ST. PAUL, MN – The Minnesota House of Representatives passed a comprehensive tax omnibus bill last night by a vote of 69-64.
The bill ends the cycle of deficits, shifts, and gimmicks seen over the past decade and provides for a structurally balanced budget into the future. It also pays back the remaining $854 million school shift balance caused by a Republican-controlled Legislature’s decision to enact record borrowing from schools in 2011.
“The House DFL tax bill makes good on our promise to Minnesotans to pay back the school shift in full,” said Rep. Peter Fischer (DFL—Maplewood). “This was a top priority for me and I’m glad our plan gets the job done.”
The omnibus tax bill also funds historic investments in education at every level, provides middle class property tax relief, and increases local government and county program aid.
In addition, the bill includes a provision authored by Rep. Fischer that allows businesses to receive a sales tax exemption on capital equipment purchases at the time of purchase instead of having to file for a refund later in the year.
Capital equipment used in manufacturing, fabricating, mining, refining and data retrieval has been exempt from the sales tax since 1997. However, current law requires that the buyer pay the tax at the time of purchase and then apply for a refund. Rep. Fischer’s bill streamlines this overly-complicated process by allowing businesses to immediately receive that exemption. The provision has strong support from the White Bear Chamber of Commerce.
“This is a business-friendly measure that cuts red tape for companies by streamlining the sales tax exemption on capital purchases,” said Rep. Fischer. “It’s going to get rid of a lot of headaches for business owners who have had to navigate an unnecessarily complicated process over the years.”
The House DFL omnibus tax bill provides $270 million in direct middle class property tax relief to nearly one million Minnesotans through the Homestead Credit Refund, retooled renters’ credit and increased funds to cities and counties. Under the new Homestead Credit Refund, the average homeowner will see an increase of $219. The new proposal also enhances the renter’s credit by increasing the maximum refund allowed for renters.
Cities and counties will see a significant increase in local government and county program aid under this bill, which includes the largest LGA reform in a decade. The new LGA formula provides $110 million in need-based aid to cities and counties after years of cuts to vital services like police officers and firefighters. The city of Maplewood will receive $1,156,867 in LGA over the next two years and White Bear Lake will receive $3,063,430.
“The LGA increases in this bill will make sure our cities and towns can continue providing high-quality services that Minnesotans depend on every day,” said Rep. Fischer. “It will also reduce the property tax burden on middle class families and small businesses by reducing the need for local levies and increases. That means more money in people’s pockets to buy gas, groceries, and save for retirement. It’s going to lead to greater economic security for every Minnesotan.”
There are three main revenue components to the House Omnibus Tax bill used to balance the budget and fund state priorities. These components increase tax fairness by asking the wealthiest 1.1% of Minnesotans to pay their fair share, close corporate loopholes and recover state costs from tobacco and alcohol consumption.
The bill pays back the remaining $854 million school shift balance through a temporary income tax surcharge on the wealthiest 0.5% of Minnesotans, or those with taxable income greater than $500,000 per joint filers.
Differences between the House and Senate tax bills will be ironed out in a conference committee before each chamber holds a final vote.