Tax proposal differences

The House, Senate and governor can agree on one thing when it comes to taxes — downloadable ringtones should not be taxed. “We are in complete agreement that there is one thing we can agree on,” said Senate Taxes Chairwoman Julianne Ortman (R-Chanhassen). The provision to bring the state in line with the national Streamlined Sales Tax Agreement is a small piece of the tax provisions that the House and Senate need to agree on before the bill HF42*/ SF27 can move forward.

The conferees got their first official look at the each other’s proposals April 14. The House proposes to reduce the amount of tax revenue available by $330.7 million in the 2012-2013 biennium, while the Senate figure is around $154.8 million.

This difference could pose a problem for smooth negotiation going forward, said Rep. Greg Davids (R-Preston), who chairs the House Taxes Committee. However, he expects quick agreement on provisions that have little or no cost that are contained in the bill.

Major differences include a provision by the House to reduce income tax rates for lower and middle brackets at a cost of $221 million in fiscal years 2012-2013. The Senate does not support the provision. Local Government Aid proposals differ as well, with the House proposing a phase-out of aid to cities of the first class, which is not among the Senate’s priorities.

Both the House and Senate support local government redesign initiatives that would have a cost to the General Fund.

Overall cost savings from all tax aids and credit proposals for the upcoming biennium are $877 million in the House and

$729 million in the Senate.

Davids said the committee will most likely begin meeting in earnest April 26. Besides conferees, also seated at the table were the governor’s negotiating team of Commissioner of Revenue Myron Frans and Assistant Commissioner Matt Massman.