With surplus, Senate focuses on tax cutsPublished 10:00am Sunday, March 23, 2014
Column: Senate Report, by Dan Sparks
Following the good news of the $1.2 billion budget surplus, the Senate has been working to develop a finance package that continues the state’s positive economic momentum. The first bill to accomplish this goal is the Senate omnibus tax bill.
The changes included in the bill will benefit middle-class families, business owners and rural school districts. This broad package of tax cuts will put money in the pockets of thousands of Minnesota families and businesses.
Families will see relief through changes to the marriage penalty and an increase and expansion of the working family tax credit. The change to the marriage penalty will save married couples an average of $115 starting next year. The working family tax credit will provide an average benefit of $334 per household to families of four that earn less than $44,000 a year.
For businesses, we eliminated the three business to business taxes, the equipment repair and maintenance, warehousing and storage services, and telecommunications sales taxes.
The farm equipment repair sales tax is an issue I have heard about from many local farmers. I share their concerns and introduced bills to address this issue in last year’s special session and again this year. The warehousing and storage services sales tax was going to impact a number of local businesses, so I am happy to see this repealed as well.
Reinstating the tax exemption on telecom services was an issue we heard in the Job, Agriculture and Economic Development Committee. The discussion was on the current state of broadband in rural communities and the need to invest and expand to boost business, help our schools and provide online tools for health care. Several leaders in the telecom community said that this tax could hinder future development and I am pleased to see the change in the Senate bill.
More businesses will also benefit from the angel investment program. Our legislation extends the program to 2016 and increases the current-year appropriation for the program by $3 million (from $12 million to $15 million). The program has a proven track record and I would like to see more local businesses take advantage.
Our rural school districts will now have the same financial tool as the districts in the metropolitan area. Last session many school districts were given a boost through what is called “Location Equity.” Unfortunately, the legislation created what is being called the doughnut hole, which refers to school districts not quite big enough (more than 2,000 students) and not quite small enough (less than 960 students) did not have access to the same funding options as the rest of our districts.
Through language in the tax bill, every school will now be treated equally by giving all schools the option of using location equity revenue, no matter how big or small they are. School districts can choose not to use this option, but we need to offer a level playing field to ensure that our rural schools do not fall behind.
Finally, our legislation focuses on the unknown future. To support Minnesota’s long-term economic stability, the tax bill includes $150 million to bolster the state budget reserve account. What many call the “rainy day fund,” the budget reserve will help future legislators withstand volatility in the economy. Today’s economic outlook looks great, but we should be prepared for any unforeseen downturns in the future.
Dan Sparks, DFL-Austin, is the state senator for District 27.