Dear Neighbors,
The last few weeks at the Minnesota House of Representatives have been very busy.
Early in the session, legislators in the House and Senate spend a lot of time in committee hearings reviewing bills. At the end of session we spend most of our time focused on passing bills off the House floor, and working with the Senate and Governor Dayton to iron out differences in our proposals.
In the odd-numbered years – like this one – we craft a two-year budget for the state. (The even-numbered years tend to focus more on the bonding bill and policy issues). In this budget year, the major finance committees rely on the official state budget forecast to know exactly how much revenue to plan to spend in their budget bills. The official state budget forecast was released on February 27, 2015. Committee work will now speed up and intensify, and we will be meeting long hours, often into the evenings for the next few weeks.
Good News in the State Budget Forecast
The
Economic Forecast shows Minnesota has a $1.9 billion budget surplus, before you take into account inflation, or roughly $1 billion after you take inflation into account. The surplus indicates Minnesota’s economy is growing. The state economist noted there were signs that wages are likely to increase in the coming year. The budget we enacted in 2013 was responsible and balanced; it invested in education and job growth, solving a deficit in the last biennium by raising taxes on the top 2% of income tax payers and on tobacco sales, while lowering property taxes for middle and lower income Minnesotans. The budget we enacted has resulted in a stronger economy in Minnesota and brought about the surplus.
More than 75,000 jobs have been created in Minnesota since we passed the most recent balanced budget in 2013. More Minnesotans are working now than ever before.
Now that we have the official budget numbers, the House, Senate and Governor will put together proposed budgets for each major finance area. The finance committee I serve on has just begun the process of assembling our budget bill. Over the next several weeks we will review all current budget activity and all proposed changes.
More Good News: Taxes are down for 9 out of 10 Minnesotans
Overall tax rates are decreasing for nine in ten Minnesotans (those earning less than $140,690), according to the 2015 Minnesota Department of Revenue Tax Incidence Study. The Tax Incidence Study indicates that by 2017, tax rates will drop for 9 in 10 Minnesotans compared to 2012 taxes.
In 2013, part of our budget included direct tax relief. We provided $177 million in direct property tax relief, benefitting nearly 1 million Minnesotans. It was gratifying to see this direct relief achieved the results we intended. The overall tax burden is more fair across different levels of income than it used to be. In addition, wage growth has outpaced taxes in recent years.
The annual study focuses on the relative tax burden for Minnesotans with different income levels and gives lawmakers a glimpse of the state and local tax structure, reflecting current tax law. The study defines “effective” tax rates as the ratio of taxes paid to income. This study also helps inform our debate as we craft the state’s next two-year budget.
To see the full Tax Incidence Report, please click
here.
Keep in touch!
I encourage you to contact me on any legislative issues. During the legislative session, you can reach me by email at
rep.ann.lenczewski@house.mn or by phone at 651-296-4218.
Sincerely,
Ann Lenczewski
State Representative