Awaiting a budget target for tax relief, House tax chair patient, hopeful

A year ago today the House omnibus tax bill (HF848) passed off the House Floor. Highly controversial because it proposed to eat up the $2 billion state budget surplus projected at that time, it languished at the end of session in conference committee.

Now, with the surplus projected at $900 million, and a little more than three weeks left until the constitutional end of session, House Taxes Committee Chair Rep. Greg Davids (R-Preston) waits for spending targets before reconvening the conference committee. He is realistic that some things currently in the bill will have to go and is left to manage expectations.

Session Daily recently spoke with Davids about the future of last year’s omnibus tax bill and how it plays into the 2016 session endgame. This is an edited transcript of that conversation.

Session Daily: At the beginning of session, you said in committee there wouldn’t be another major tax bill this session other than one dealing with federal conformity and one addressing Department of Revenue policy and technical changes [HF2871]. Is that still your expectation?

Davids: As they say, things are subject to change and the situation is fluid. I still don’t see us doing a major tax omnibus bill on the floor, unless leadership comes to an agreement and says this is how we are going to do it. I don’t see a big omnibus tax bill going on to the House Floor.

SD: Then what was the purpose of hearing all the tax-related bills in committee this session, and why hold them over for an omnibus bill that you say won’t happen?

Rep. Greg Davids

Davids: The reason you hear bills is because you want citizens to be heard. Now, with the tax bill, we lay them over, very seldom does a bill move on its own. I think we should be listening, and that’s what you do when you hear the bills. Now, how those come out of there [committee], I don’t have that answer yet. I don’t know how that’s going to work. But I will never apologize for hearing a citizen’s idea that they want to move forward. All a bill is a request to be heard, and I don’t think that’s ever a waste of time. How it all comes together, I don’t know.

SD: Why isn’t the conference committee meeting on last year’s omnibus tax bill?

Davids: Targets. And there’s other business moving forward that is taking up members’ time. I was thinking all summer and fall that we’d get a conference committee on day one, and we are going to fly. But I wasn’t thinking through the whole thing. I don’t want to go to conference until we have some numbers; I don’t see the point. The House would gavel the meeting in first, and I don’t want to do that until I have numbers. I understand that leadership has their own set of issues, and they have many moving parts that they have to look at. I will get my numbers in due time. I really want to get this thing done. It will be go big or go home.

SD: I sense some frustration that you aren’t sure where all this is going to go.

Davids: I’m trying to be patient – it’s not one of my strong suits. I pray, ‘Dear Lord, give me patience and give it to me now.’ But it will all work out in its own time; but yes, I’d really like some numbers [a spending target from leadership].

Last year’s tax bill would provide nearly $2 billion in tax relief – that’s when there was an equal amount projected for a state surplus. But now, with the surplus projected at $900 million, a final tax bill would most likely be significantly smaller. There are also several tax proposals from local governments in last year’s bill that would allow them to move forward with some projects. And then there are the tax proposals that could affect the future of a proposed Major League Soccer stadium in St. Paul.

Davids: My job now is to manage expectations. With a $900 million surplus, and that’s to go for taxes and transportation – well, the scenario has changed dramatically since last year. I say we can still do some very, very good things for Minnesotans. A lot of things are scalable. We can still do the same things but not to the level that we could have last year.

SD: The proposed St. Paul soccer stadium relies on some tax credits laid out in HF3806 that is sitting in your committee. Where is that going?

Davids: I don’t know, that decision is being made at a higher pay grade than mine. There are tax provisions – it has had its proper hearings. Does it go off by itself? Do we roll it into a conference report somehow? I don’t know that for sure. We’re very creative.

He said that he and the Senate Taxes Committee Chair Sen. Rod Skoe (DFL-Clearbrook) have been communicating about the future of last year’s omnibus tax bill.

Davids: We’ve been talking about general basic concepts, but we can’t get down to putting something together without numbers. I’ve gone through different scenarios of what I’d like to see in the conference report.

SD: Are transportation, taxes and bonding intertwined as end-of-session negotiations move forward?

Davids: I can’t see a scenario where you do one and not the other two. I think you do all three – you go big or go home and don’t stop believin’.

SD: When May 23, the constitutional end of session, comes around, what will be done?

Davids: We are going to have a good tax package benefitting the middle class, with provisions from the House, Senate and the governor; I really think the least of anybody’s concerns is the tax bill, in that we can do that; I think bonding is very doable. The big thing is transportation; everybody wants to do more in transportation. Whatever the number is, we will get the most bang for the buck.

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