Dear Neighbor,
The House put forward its proposal for a new state budget this week, officially launching the process of establishing a new two-year plan for the state.
At a Ways and Means Committee meeting Wednesday, which I chaired, the committee passed this broad outline of the state’s budget. Individual “targets,” or spending amounts for each finance committee, were adopted, and those committees are now putting together their detailed bills, most of which will be heard in Ways and Means next week.
Interestingly, Governor Dayton’s budget targets were offered as an alternative, and the committee, on a bipartisan vote, rejected the Governor's budget. Three of the 10 Democrats voted with all Republicans against the Governor’s budget.
The overarching theme in the House proposal is that it aims to slow the growth in state government spending. Minnesota families expect that government will not continue to grow unchecked. Our “Minnesota Way” approach respects taxpayers and ensures a responsible level of state spending.
Some of the most notable components of the House plan include $1.35 billion in tax reform, $450 million in new funding for roads and bridges and $1.1 billion in new funding for K-12 schools compared with the 2016-17 biennium.
The tax bill includes a number of proposals included in the package vetoed by Governor Dayton last year despite support from 89 percent of the Legislature. Key tax provisions in this year’s House plan include:
- $270 million to reduce the state tax on social security income to help senior citizens living on fixed income.
- $35 million toward modifying the child and dependent care credit; a family of four with childcare expenses would receive $660 more relief than current law.
- $125 million toward expanded education deductions and credits for expenses incurred by public, private, and home school families.
- 77,500 students would receive, on average, a $640 reduction in their taxes through a first-in-the-nation tax credit for student loan payments.
- $203 million to reduce the extra state property tax on businesses, exempting the first $200,000 in property value from the extra tax on businesses and freezing its automatic inflator.
- $42 million to reduce the burden agriculture land owners pay for school bond referendums. Farms also benefit from a measure conforming the state death tax to the federal exclusion.
As for transportation, the House proposal would invest $6 billion in Minnesota’s roads and bridges infrastructure over the next 10 years from a variety of sources including the general fund, general obligation bonding, trunk highway bonding, and savings in construction costs through reforms.
The $450 million for road and bridge infrastructure throughout the state during the next two years would come from redirecting existing transportation-related funding streams to a Transportation Priorities Fund. The fund would be supported by existing taxes on auto parts, repairs and rentals and leases.
Taxes and transportation are just two components of the House budget plan. I will pass along more details in other areas in next week’s report.
Sincerely,
Jim