Column: Capitol Conversations, by Rich Murray

When the dust finally settled from last session’s budget agreement, some of you were not pleased about the plan to extend the school payment funding shift in order to help balance the state’s budget.

To be truthful, neither was I, and I can’t imagine any lawmaker thought it was a good idea to borrow money from our schools. But the alternative last summer was a continued shutdown, and that would have been even worse.

Since then, Minnesota’s economic situation has changed dramatically. That $5.1 billion budget deficit we faced last year has been turned into a $1.2 billion surplus. Minnesota’s rainy day fund and budget reserves have been refilled, and we now have $1 billion in savings. As part of this new surplus, current law sent $318 million of this windfall to pay back part of what we owe our schools.

Now is the time to pay back even more.

This week, the Minnesota House approved legislation that will repay in full the amount of the additional school shift that was signed into law last summer in order to help balance the budget.

Here’s the brief overview on school shifts. Historically, the shift has had a 90/10 breakdown. This means schools receive 90 percent of their expected revenue during the current the biennium, and 10 percent the next biennium. Two years ago when the Democrats controlled the Legislature, their leadership made the choice to enact a 70/30 split as a way to eliminate a deficit — which shorted schools roughly $2 billion. The 60/40 shift enacted last year raised that amount to roughly $2.7 billion. With the $318 million from the most recent windfall factored in, we now have a 64.3/35.7 split.

The plan we approved this week would take $430 million from cash reserves and pay back the remaining $400 million borrowed from last session, while beginning to pay back the $2 billion the previous Legislature borrowed from schools during the last biennium.

It appears Minnesota is trending toward economic recovery. The future impacts of the reforms enacted last year, combined with more prudent spending decisions, means we will likely continue to accumulate extra money each month at the state level. With that in mind, we should be utilizing some of these resources to pay back the shift and whittle away at the projected debt to our schools.

 

Small business caucus agency unveiled

As promised, the bipartisan Minnesota House Small Business Caucus has released its legislative agenda which seeks to assist our state’s small business owners.

In the area of taxation, we are offering legislation that would reduce property taxes on small businesses by exempting the first $150,000 of value from the state property tax; repealing the accelerated pre-payment of state sales taxes for small businesses; and allowing an upfront sales tax exemption for capital equipment purchases rather than the current requirement to submit paperwork for reimbursement.

Several bills have also been proposed dealing with regulation relief, including providing relocation cost relief for businesses affected by eminent domain; requiring the Department of Employment and Economic Development to provide a permitting and regulatory ombudsman to assist startups and small businesses; and allowing them under certain conditions, to voluntarily request advisory inspections and remediate violations before penalties are imposed.

Investment was also addressed, as some of the proposals include expanding and enhancing the Angel Investment Tax Credit program; assisting small businesses with health insurance costs by continuing to support Section 125 group plans, continuing rewards for those paying 50 percent of the premium cost, and removing an unworkable mandate; and equalizing the small business penalty interest rate with the personal penalty interest rate.

For Minnesota to be successful, we must have small businesses that thrive. Without them, we would lose a significant sector of our economy, not to mention the foundation of our communities. The Small Business Caucus understands that we must not only sustain but improve these businesses through certain legislation, and we look forward to taking some common sense action this session on their behalf.

Have a question or concern? Constituents in District 27A including communities in Freeborn and Mower counties can write to me at 439 State Office Building, 100 Rev Dr. Martin Luther King Jr. Blvd., St. Paul, MN 55155. Or call me at 651-296-8216 or email me at rep.rich.murray@house.mn.

 

Rich Murray, R-Albert Lea, is the state representative for House District 27A.