By Rep. Paul Anderson
Will there be a special session of the Legislature or not?
High level negotiations continue this week between Gov. Dayton and leadership of both parties, seeking agreement on the agenda for what usually is a one-day session to work on a single issue. The scope of the agenda became a sticking point earlier when the governor surprised many by announcing at Farmfest that he would consider the repeal of a new sales tax on farm repairs. Previously, the special session had only one item, that being the allocation of state funds to match federal disaster money for 18 counties in Minnesota (including all three in District 12B) that were declared disaster areas due to severe storms in June.
The state’s share of the disaster relief money is between $4 million and $5 million, while the repeal of the sales tax on the labor portion of farm repairs is projected to cost the state around $28 million. Enough of a surplus remains from the last fiscal year that ended June 30 to cover the cost of those two items. In addition, there have been calls ever since the Legislature adjourned to repeal another new tax, one that broadens the sales tax to commercial warehousing and storage.
This “business-to-business” tax would make our state uncompetitive with neighboring states and could drive companies who provide warehousing to leave Minnesota and relocate in other states such as Wisconsin. The tax is not scheduled to take effect until this April, and the governor is saying that it could be repealed next year when more is known about the new state budget. Others say the tax should be repealed immediately to give business the assurance that they can expand here in Minnesota without the threat of this new tax hanging over them.
There were two other taxes enacted last session that are also being touted for repeal. Both are taxes on business, and the cost of which would probably be passed on to consumers. They are expansions of the sales tax, with one being assessed on telecommunications equipment and the other on the repair of commercial equipment. If the farm repair tax is repealed and the tax on other commercial equipment is not, it could lead to confusion about what is taxable or not. For example, what about a truck used to haul both farm produce and other products not produced by a farmer?
I favor the repeal of all these taxes, but the special session may not be the time to do all of them. Removing all would leave a hole in the state budget too large to be covered by last year’s surplus and may necessitate further work on the budget or tax bill to fill the gap. Adding to the confusion, reports surfaced late last week that a special session may not be needed after all to cover the disaster aid because of unused funds from previous disaster allocations. We should know soon if the Legislature will be called back or not.
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It’s been a challenging year on the agriculture front. A late, cool spring was followed by a cool summer, and rainfall has been spotty throughout the area. Severe hailstorms rolled through the district two weeks ago, leaving shredded crops in the areas they hit. Now, the forecast is calling for heat to finally return for the rest of August. The heat is needed to push crops to maturity, but for the areas short of moisture, rain is needed soon or the crop will deteriorate quickly. A seed company agronomist showed us a cob of corn at the Stearns County golf outing last week and said it would take until around Oct. 10 for the field where that cob came from to reach "black layer" or maturity. The odds of reaching that date before a killing frost are questionable.
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