With fewer than four days left in the legislative session, House and Senate leaders are looking to put together a new tax conformity bill following Gov. Mark Dayton’s Thursday morning veto of the tax omnibus bill.
The rejected bill, HF4385, cleared both chambers earlier this week and would have aligned Minnesota’s tax code with the recently enacted Tax Cut and Jobs Act of 2017. If the Legislature fails to address federal tax conformity this session, Minnesota faces a $60 million increase in state income taxes for more than 300,000 families and a labyrinthine filing process next year.
“This is a really important issue,” said House Speaker Kurt Daudt (R-Crown) Thursday morning during a press briefing. “Our bill actually gave tax relief to low- and middle-income Minnesotans in the process of tax conformity. This was as reasonable a bill as you could’ve found.”
Earlier this week, Dayton issued the Legislature an ultimatum: provide $138 million in emergency education funding or the tax bill gets nixed. Without emergency funding, 59 Minnesota schools will face immediate budget deficits in the coming year, which could result in teacher layoffs and cuts to school programs.
In his veto letter, Dayton suggested emergency education funding could be derived by removing corporate tax cuts and provisions that benefit multi-national corporations and wealthy Minnesotans.
“I am vetoing this bill because of its misguided priorities for corporations and the wealthy over the education of our children,” Dayton wrote. “Yet, I remain hopeful that we can come to an agreement in the final days of the session to fund emergency school aid and provide tax cuts that better serve our Minnesota families.”
Daudt, however, blames Dayton for not coming to the bargaining table earlier.
“We’re on day four now this week where the governor has literally said he will not meet with us,” Daudt said. “We cannot land this session smoothly and find compromise necessary to pass these bills if the governor won’t engage the Legislature and actually just sit down with us.”
Senate Majority Leader Paul Gazelka (R-Nisswa) and Daudt invited the governor to an afternoon meeting Thursday to discuss some of this session’s most important, and unresolved, issues.