ST. PAUL, MN – The Minnesota House of Representatives passed comprehensive tax and higher education bills this week by votes of 69-64 and 86-44, respectively.
The votes cap an intense week at the capitol where House lawmakers approved a series of major omnibus bills, marking significant progress towards finalizing a budget before the Legislature adjourns in late May.
The omnibus tax bill passed by the House ends the cycle of deficits, shifts, and gimmicks seen over the past decade and provides for a structurally balanced budget into the future. It covers the cost of new middle class property tax cuts, historic investments in education at every level, and pays back the remaining $854 million school shift balance caused when the Legislature enacted record borrowing from schools in 2011.
The bill pays back Minnesota schools by establishing a temporary income tax surcharge on the wealthiest 0.5% of Minnesotans, or those with taxable income greater than $500,000 per joint filers. The surcharge expires after the shift is paid back in full, which would happen in two years or sooner.
“The House tax bill generates the revenue needed to build a stronger economy in a way that is fair,” said Rep. David Bly (DFL—Northfield). “High income earners have done extremely well coming out of the recession. Asking those who can afford to chip in a little more to help improve Minnesota’s economic vitality is a much fairer approach than pushing the cost of the things we need onto the backs of middle class families in the form of higher property taxes.”
The omnibus tax bill provides $270 million in direct middle class property tax cuts to nearly one million Minnesotans through the Homestead Credit Refund, a retooled renter’s credit and increased funds to cities and counties. Under the new Homestead Credit Refund, homeowners in Rice County will see an average increase of $203. The new proposal also enhances the renter’s credit by increasing the maximum refund allowed for renters.
Cities and counties will see a significant increase in local government and county program aid (CPA) under this bill, which includes the largest LGA reform in a decade. The new LGA formula provides $110 million in need-based aid to cities and counties after years of cuts to vital services like police officers and firefighters. Rice County will receive nearly $450,000 more in CPA in 2014 and the city of Northfield will receive over $660,000 more in LGA.
“The ‘all-cuts’ budget approach of the last decade shrinks demand and does not create an environment conducive to job creation,” added Rep. Bly. “Cuts to LGA over the past ten years caused property taxes to skyrocket by 86 percent. That kind of burden on middle class families is not sustainable over the long haul.”
Rep. Bly stressed that the property tax cuts passed this week puts more money in people’s pockets so they can save for retirement, send their kids to college, and purchase goods like gas and groceries. “This approach increases demand because those dollars are pumped right back into our economy,” said Rep. Bly. “Any economist will tell you that higher consumer spending generates growth. It’s what we need to create jobs and stay on the path to long-lasting, shared prosperity.”
The House also passed a higher education bill this week that freezes tuition at Minnesota’s public colleges and universities. It passed by a vote of 86-44 and comes as welcome news to students who have seen tuition more than double since 2000.
“Saddling our young people with record levels of debt after they graduate from college is not a recipe for economic growth,” said Rep. Bly. “I’m pleased we’re taking serious steps to get that problem under control. It marks a significant departure from the past ten years when we saw skyrocketing tuition rates due to perpetual budget cuts. This is an issue I will continue to make a top priority.”
Rep. Bly encourages his constituents to contact him with any questions about the House K-12 education bill. He can be reached by phone at (651) 296-0171, by email at rep.david.bly@house.mn, or by postal mail at 559 State Office Building, 100 Rev. Dr. Martin Luther King Jr. Blvd., St. Paul, MN 55155.