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.
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."
After the Republican 1st District convention went 23 ballots without an endorsement in the race for Congress a couple weekends ago, one of the candidates said today he would not wait for another convention and would instead run in the August primary.
Former state Rep. Allen Quist said the convention had deadlocked over the choice between him and state Sen. Mike Parry, R-Waseca.
"The reality is that there is no Republican endorsed candidate," said Quist in a press release.
"The May 12th follow-up convention, which I strongly supported and which the delegates approved, ran into insurmountable scheduling difficulties," said Quist. "Going to the primary is now the only reasonable course of action, since June 2nd is the earliest a new convention can be scheduled, if one is scheduled at all."
Quist and Parry are competing for the nomination to run against incumbent DFL Congressman Tim Walz.
Mike Parry issued a statement indicating he too will go to the primary. Here's part of what it said:
"While we're disappointed that Allen Quist broke his word, we look forward to taking the conversation to the broader public. Allen Quist has repeatedly been tried, tested and rejected in his numerous attempts to attain higher office. We are confident that Minnesotans will choose the only conservative candidate who has a proven ability to win -- with not only conservative Republicans but also independent voters and Reagan Democrats."
Posted at 8:33 PM on April 30, 2012
by Tim Nelson
An unlikely trio of Minnesota senators has been pushing for a new twist in Vikings stadium financing: user fees.
The issue nearly derailed the stadium last week, after a proposal for a sales tax from DFL Sen. Tom Bakk morphed into a measure that put the entire bill for state share of the Vikings stadium on fans and spectators.
The issue actually prompted the Senate Taxes committee to adjourn at one point, because no one had any idea of the burden the user fees might represent. Now, it looks like they have an idea: Sen. John Howe, R-Red Wing, said an 18 percent levy on stadium activities -- including the Vikings share of NFL TV revenue -- would more than cover it. He said he's been working with Sen. John Marty, DFL-Roseville, and Sen. Roger Chamberlain, R-Lino Lakes, to refine the idea.
Howe said this afternoon that an estimate from the Minnesota Department of Revenue may even lower the user tax.
"Right now, it's an 18 percent user fee, to make [the state's stadium funding share] 100 percent user based, and we wouldn't have to do the charitable gambling electronic pull tabs," Howe said. "We're waiting to get that revenue estimate back, but it looks like it'll be less than 18 percent."
The plan drew strong objections from the Vikings last week. The team cited the deal it struck with the city of Minneapolis and the Dayton administration on March 1. That plan has the state share being paid by new tax revenue as the state's charitable gambling industry rises from about $900 million to $2.6 billion in sales.1 Comments)
Posted at 8:23 PM on April 30, 2012
by Catharine Richert
Filed under: Political parties
Republican Party of Minnesota Chairman Pat Shortridge says the party has reached an agreement regarding its lease.
"We have reached a confidential agreement with our landlord, HUB Properties, that will allow us to fulfill our obligations to them," Shortridge said in a statement. "HUB will request a continuance of tomorrow's hearing and we expect to have a final agreement in place within a week."
Boston-based Hub Properties filed an eviction notice in Ramsey County District Court earlier this month because the party owes them $96,000 in rent.
A hearing on the matter is scheduled for 8:45 a.m. on May 1.
Late last year, the party disclosed that it was nearly $2 million in debt.
The biggest hang up in end of session budget negotiations between Gov. Dayton and GOP legislative leaders is the Tax bill. Republicans have passed a conference committee report that provides a mix of business tax cuts (You can read more about the plan here). Democrats have proposed a counter offer to Republicans that would create $51 million in one-time tax cuts in the current budget cycle.
The debate over taxes highlights a debate over the best way to manage the state's fiscal policy over the short and long-term.
Democrats argue that passing the GOP Tax bill will only cause problems for the state's long-term budget future budget without any guarantee that the plan will create jobs in Minnesota.
"This is really giving hundreds of millions of dollars away to big corporations," DFL House Minority Leader Paul Thissen said.
Republicans are arguing that their tax bill will end up paying for itself.
Rep. Greg Davids, R-Spring Valley, says the plan would give property tax relief for businesses across Minnesota.
"There's property tax relief in this bill for every business," Davids said. "From 3M to Big Bob's Eatery in Spring Valley."
The only problem is that the GOP plan would create a budget hole of $52 million in the current budget cycle and a $139 million hole in the next budget cycle. Since February, Dayton has said he won't support any tax cuts that aren't offset by another revenue increase. He's worried that the so-called tails from the GOP tax bill will create bigger budget problems in the future.
"I think taking $145 million as the current proposal proposes out of the next biennium and and adding that amount to the projected $1.1 billion deficit is fiscally unsound and unwise," Dayton said.
The problem for Republicans is that they aren't willing to find other revenue to pay for their tax cuts. Dayton has pushed to close so-called tax loopholes on corporations that operate overseas and to create the so-called Amazon tax that requires online retailers that don't have operations in Minnesota to pay sales tax on Minnesota-based purchases. Neither plan gained much traction in the GOP-controlled Legislature.
Instead, Republicans have decided to use the state's budget reserve to pay for the tax breaks in the current budget cycle and hope the state's financial picture improves enough that the tax break to businesses don't add to the projected deficit in the next budget cycle.
The difference in opinion is both financial and political. Republicans have argued that the state's financial picture is improving and point to an increase in tax collections over the past few months. Gov. Dayton has argued that the state's budget is already out of balance and adding another tax break will only exacerbate the problem. Davids, who chairs the House Tax Committee, said he believes his tax bill will encourage businesses to invest more money in their businesses.
"This tax bill will create more jobs than a bonding bill and a Vikings stadium combined," Davids said.
Dayton has argued that passing a public works bonding bill and a Vikings stadium will have a more immediate impact on the state's economy since there is high unemployment in the state's construction sector.
The other major issue of politics.
Republicans are also looking for a victory heading into November. Every member of the Legislature is on the ballot this year and the GOP talking points over the past two years have focused on cutting regulations and taxes. Dayton isn't on the ballot and has less urgency on the issue.
Republicans have yet to respond to the DFL offer. House and Senate officials say they intend to take up the GOP Tax bill on Tuesday.(1 Comments)