[Note: this blog entry refers to the conference committee report put together by the tax conference committee on May 12. For information on the final tax bill passed by the legislature on May 18, see Legislature and Governor reach compromise on tax bill.]
Last night – or I guess technically this morning – the Tax Conference Committee wrapped up their bill so that it can go to the floor (HF 3149).
Before giving a quick overview of the major pieces in the bill, I want to mention what this bill represents. The legislature has two main choices in putting a bill together:
- They can work towards a negotiated compromise with the Governor and develop a bill he ultimately can sign.
- If they think they aren’t going to meet a negotiated compromise with the Governor, then they can pass a bill that more clearly represents their own priorities, but know that it will be vetoed.
At this point in the session, the legislature and Governor have not reached agreement, but they also haven’t given up on getting there. The bill as it stands today is between these two choices. It appears that the legislature is taking a pause at this point and will pass the bill as it stands right now so that they will indeed have a final product if we reach the end of the session without a negotiated agreement. But there will continue to be ongoing negotiations, and if the Governor and legislature are able to come to agreement, we’ll see another version of this bill with the changes needed to achieve that agreement.
So here’s what appears to be some of the major components of the bill at this point:
- The net impact of the bill is $138 million in additional revenues in FY 2008-09 and just under $100 million in FY 2010-11.
- The House’s Homestead Credit State Refund is in the bill, as well as additional funding recommended by the Minnesota Budget Project to help low-income households apply for the property tax refund for which they are eligible.
- There is a one-year levy limit that would achieve $20 million in savings – in other words, it would prevent $20 million in expected property tax increases from happening. The levy limit would only go into effect if the increased funding in aids to local governments go into effect as well. The bill provides a $55 million increase in aids to cities starting in FY 2010, $27 million more to counties, and $4 million to townships.
- The bill raises $109 million in FY 2008-09 and $175 million in FY 2010-11 through modifying tax treatment of Foreign Operating Corporations and Foreign Royalty subtractions. $10 million in FY 2008-09 and $83 million in FY 2010-11 will be raised through changes to the state property tax (which is paid to the state by businesses and cabins).
- Increasing the June Accelerated Sales tax to 90%.
- In terms of economic development, there is a package of incentives for the Mall of America, but the bill would not allow any new business subsidy agreements under JOBZ starting May 1, 2008.
- Nonprofit items: the moratorium on implementation of the Rainbow case is in the bill, as well as extending the charitable deduction for non-itemizers to taxpayers subject to the AMT.
- There is funding for the Voss database.
– Nan Madden