Capitol View: April 30, 2012 Archive

GOP tax bill bets on sunny days ahead

Posted at 7:41 AM on April 30, 2012 by Tom Scheck
Filed under: MN Legislature, Mark Dayton

The House and Senate are expected to vote on a tax bill today that would cut business taxes. The measure pays for the cut by relying on money that isn't guaranteed to be there.

The plan agreed on by a House/Senate conference committee freezes the statewide business property tax, creates a tax break for investors in new businesses and provides an upfront sales tax exemption for businesses that buy new capital equipment. It also includes Gov. Dayton's initiative to provide a tax credit to businesses that hire veterans.

"We're hopeful the governor will sign it," Sen. Julianne Ortman, R-Chanhassen said.

That's a big question mark, since Gov. Dayton has repeatedly said that he wants any spending, including tax cuts, to be offset in some way.

In the tax bill, Republicans are betting that the economy will continue to improve, which would mean more tax revenue to the state.

The plan directs Minnesota Management and Budget to book higher than expected tax collections from February and March to pay for the changes. Typically, lawmakers rely on the February revenue forecast as they make tax and spending decisions, not the partial information that comes from monthly tax reports.

Several budget analysts say the April Economic Update, which GOP leaders cite as evidence they can pay for the bill, doesn't provide a full picture of the state's budget because it focuses on tax revenues and not the spending side of the ledger.

The bill would also pit tax cuts for businesses against school funding. That's because current law says any surplus money from the November forecast would be used to pay back a K-12 school payment delay. This bill short-circuits that process by capturing tax revenue that hasn't been recorded in the forecast yet.

"We have the authority in the law to bring that back earlier by statute if the governor signs it," Ortman said.

Another hurdle is convincing Dayton to sign a bill that would create a deficit of $145 million in the next biennium.

Republicans are pinning their hopes that Dayton wants a Vikings stadium bill and is willing to give up on his pledge to not increase the deficit to get it.

GOP legislative leaders have said repeatedly that the Vikings stadium should not be linked to any other issues, but they moved off that talking point on Saturday. They now say their top priority is enacting a tax bill.

The proposal includes several tax cuts that have been pushed by business groups. In addition to the freeze on business property taxes, it extends and expands a tax break for companies that establish data centers in Minnesota. It also includes a tax break for the Mall of America expansion and it exempts the city of Woodbury from getting voter approval to build the Bielenberg Sports Center. A tax break for breweries has also been expanded and extended. That measure came at the request of St. Paul-based Summit Brewing.

Dayton mostly mum on taxes, stadium

Posted at 10:36 AM on April 30, 2012 by Tim Pugmire (2 Comments)
Filed under: MN Legislature, Mark Dayton

DFL Gov. Mark Dayton says he's not ready to comment on a package of tax policy changes that Republican lawmakers finalized over the weekend.

Dayton told reporters this morning that he had not yet analyzed the bill, and he expected it to be addressed during an afternoon negotiation session with GOP leaders. The tax bill includes several provisions aimed at helping businesses, including a freeze on the statewide business property tax. Dayton did say that would be a problem.

"Property tax increases have also hit homeowners and farmers and renters and senior citizens, and they're nowhere in the bill as I understand it," Dayton said. "So, I have problems with singling out one group: businesses, even though they certainly have a case to make about property tax increases. But so does everyone else in Minnesota."

Still, Dayton indicated he was willing to try to find some middle ground and compromise on a tax bill. But he stressed that Republican leaders must do the same.

Dayton also had little to say about the Vikings stadium bill, which is awaiting action on the House and Senate floors.

"It's still breathing, and they're still in session," he said. "So anything can happen if we get our minds together and decide we can work this out."

The governor's most specific comments came during an explanation of his weekend veto of legislation to allow the sale and use of more kinds of fireworks in the state.

Dayton said he understands that many people supported the bill, but there were just too many health and public safety officials lined up against it. He said he decided more fireworks would be unwise for Minnesota.

"They may be fun, but they're also dangerous. I don't want somebody's eye put out, somebody's hand blown off. I don't want it on my conscience that I opened that door and resulted in that kind of casualty or even fatalities."