Dear Neighbor,
I hope you have had a good start to your summer since my last update. With some new laws taking effect July 1, I thought I would send out an update. Increased education funding, historic investments in roads and bridges and more are set to take effect July 1 as we begin the state’s new fiscal biennium.
At $6.5 billion for 2018-19, the new transportation budget invests a historic level of existing funds into our transportation infrastructure statewide. There is a $300 million increase in General Fund spending, $940 million in bonding and a $75 annual surcharge on electric motor vehicles set to take effect. This surcharge is meant to compensate for the fact that all electric vehicles don't pay the gas tax, and thus don't contribute to taking care of our roads in the same way that other traditional vehicles do.
The transportation package enacted this year directs taxes already collected on rental cars, leased cars and the purchase of auto parts to roads and bridges instead of the general fund. Minnesota will join 33 other states that now use their general fund for roads and bridges. Combined with bonding, Minnesota will see billions in additional funding over the next decade for road and bridge construction.
The K-12 education budget which is set to take effect includes more than $1.3 billion in increased funding, 8 percent more over the next two years. Saint Cloud District #742 will receive approximately $5.2 million in new funding the next two years. Funding for early learning initiatives for preschoolers is also provided. Early learning programs I got funded in District #742 last year will have continued funding.
As for higher education, the Minnesota State College and University System receives a $106 million increase in funding in the new budget. The state grant program, which serves lower-income students, receives a $36 million increase, which is a 10-percent increase in funding.
While tax changes do not all take effect July 1 (they are generally based on a calendar year), the 2017 tax bill delivers $650 million in tax relief to Minnesota families over the next two years, and $790 million in 2020-2021. The following highlights all are in effect for either tax year 2017 (for filings made in 2018), or in calendar year 2018 (the property tax provisions):
- Social security tax relief for nearly 284,000 senior citizen tax returns (single and married filing jointly)
- Property tax relief for small business owners by eliminating the state property tax on the first $100,000 of value on commercial real estate
- An increased child care tax credit so a family of four making $50,000 will get $1,200 more
- A student loan credit that will give 65,000 students an average of a $414 reduction
- A 40% reduction in school levy property taxes on farmland
Complete details of new laws and budget provisions taking effect July 1 can be found at this link.
On a closing note, I want to provide a quick update on the issue of the governor line-item vetoing the Legislature’s funding, effectively trying to shut down a co-equal branch of government. In my view it is unfortunate that the governor chose this path instead of just vetoing bills if he disagreed with them. There were a lot of negotiations at the end of session between the legislative branch and governor, and both sides gave up things to get things they wanted. I was very surprised to have the governor take this unprecedented path of potentially forcing the Legislature to lay off all their staff as a way to try to force the Legislature back to the bargaining table.
The House and Senate have filed a joint lawsuit on this matter and an initial hearing took place Monday. The court issued an injunction that will ensure the Legislature is funded until the case is complete or through Oct. 1 – instead of ceasing funding as of July 1.
Look for more news as this situation unfolds. Until next time, have a safe and happy Independence Day holiday as we celebrate our great nation.
Sincerely,
Jim