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Legislative News and Views - Rep. Ben Lien (DFL)

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Legislative Update - January 20, 2015

Tuesday, January 20, 2015

Greetings from the House Floor,

 

On Thursday, we passed our first bill off the House floor for the session.  It was HF 6, authored by Tax Committee chair Rep. Greg Davids, and pertains to federal conformity of Minnesota’s tax code and some fixes to legislation passed last session for the Mayo Clinic’s Destination Medical Center (DMC).  I will highlight both aspects of the bill beginning with tax conformity.

 

The federal government recently passed some changes to the federal tax code and Minnesota will be in compliance with these changes once Gov. Dayton signs HF 6.  The governor requested the legislature to pass this bill before Jan. 20 so the state would be ready to process tax returns for tax year 2014.  Some of the changes in tax code are related to:

·         higher education tuition deduction

·         educator classroom expenses deduction

·         mortgage insurance premium deduction

·         exclusions for discharges of indebtedness on principal residence from gross income

·         exclusions from adjusted gross income for direct transfers of IRAs to charities

·         increases in adjusted gross income on the limit of qualified conservation easements that may be claimed as charitable contributions

·         preferential treatment to dividends of regulated investment companies

·         more generous rules for leasehold and restaurant improvements, motorsports entertainment complexes and mine safety equipment 

·         100% exclusion for the gain on sale of certain qualified small business stock

·         reduction in the minimum holding period to avoid the tax on built-in gains on sales of assets of S corporations that converted from C corporations from ten to five years

·         energy-efficient commercial building deduction

·         tax treatment for a new type of tax-exempt savings accounts for disabled persons (ABLE accounts)

·         provisions related to certain employees of airlines that went bankrupt

 

Mayo Clinic’s DMC is the largest economic development project in state history.  It was established in the 2013 Omnibus tax bill as a partnership between the state, City of Rochester, Olmstead County and Mayo Clinic.  The state will contribute $327 million for public infrastructure and public transit over 27 years after the city, county and private investors make required investments.  In August and September of last year the Attorney General’s office and DEED discovered a potential problem with the manner in which private investment will be calculated in determining whether thresholds have been met to trigger state dollars.  The Attorney General’s office and DEED felt the 2013 legislative language indicates only private investments made in the preceding year should be counted.  The view held by the City of Rochester, Mayo Clinic and DMC bill authors is that all private investments made up to that point should be considered.  The language in HF 6 makes the clarification that all private dollars invested up to that point will be considered qualifying private investments toward DMC, and not just investments made in only the preceding year.  A second fix to DMC legislation in HF 6 includes clarification that costs incurred by the City of Rochester for preparing and modifying the development plan for DMC will count toward the city’s investment. 

 

Committee hearings started last week with overviews by different state agencies, departments and non-partisan House research staff.  In the Greater Minnesota Economic and Workforce Development Committee, we heard from the Minnesota Public Facilities Authority and the Dept. of Labor and Industry as well as received a demographic overview from the Center for Rural Policy and Development.  In the Higher Education Committee, we heard from the Office of Higher Education on the functions of the office and recent trends in higher education in Minnesota.  In the Property Tax and Local Government Division, we heard from non-partisan staff on the general concepts, programs and laws of property and local taxes in Minnesota.  On Thursday evening this week, I will attend a listening session held by the division in Stewartville, Minnesota.  This was put together by the chair of the division, Rep. Steve Drazkowski.  Chair Drazkowski explained that he plans to hold several listening session this year for the division. 

 

I also anticipate over the next week or so that committees will move from the overviews to bill hearings.  We are scheduled to hear HF 1 in the Greater Minnesota Economic Development and Workforce Committee on Thursday and a couple of bills in the Property tax and Local Government Division this week.

 

 

Thank You for the Opportunity to Serve,

Ben