Taxes & Transportation Moving Through Legislature

FromTheDomeA big week winds up at the Legislature as all omnibus bills must pass out of committees today. Next week, the House and Senate will be busy passing all the budget and tax bills by their Easter/Passover break starting April 9th. Then it’s off to conference committees and negotiations with Governor Dayton when they get back on April 17th.

Here’s an update on where some of the top issues we’re tracking stand:

Taxes

Yesterday, the Minnesota House completed consideration of its tax bill – which would take up a whopping $1.35 billion of the $1.65 billion surplus, compared to the $900 million bill moving in the Senate.  Senate consideration is next week. Here’s a summary of key issues in the bills:

  • Statewide business property tax: Both House and Senate eliminate the annual automatic inflator and both reduce the state property tax levy. The House exempts the first $200,000 of property market value from the state levy and the Senate exempts the first $100,000. The exemption of market value will result in more tax relief to lower-valued business properties, but all properties will experience some tax relief from removal of the automatic inflation adjustment.
  • Estate tax: House – immediately conforms Minnesota to the federal taxable threshold of $5.49 million; Senate – phases in the conformity.
  • Research-and-development credit: The House provides refundability and increases the second-tier percent from 2.5% to 4%. The Senate enacts a new alternative calculation similar to the federal that should help more businesses access the credit.
  • Section 179 federal conformity for expensing qualified equipment purchases: House – not addressed; Senate – full federal conformity as of 2018.
  • School Bonds: property tax credits for farmers to reduce impact of school bonds.
  • Individual provisions: House – increase to the income limit at which Social Security is taxable, refundable student loan payment and college savings plan credits, and expansion of the child dependent care credit. The Senate would provide a reduction in the income tax rate for first tier filers from 5.35% to 5%.
  • Mankato/North Mankato Sales Tax Extension: included in both bills – however the House bill would provide $9 million in authorization to North Mankato while the Senate bill would provide $15 million. There will be an effort to have the conference committee adopt the Senate position of $15 million.

Transportation

The Senate considered and passed its transportation finance bill late last night. The House takes it up today. As you know, this is another carryover item from the past two sessions and something the Legislature needs to get done this year or face significant funding shortages for our aging roads and bridges. Here’s a summary of the bills moving:

  • The House file calls for an investment of $6 billion over 10 years. Among the major provisions: Dedicates the sales tax from auto parts and rental cars to transportation purposes; $1.3 million in trunk highway bonding for state roads; nearly $2 billion in general obligation bonding over the next 10 years for local roads and bridges and improvements to rail grade crossings. The bill would also lead to significant cuts in metro bus service and light rail.
  • The Senate file would add roughly $3.6 billion in new funding over the next 10 years. Among the major provisions: Dedicate a portion of the sales tax from auto parts and rental cars to transportation purposes; redirect various funds within the Minnesota Department of Transportation to state roads and bridges; $300 million in trunk highway bonding.
  • Highway 14 – The House and Senate would both provide funding to the Corridors of Commerce Program. Senate – $200 million is apportioned to the Corridors of Commerce program – plus an additional $90 million earmarked for the Owatonna to Dodge Center section of Highway 14. House – $300 million is apportioned to the Corridors of Commerce program. Of note, neither the House or Senate bill would provide enough money over the 10 year life of their bill to complete Highway 14.

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