By Rep. Paul Anderson
It wasn’t the ending of our legislative session that I would have chosen. Gov. Dayton vetoed two major bills, one that pertained to supplemental spending and the other regarding taxes. The tax bill, especially, would have been good for Minnesota, and its veto will cause higher taxes for many of us next year, along with additional challenges when filing our returns.
The reason is because of changes made at the federal level in a major piece of legislation signed into law in Washington, D.C., last year. With the governor’s veto, we will not be conforming to any of the federal changes, with the result being complications in dealing with two sets of tax instructions that don’t match up very well.
We were warned about this possible situation early in the session, and the goal was to come up with a bill addressing it. We did that, with not only one tax bill being sent to the governor, but two. After receiving the first, he said he wouldn’t sign tax reform until school districts received what he called “emergency funding.” Well, the second tax bill contained that funding, $50 million in new money and additional dollars in the form of expanded uses for other categories of funding.
By not signing that bill, I think the people of Minnesota were hurt. On balance and through compromise, the bill did some very good things, including full conformity with federal Section 179 depreciation and the actual lowering of two tax brackets. Utilizing just these provisions alone, most residents would have seen their state tax bill decrease.
Along with his vetoes, the governor announced that there would be no special session. Then, he left the door open slightly by saying he might call a “lame duck” session after the November election. But, even if we came back then to work on another tax bill, it would be difficult to update software and other provisions in time for the next tax season. As one member said, without this conformity bill, the tax manual for next year could be nearly as thick as a Minneapolis phone book.
Also part of the vetoed tax bill was an extension of the fire remediation grant for the city of Melrose. Language in the bill would have provided a one-year extension of the nearly $1.4 million grant, along with a sales tax exemption for materials used in the reconstruction of the site in downtown Melrose. This will need to be addressed in a possible special session or immediately after the Legislature returns next January.
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On the positive side, there were two major bills that actually got signed. One was the pension bill, which made needed changes in several state pensions to increase their funding levels. The legislation removes early retirement subsidies and reforms post-retirement COLAs. Some of the pension plans affected were the MSRS General, Correctional, and State Patrol, along with PERA Police and Fire and TRA. In nearly all cases, the contribution levels of both employee and employer are increased over time.
It was also good to see the bonding bill signed into law. It contained $825 million in general obligation bonds, along with additional funding from the Environment and Natural Resources Trust Fund, better known as LCCMR. That’s where the Alexandria Lakes Area Sanitary District will receive a $600,000 grant to work on phosphorus reduction in lakes Winona and Agnes. If this research proves successful, it could save the district from a $14 million upgrade to their treatment plant to reach those reduction levels.
Also part of the bonding bill was an increase in truck highway bonding. Among the projects approved for funding was a $10.5 million rail grade separation project in Pope County. The location is north of Glenwood at the intersection of state highways 29 and 55 and the main line of the Canadian Pacific railroad. In talking with staff at the MnDOT district office in Detroit Lakes, the first step in the construction of an overpass is to appoint a project manager and then work on design and engineering. A preliminary estimate would have bidding for the project done in the fall of 2020 with construction to start sometime after that.
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