The 2013 legislative session came to a close today with the passage of the final conference committee reports. The most controversial and time consuming of the remaining budget bills was the final agreement on the tax bill. The House and Senate DFL, along with Governor Dayton all proposed a variety of new tax increases and policy and it required significant negotiations to work out all the differences.
In the end, the bill came back from conference with significant changes from the original proposal put forward by the Senate DFL. The proposal to increase the sales tax to clothing, services, and some good was dropped from the bill, as was a proposed new tax rate for families making $140,000 or individuals making just over $79,000. A House proposal to increase the alcohol tax was also not included in the final bill.
The major tax increase provisions in the agreement are:
Sales taxes on commercial warehousing and storage, electronic and commercial equipment repair and maintenance, and telecommunications equipment by small and large businesses. Sales taxes for individuals on internet purchases, digital download like iTunes and eBooks, and television satellite services. The rate stays the same. Increase taxes by 50 percent on vehicle rentals. Increases cigarette/tobacco taxes by $408 million or $1.60/pack. Increases individual income taxes by $1.1 billion by creating a new 4th tier and increasing the rate 25 percent from 7.85 percent to 9.85 percent for married couples making at least $250,000, and individuals making at least $150,000. Increases business taxes by $424 million in FY 2014-15 through the repeal of the Foreign Royalty Deduction, and FOC tax treatment, and more. Increases estate taxes by $78 million through imposing a new gift tax and by tightening current law on exemptions for qualified farms and small businesses.
Other provisions included in the bill are:
Provisions to support the creation of the Destination Medical Center in Rochester. Governor Dayton’s Viking stadium back-up funding proposal using a “stocking fee” related to the tobacco tax increase. Upfront capital equipment exemption for businesses.
Other Budget Bills: The Transportation Omnibus Finance bill which was agreed upon by the DFL legislature and Governor Dayton includes some new fees which will impact all Minnesotans who own and operate a vehicle. This legislation will increase the drivers’ licenses transaction filing fee by $3 and expand the current wheelage tax state wide and increase it from $5 to $10 per vehicle. Vehicle title fees are also increased from $6.25 to $8.25. Removed from the bill as it left the Senate floor were an increase in the gas tax and two different proposed sales tax increases to fund transportation projects. The E-12 Education Omnibus bill was finalized and increases funding by nearly $500 million while making a variety of policy changes. Included in the final bill is an expansion of optional all day kindergarten, removal of testing requirements for students and teachers, as well the re-instatement of the General Education Levy which will impact property taxes in every class. The Higher Education Omnibus budget bill was repassed after a conference committee came to an agreement on all the remaining differences. This bill increases total funding by $250 million over current levels. The bill also free tuition at campuses in the Minnesota State Colleges and Universities system (MnSCU) and the University of Minnesota (U of M). Also included in the final agreement is the “Prosperity Act” which would give financial aid and in-state tuition to illegal, non-documented students who attend Minnesota high schools and meet other specific criteria. The Jobs, Economic Development, Commerce, and Energy Finance bill was agreed upon and contains a wide variety of provisions dealing with energy, commerce, and some economic development tools around the state. The bill includes a mandate that by 2020 at least 1.5 percent of energy from public utilities come from solar. The bill also lists a goal of 10 percent by 230. Other provisions in the final agreement include subsidies for Hollywood TV and movie companies, an extension of unemployment benefits for workers who are locked out. The Health and Human Services Omnibus bill spends total of $11.27 billion dollars which is
.5 percent less than was built into the budget forecast. In this bill, nursing homes will receive an increase of
5 percent in the first year and 3.5 percent in the second year of the biennium. Home and Community Based Service providers receive a COLA increase of 2 percent each year, which is far less than was requested. The State Government Omnibus bill was agreed to by conferees and was approved on the final day of the session. In the conference committee agreement, the bill repeals the Sunset Commission which was implemented in 2011 in a way of ensuring that state level commissions are doing what they were created to do. The bill also increases the pay for
executive branch salaries. Also included is an increase in funding for public broadcasting of $2 million for the biennium.
Other Legislation: S.F.778 which would allow a vote by some day care and personal care workers on whether they want to join a union. The bill, which has been intensely controversial, was passed earlier today by the Minnesota House, which was its final stop prior to being sent to the Governor.
Senator Michelle Fischbach encourages and appreciates constituent input and can be reached by phone at (651) 296-2084, by mail to G 15 State Office Building,