Dear Neighbor,
The House passed a series of supplemental budget/tax bills this week, with approval provided to legislation encompassing 10 separate finance areas – 11 if you include Legacy Amendment funding.
There is a lot going on now as we enter the last few weeks of session, so this update will try to just hit the highlights:
CAPITAL INVESTMENT
The House Capital Investment Committee unveiled this year’s bonding bill this week. There were three main projects for the Saint Cloud area: $4.5 million for renovating the Saint Cloud Armory, $18 million for renovations at the Saint Cloud Prison, and $5 million for the quarry amphitheater in Waite Park. The armory and prison projects represent needed state investments in state assets that need significant updating. The amphitheater looks to me like a significant economic development project that will bring thousands of people into the Saint Cloud area for concerts and other events.
The House’s target for the bill accommodates $825 million in General Obligation (GO) bonds and prioritizes asset preservation, water infrastructure, and transportation projects. In these areas the House bonding bill provides:
- $364 million for asset preservation such as state-owned buildings
- $120 million for road and transportation infrastructure
- $153 million for water and conservation projects
There are also numerous other areas covered such as $50 million for affordable housing.
TAXES
Federal tax reform presents a significant opportunity to simplify our state tax code. The bill we’ve passed in the House not only helps us accomplish that, but also puts us in position to capitalize on surplus dollars to provide broad tax relief to the middle class. Without the House reforms, conforming to the federal tax code would cause nearly 970,000 filers to pay more. Instead, the House bill delivers the first income tax cut in nearly 20 years, with a rate decrease from 7.05 percent to 6.75 percent in the second tax tier. More than 2.1 million Minnesota filers will benefit from a tax cut in tax year 2018. The bill passed by a wide bipartisan majority, and I look forward to working with the governor and our colleagues in the Senate to help come to a compromise acceptable to all.
The Senate’s tax bill uses $176 million in money from the state's projected budgeted surplus to reduce the lowest-tier income tax rate from 5.35 percent to 5.1 percent beginning this year. Their plan retains many of the deductions that are eliminated in the federal tax overhaul, including the personal and dependent exemptions. The Senate bill continues deductions for charitable donations, mortgage interest and property taxes. The state standard deduction of $13,000 also would remain. The Senate proposal also establishes triggers that would automatically reduce the income tax rate and corporate rate when the state possesses a budget surplus.
TRANSPORTATION
The supplemental transportation finance bill uses surplus funds leveraged with trunk highway bonds to invest $385 million in transportation needs this year. The bill includes funding in 2020 to make the proposed temporary third lanes each way on I-94 between Monticello and Clearwater permanent. MNDOT announced its Corridors of Commerce program this week and that includes adding a third lane on I-94 between St. Michael and Albertville. With the passage of my bill to add the third lane between Monticello and Clearwater, we will be closing in on having a third lane on I-94 all the way to Saint Cloud.
The House bill also includes my language on opening negotiations with BNSF on extending the Northstar Corridor to Saint Cloud. The Senate Transportation bill includes $850,000 for a study of the Northstar Corridor extension. It is thus encouraging that both bills have support for the Northstar Corridor, albeit in different forms. That will now be negotiated in the next few weeks.
With the passage of the last omnibus bill last night in the House, the stage is set to start conference committees early next week. I will be co-chairing the conference committee of the supplemental finance bill, along with Senator Julie Rosen from Fairmont. This bill will cover pretty much all the state appropriation areas other than taxes and bonding, and will be the main emphasis of the rest of the session for me, as negotiations begin in earnest between the House, the Senate and the Governor.
I will keep you up to speed as best I can as we make progress. Have a great weekend (I will be spending mine preparing for the conference committee by reading the rest of the Senate bill and communications from the Governor’s office and other sources that I have not yet read).
Sincerely,
Jim