Summer storms are nothing new to Minnesota, but the costly damage left in the wake of them has started a new trend in St. Paul. Governor Dayton is again considering calling the legislature into a one day special session on Monday, Sept. 9 to appropriate several million dollars to 18 counties effected by severe rain and wind storms in June.
Tradition has it that legislative leaders agree in advance with the Governor on the parameters of the special session. The agreement usually includes a signed promise to keep the special session to one day and limit the votes taken in the legislature to the specific issue that brought them into the session.
The hang up this time around is that Republican leaders are pushing the Governor to expand the agenda of the special session to include a repeal of three new business-to-business taxes that were passed into law last May. Those “B2B” taxes include a sales tax on labor service charges for repair and maintenance of business equipment; a sales tax on storage and warehousing services of business-related goods; and a sales tax on the purchases of telecommunication equipment by telecom providers.
Together, the three new B2B taxes are projected to raise almost $315 million in the new biennium that began on July 1. That represents about 15 percent of the new revenues generated in the tax bill.
Before last week, DFL leaders were urging the Governor to limit the special session to storm clean up only and to leave the tax debate to next year’s regular session. That seemed to be the game plan until the Governor Dayton appeared at Farmfest and told the crowd he supports an immediate repeal of a specific portion of the equipment and repair tax that impacts the agricultural sector. The cost of this specific repeal is estimated at $29 million for the current biennium.
Dayton further complicated the situation by telling the crowd that he doesn’t like the warehousing services tax either and would like to see that repealed next year. GOP leaders pounced on the Governor’s comments and are now pushing for a total repeal of these two taxes during the proposed special session arguing that if they aren’t good policy today, then why way until next year.
The ink is hardly dry on the DFL’s new tax and budget plan and undoing portions of it at this point is not what DFL leaders want to be dealing with right now. The last thing they want to do is complicate the 2014 regular session, which is the last stop for many of them before the general election in November 2014.
Their primary concern is that undoing new tax revenue before formal budget forecasts are complete could leave them in a position of having a deficit next year in a budget they touted as being truly balanced for the first time in many years. That would force them to vote for either another round of new tax increases, spending cuts or a combination of both.
Their preference, obviously, is to avoid all of that mess and instead focus on a bonding bill next year. Fueling DFL concerns about lost revenue is a July revenue snapshot that shows projected revenues down 2.2 percent.
The next formal budget forecast is due in early December.
Agreement This Week
As for the special session on September 9, the Governor is meeting with GOP leaders this week to urge them to sign an agreement limiting the special session to storm relief and farm equipment repairs. DFL leaders have agreed to the limited scope. If GOP leaders don’t agree then Dayton won’t call them in at all.