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Capitol View®
Tim Pugmire

Agreement at Capitol on another round of tax cuts

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House and Senate negotiators have reached a bipartisan agreement on a bill to provide $103 million in tax cuts, including property tax reductions for farmers, homeowners and renters.

It’s the second tax bill of the session. The earlier bill already signed into law cut taxes by $447 million, largely through federal income tax conformity and the repeal of three business sales taxes.

The DFL tax chairs in the House and Senate praised the conference report as a good balance.

Rep. Greg Davids, R-Preston, also likes the bill.

“You’re going to see property tax relief. You’re going to see ag property tax relief. You’re going to see local option sales taxes allowed. You’re going to see TIF districts allowed, very important for economic development," Davids said. "So overall, I think we put together a very reasonable tax bill, and anytime we can get more of the people’s money back to the people, you’re talking my language.”

DFL Gov. Mark Dayton said he plans to sign the bill.

“I’m disappointed that the child and dependent care tax credit for working families is not part of the bill," Dayton said. "But overall, the two bills that the Legislature passed have been over $500 million of tax cuts for middle class Minnesotans and their families, and I think that’s a very good job.”

Dayton said farmers have been particularly hard hit by property tax increases, and it’s appropriate that they’ll be getting some relief.

Lawmakers aren’t expected to vote on the bill until next week.

Here are some specifics from House Research:

• Farmers: This provision builds off the effort to restore the Homestead Credit by enhancing the market value credit for homesteaded farms. The result is an immediate $17 million in property tax relief to more than 90,000 homesteaded farms. An average family farmer in Minnesota will see $410 in property tax relief – an increase of about $200.

• Homeowners: A one-time increase for all Homestead Credit Refunds paid in 2014. Each and every homeowner receiving a refund will see a 3 percent increase, providing an additional $12.1 million in property tax relief to 500,000 Minnesota homeowners. The average homeowner will see a refund of $837 for 2014. This comes on top of the $133 million in direct property tax relief passed in 2013 for homeowners and renters.

• Renters: A one-time increase for all Renters’ Credit Refunds paid in 2014. Each and every renter receiving a refund will see a 6 percent increase, providing an additional $12.5 million in property tax relief to 350,000 Minnesota renters. The average renter will see a refund of $643.This comes on top of the $133 million in direct property tax relief passed in 2013 for homeowners and renters.

In addition to property tax relief, the tax bill includes targeted income and sales tax relief:

• Aquatic Invasive Species Prevention Aid: $4.5 million this year and $10 million a year thereafter will be distributed to 83 of Minnesota's 87 counties with public-access boat landings, to help manage county-based AIS-control efforts.

• Volunteer first-responders: Fourteen counties will participate in a pilot project aimed at improving retention and recruitment of these crucial positions. The pilot includes a $500 stipend to be paid to each eligible first-responder in participating counties.

• National Guard members: Military income paid to National Guard members in Active Guard/Reserve status now will be treated like other forms of active-duty military pay and eligible to be subtracted from income taxes.

• Reading-tutor expenses: Parents or guardians of students struggling to learn how to read will be eligible for a new education credit equal to 75 percent of tutoring expenses, up to $2,000.

• Businesses will be relieved of significant cash-flow pressure through a reduction or, in some cases, complete elimination of the current liability to submit June sales taxes about six weeks earlier than normal.