$100M possible in tax cuts bill

Published 9:31 am Friday, May 9, 2014

ST. PAUL — Minnesota lawmakers from both parties Thursday hailed a deal to deliver $103 million more in tax relief, including extra refunds and credits for homeowners, renters and farmers.

The bill finalized late Wednesday night won’t be voted on until next week, leaving room for tinkering as the Legislature works to complete other big items in its annual session. But Gov. Mark Dayton already pledged his signature.

House Tax Committee Chairwoman Ann Lenczewski, DFL-Bloomington, said all sides can be happy that “we’re returning more of the surplus to Minnesotans in the form of property tax relief.”

Email newsletter signup

When combined with a tax bill signed in March, it means that about $550 million of a $1.2 billion surplus will have gone out as tax breaks.

Republican Rep. Greg Davids of Preston said the money being sent back pales in comparison to tax increases imposed last year when state lawmakers were addressing a deficit. But, he added, “Anytime they’re talking tax cuts, they’re talking my language.”

Under the deal, there would be almost $25 million put into property tax refund programs to increase the checks due to go out to 500,000 eligible homeowners and 350,000 renters later this year. Individual rebates are based on income and the amount owed in property taxes, but not everyone qualifies. Another $17 million would go into new agriculture tax credits, averaging $200, that would be available to more than 90,000 farmers.

Also included in the bill are changes that give businesses more time to turn over sales taxes to the state. It would put $10 million into local government aid programs. And a sales tax exemption afforded to cities and counties last year would be extended to areas where different government jurisdictions team up to provide services.

Dayton’s bid to expand a dependent and child care tax credit was left out of the final agreement. He expressed disappointment in a statement but said he would sign the bill anyway.

Senate Taxes Committee Chairman Rod Skoe, DFL-Clearbrook, said leadership is holding the bill back from a vote until next week “just in case” but he doubts any major changes would be made before then.

“There are always things that happen as session comes to a close, some little emergency, maybe disaster response,” Skoe said. “The tax bill is a spot most things would fit.”

The earlier round of tax cuts were mostly on the income tax side.

Lawmakers also repealed sales taxes on equipment repair, warehousing services and business telecommunications purchases.

In 2013, the Legislature and Dayton imposed $2.1 billion in new taxes, mostly by making top earners pay more.

House Speaker Paul Thissen, DFL-Minneapolis, said critics of that approach overlook that Democrats beefed up property tax relief programs last year, too. “Now we’re just building on it this year with additional property tax relief, particularly for farmers,” he said.

House Minority Leader Kurt Daudt, R-Crown, said his party supports the plan. But he argues that the zeal to cut taxes this year is tinged in politics.

“We understand this is an election year, and we know that tax cuts are popular even with Democrats in an election year,” Daudt said. “We think it’s too little too late, but we’re happy to do what we can.”