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Legislative News and Views - Rep. Jerry Hertaus (R)

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Infrastructure investments will aid the growth of our economy

Thursday, June 07, 2018

 

By Rep. Jerry Hertaus

Gov. Mark Dayton signed into law a significant investment in infrastructure projects all across the state, which will aid in the growth and expansion of our state’s economy. Unfortunately, the governor could have done much more by supporting the bipartisan bills delivered to his desk.

With the state fully funded through last year’s biennial budget, some of the top priorities in the 2018 session were to pass a “conformity” tax bill this year to lower state income taxes and simplify tax returns on the heels of sweeping federal changes, improve safety in our schools, and provide pension reform to stabilize this state liability.

It is unfortunate the governor vetoed the tax bill (twice) because doing so will have damaging consequences to a large number of Minnesotans. When he vetoed the first tax bill, he demanded the Legislature provide “emergency” school funding to help shore up financially strapped districts. The Legislature’s second proposal was a package which not only met the governor’s demand for emergency funding, but doubled the governor’s funding request for education. We also eliminated 70 percent of the 113 objections the governor expressed in vetoing the first tax bill – including honoring his strongest demands – yet the bill, if enacted, would have protected 99.8 percent of Minnesotans from being negatively impacted by those changes at the federal level, which increases the amount of income subject to state income taxes.

Gov. Dayton then vetoed the second tax bill, which included his demands. In doing so, his second veto action seemed to indicate that the governor’s own school funding “emergency” apparently was no emergency at all and it made the whole negotiation process appear hollow on his end. Claims the governor and his administration have made suggesting that our tax bill contained big tax breaks for corporations are and continue to be patently false. In net, the tax bill would have modestly increased taxes on corporations to the benefit of all taxpayers by lowering individual income tax rates.

In 2013, the Dayton Administration claimed the need to pass higher taxes to help manage shortfalls caused by the Great Recession and now it is clear revenue is not any longer the issue. As of May 10, the state has $1.6 billion in the budget reserve account, $300 million in the cash reserve account and revenues of $825 million above this biennium’s forecast during the first 10 months of this budget cycle. This totals more than $2.7 billion of state taxpayers’ treasure sitting in reserves.

It is time to repeal taxes to pre-recession levels. We started that process in 2017 when the Legislature passed and the governor enacted (unwillingly) the largest tax cut in nearly two decades, including a reduction on Social Security taxes for seniors. Small businesses also saw property tax relief when last year we eliminated the state property tax on the first $100,000 of value. The 2018 tax provisions would have helped even more had the governor not vetoed this year’s tax bill.

The governor did sign an important pension bill, which is a good first step in addressing $3.8 billion of our state’s unfunded pension liability. It is important to note, however, this is just the tip of the iceberg on this subject and much more is needed in order to address what is, by some estimates, a $16 billion overall pension liability that is still remaining unfunded after passage of this bill. A promise made is a promise kept and it is important for the state to do the honorable thing in regard to honoring pensions. That said, future reforms for enrollees should be advanced as more and more Baby Boomers retire, leaving a smaller share of workers to support a greater percentage of the population receiving pensions as an increasing life expectancy rate increases the duration for which payments are made to pensioners.

Approximately 511,000 state workers will see a permanent benefit through his signature on this bill, something he highlighted to the media in taking credit for enactment. I just wish the governor would have been equally as thoughtful and deliberate on the taxes/school funding bill before vetoing it because it, too, would have protected the financial security of 5.5 million Minnesotans – including those same pensioners – while also helping an untold number of children in our schools.

Roads and bridges are another priority in the Legislature and last year a bill was enacted delivering the largest investment in roads and bridges in state history without a gas tax increase. A bill with $825 million in general obligation bonding, along with other funding mechanisms adding up to $1.5 billion total was enacted by passage of the bonding bill this year. The package provides $541 million for roads and bridges, with $416 million of that amount coming from trunk highway bonds. Local projects in Loretto, Medina and Wayzata are among those funded in the bill. The preponderance of funds appropriated in the bonding bill is dedicated to public infrastructure improvements.

We must acknowledge the fact that 95 percent of citizens use roads and bridges to get to and from work and to conduct other daily commerce. Of the 5 percent who use mass transit, of that, 85 percent of transit users travel on busses – which also rely on roads and bridges. It makes sense to prioritize roads and bridges in funding priorities since 98.5 percent of people use roads and bridges in their daily travels over the mere 1.5 percent riding heavily subsidized rail projects.

It is an honor to continue representing the people of District 33A and I look forward to continuing discussions with constituents during these months the Legislature is not in session. It will be interesting to see what dynamics are in play for the 2019 session.

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