No agreement on how to spend money targeted for tax relief

House and Senate conferees met through the weekend but only worked around the edges of the tax proposals contained in HF3167*/SF2726, the second omnibus tax bill of the session.

Conferees agree on spending $103 million on further tax relief (the first tax bill provided $447 million in relief), but there is plenty of difference in how each body wishes the money to be spent. The signature spending proposed by the House is $45 million in property tax relief for fiscal year 2015.This would be done through increases to the homestead credit refund base on taxes payable in 2014, the renter property tax refund base on rent paid in 2013, and an increase in the agricultural homestead market value credit beginning in 2015.

“The House really wants property tax relief,” said Rep. Ann Lenczewski (DFL-Bloomington), who sponsors the bill along with Sen. Rod Skoe (DFL-Clearbrook). “We had a surplus, and the House wants to give more of that surplus back.”

The House, however, has a tough sell to the Senate about the $100 million impact on the General Fund in later years. The Senate, on the other hand, has their own tough sell to the House on their proposed tax credits.

The Senate provisions include about $30 million in tax relief, with special exemptions granted for parents or guardians of students with certain disabilities such as dyslexia; those who volunteer as first responders; and extension of the current military service credit.

Lenczewski noted her longstanding opposition to the practice of issuing targeted tax credits, saying they lack in transparency. Once in place, she said, “we never have the courage to get rid of them.”

The conference committee is scheduled to meet next on Tuesday. The House conferees are Lenczewski, who chairs the House Taxes Committee, Rep. Jim Davnie (DFL-Mpls) who chairs the House Property and Local Tax Division; Rep. Greg Davids (R-Preston), Rep. Paul Torkelson (DFL-Hanska), Rep. Linda Slocum (DFL-Richfield). Senate conferees are Skoe, who chairs the Senate Taxes Committee, Sen. Ann Rest (DFL-New Hope), Rep. Kari Dziedzic (DFL-Mpls), Sen. Lyle Koenen (DFL-Clara City and Sen. Paul Gazelka (R-Nisswa).