Saint Paul, Minnesota – The Minnesota House of Representatives passed the Omnibus Tax Bill today on a vote of 69 to 64. The bill balances the budget honestly, provides property tax relief, fully pays back the school shift and funds strategic investments in education, middle-class tax relief, and job creation. State Representative John Ward (DFL – Baxter) voted for the legislation.
“After a decade-long cycle of deficits, shifts, and gimmicks, this bill responsibly funds a balanced budget into the future,” said Rep. Ward. “We’re doing the right thing: balancing the budget honestly, providing property tax relief, paying back our schools, and raising revenue fairly.”
The bill provides $270 million in middle-class property tax relief for nearly 1 million Minnesotans through the Homestead Credit Refund, retooled renters’ credit and increased aid to cities and counties.
The Homestead Credit Refund provides universal, targeted property tax relief to middle-class homeowners. Under this program, more than 300,000 homeowners (75% of filers) will see a refund increase. More than 100,000 additional homeowners will be eligible for a refund. Homeowners will be notified if they are eligible for a refund, increasing filers by 100,000. The average homeowner will see their refund increase by $212.
The previous Legislature raised property taxes on renters who earn less than $55,000 a year by cutting the Renter’s Credit. This provision enhances the Renters’ Credit, providing property tax relief to Minnesota renters (including elderly and disabled renters), so that the neediest renters see the greatest benefit. Under the improved Renter’s Credit, 66,000 filers will see a bigger refund, 10,000 additional renters will qualify, and the average renter will see their refund increase by $179.
The bill also increases Local Government Aid by $80 million and Country Program Aid by nearly $30 million. Brainerd would receive a nearly 15 percent increase in LGA, Pequot Lakes would receive a 15 percent increase (from 2013 levels), and Jenkins would receive LGA dollars for the first time.
“This is great news for the people of Minnesota, especially for us in Greater Minnesota where property taxes have increased eight times more than in the metro, and Greater Minnesota business taxes have increased three times more than the metro,” said Rep. Ward. “We told the people of Minnesota that we would make property tax relief a top priority and we’re walking the walk.”
Two years ago, the previous legislature chose to borrow a record amount from Minnesota schools. The House Tax Bill pays back the $854 million still owed to Minnesota schools through a temporary, two-year income tax surcharge on only the wealthiest 0.5 percent of Minnesotans — taxable income greater than $500,000 per year for joint filer.
“We’re keeping another promise that we made to Minnesotans and paying back the money we still owe our schools and students,” added Rep. Ward. “It’s time to end the use of shifts and gimmicks. Paying back our schools is the right thing to do and it and will give our schools and students more resources as we work to put our kids on the path to the world’s best workforce.”
The bill asks the wealthiest 1.1 percent of Minnesotans to pay their fair share by raising the income tax rate to 8.49 percent for individuals with a taxable income greater than $226,000 or $400,000 for joint filers. That 1.1 percent would pay an addition $3,700 per year on average. This increase would only affect 3.3 percent of businesses. This group currently pays a smaller percentage in income taxes than low-and middle-income earners.
The third revenue component in the bill recovers state costs from tobacco and alcohol consumption. The proposal increases the user-based fees on cigarettes to $2.83 per pack and catches Minnesota up with Iowa, South Dakota and Wisconsin who all have a higher cigarette tax. The bill increases the user-based fees on alcohol by 7 cents per beer. The alcohol tax hasn’t been raised since 1986. Alcohol and cigarette use cost the state billions of dollars annually in related health care, public safety and other costs.
These revenue increases will go to overdue investments aimed at building a prosperous Minnesota, including a historic $700 million investment in education from “cradle to career” and the $270 million in property tax relief programs.
“Minnesotans and our business community have said loud and clear that they want investments in education, economic development, and property tax relief, and that all costs money,” said Rep. Ward. “We’re raising revenue in a fair way and asking the wealthiest to pay a little bit more to help make a better Minnesota.”