Senate passes tax bill

By T.W. Budig, ECM Capitol Reporter

The Senate passed its tax bill March 30, one promising a phase-out of the statewide business property tax, an increased standard deductions for married tax filers, tax benefits on military retirement pay, and other provisions.

“Think of it as seed money,” said Senate Tax Committee Chairwoman Julianne Ortman, R-Chanhassen, of the $100 million in immediate tax relief provided in the bill.

Rather than ailing, Ortman portrayed state government as heavy with surplus dollars.

Minnesota shouldn’t have a $1 billion “honey pot,” said Ortman, referring to state budget reserves.

But Democratic Gov. Mark Dayton in a letter to Ortman said the tax provisions in her bill would create a loss of $193 million in revenue to the state in the upcoming two-year budget cycle — Ortman speaks of reprioritizing the state budget.

Dayton indicated he shares Ortman’s desire for property tax relief.

But he believes her approach is too narrow.

“To me, it’s not a fair way to proceed,” he said, speaking to reporters earlier today.

Besides the phase-out of the statewide property tax and alignment with the federal marriage deduction — some 560,000 married Minnesotans will benefit to the tune of $62 million in 2012, Ortman said — the tax bill extends the sunset date of the state historic structure rehabilitation credit, increases the number of barrels of beer brewers may produce to be eligible for a tax credit, adds a phased-in, upfront exemption for capital equipment purchases for business.

It boosts individual property tax state refunds in the event of large property tax increases.

More locally, it contains tax increment (TIF) financing extensions for the cities of Bloomington and Brooklyn Park and a TIF authorization for the City of Apple Valley, under certain conditions.

It authorizes the Dakota County Community Development Agency to create a redevelopment district out of parcels of older districts.

Democrats tried a handful of times to amend the bill.

One amendment offered by Sen. Katie Sieben, DFL-Newport, sought to close perceived loopholes in state tax law relating to offshore corporate “tax havens,” directing captured tax revenue to pay off the school funding shift.

“If you’re going to vote against Senator Sieben’s amendment, I think you’ve lost touch with Minnesota,” said Senate Minority Leader Tom Bakk, DFL-Cook.

But Republicans said the provision would serve to stymie job creation.

It represented a $180 million business tax increase, said Ortman.

“This is not a good amendment,” said Sen. David Hann, R-Eden Prairie.

The amendment failed.

One Democrat, Sen. Terri Bonoff, DFL-Minnetonka, said she wrestled with the idea of supporting the tax bill.

It was like a candy store, chocked full of good things, she said.

Still, a line had to drawn in the sand in terms of state borrowing, said Bonoff.

“It’s my hope by the end of the session I’ll be a ‘Yes’ vote on the tax bill,” she said.

Bakk warned against campaign talk about $1 billion state surplus — it’s not true, he said.

Projected state budget deficits loom ahead, Bakk said.

Bakk toyed with the idea “if we’re all going to drink that Kool-Aid” of offering an amendment directing the budget reserves be rebated — $323 per taxpayer, he said — like the “Jesse” refund checks mailed to taxpayers during the Ventura Administration.

But Bakk was afraid the amendment would pass, he said.

The tax bill was drawn from the whole Senate, Ortman said, and senators should support it.

“The bill does that,” she said of creating jobs.

“Thousand of jobs,” she said.

It passed on a 34 to 26 vote.

Dayton credited Ortman and the Republican Senate with not attempting to reduce the renter property tax credit, something the Republican House in its tax bill did to help pay for tax cuts.

Ortman spoke of meeting with administration officials and working out a tax bill that served to create jobs.