By Sam Walseth
Six months ago it was cold outside and a new legislature was about to be sworn in. That new legislature would be lead by a majority of DFL legislators in both bodies. They set out to work with Governor Dayton to accomplish some common agenda items like balancing the budget without “gimmicks” and to raise the revenue needed to pay for investments in areas like education and health care.
They had differing ideas about how to accomplish these goals. Some wanted to repay all of the school payment shifts; some wanted broad based tax reform. Some wanted the wealthy to pay more (well, all the DFLers wanted that to some degree) and some wanted sin taxes to pick up more of the tab.
In the last week, those competing ideas came to a head in the various budget and tax conference committees. In the last 72 hours, the details of the agreed upon provisions were flushed out. Now we’re beginning to digest the particular pieces of the education and tax bills to better understand their implications for school budgets and policy. Check out the highlights of the K-12 Omnibus Bill for funding, taxes and policies.
The old-timer lobbyists like to remind people that in the end, governors are in charge and get most of what they want. Governor Dayton wanted a two percentage point income tax increase on the top 2 percent of Minnesota’s earners. He got it despite the House and Senate taking different approaches to income tax increases.
The Governor wanted to close corporate tax loopholes and make other corporate tax changes to bring in additional revenue. He got it.
The Governor wanted to raise tobacco taxes to raise revenue and create an economic barrier for the next generation of kids to start smoking. He got it.
Initially, the Governor wanted major tax code reform and to expand the sales tax to business-to-business purchases. After huge blow-back from the state’s business community, he dropped that plan and refocused on the above mentioned items. This also meant dropping about $1.5 billion in property tax rebates.
Wins for Senate & House
The Senate DFL wanted some sales tax reform and in the end they were able to get a few pieces of that puzzle. The Senate DFL wanted property tax relief and they got about $400 million in relief that will go to homeowners, renters and restructure the financial relationship between the state and local governments. Cities and Counties will no longer pay sales taxes to the state and local government aid was increased by $80 million. School levies will be reduced by $60 million with new referendum equalization.
The House DFL position of repaying all of the school shifts was scaled back, but they got the major piece of it. The final agreement will take the estimated $295 million on the bottom line for the close of the current biennium and repay as much of the remaining school payment (about $260 million) and the property tax recognition shift (about $560 million) by September 30. Current law will put any additional forecasted surplus dollars shown in the November and February towards repayment of these balances.
The House DFL wanted more state aid for the K-12 classroom and they got it. A hard fought battle to get 2&2 on the formula resulted in 1.5&1.5 going on the formula. School officials have them to thank for this money going into the classroom.
As of Monday morning, the E-12 omnibus bill (HF 630) sits on Governor Dayton’s desk awaiting his anticipated signature. The tax bill (HF 677) is still making its way there. An anti-bullying bill (HF 826) will likely make it to Dayton’s desk in the final hours of session.
At midnight Monday, they all head home to tell their constituents their version of the story of how it all went down. My version? Not too shabby of a session from the perspective of a public school advocate.