Legislative Update - March 6, 2014

Last week, Minnesota Management and Budget announced that the budget forecast shows a projected budget surplus of $1.23 billion for fiscal years 2014-15, a $408 million improvement over the last forecast. The forecast shows a surplus of $2.59 billion in the FY 15-16 biennium.

Just a year ago we were facing a $600 million deficit and an $800 million IOU to schools. A year later, our schools have been paid back and we have a strong surplus. We know we have more work to do, but this forecast is good news for Minnesota and shows that we’re making progress.

Middle-Class Tax Cuts & Repealing the Warehouse Tax

Today the full House is voting on legislation (HF 1777) to cut taxes for middle class families and to repeal business-to-business taxes. The $514 million tax cut bill would reduce taxes largely by conforming to federal tax changes. We passed federal conformity for the 2012 tax year and we need to do so for future years.

With a strong surplus and Minnesotans already filing returns, we shouldn’t wait to pass middle-class tax cuts through tax conformity. Nearly one million Minnesotans would receive a tax cut through this legislation.

Those tax cuts include:

·         $111 million for middle income married families by eliminating the “marriage penalty”

o   650,000 families will see an average tax decrease of $115

o   The vast majority of families claiming the standard deduction make less than $75,000

·         $36 million for low income working families by matching the state’s Working Family Credit with the federal Earned Income Tax Credit (EITC)

o   More than 50,000 working families will see an average tax decrease of $300

·         $7.2 million for homeowners that refinanced or had a short sale  

·         $3.9 million for new homeowners through deduction of mortgage insurance premiums

o   80,000 new homeowners will see an average tax cut of $60

·         $26.4 million for students and parents paying for college and students paying off loans 

·         $1.8 million for Minnesota families with dependents

o   25,000 families with household incomes below $38,570 will see a $65 tax decrease

·         $400,000 for adopting who receive adoption assistance from employers

·         $1.1 million for 60,0000 teachers with the classroom expense deduction for educators

·         $4 million for charitable contributions

·         $1.8 million for Minnesota families with dependents 

o   25,000 families with household incomes below $38,570 will see a $65 tax decrease

·         $6.7 million for businesses - to make tax filing simpler for businesses

·          (Source: Non-partisan House Research)

The House Tax bill would also repeal three business-to-business taxes (warehousing and storage services, commercial equipment repair (including farm machinery) and telecommunications equipment) that were passed as part of the 2013 budget. Last year those taxes were part of a Senate package that paid for an upfront capital sales exemption for businesses and provided property tax relief by eliminating sales taxes for cities and counties.

As many of you are aware, I'm the chief author of legislation to repeal the warehouse tax. My legislation was folded into the larger bill. I’ve been working on this with constituents, local businesses, and legislators on both sides of the aisle for months, and I’m pleased it was included in the final bill and that the House has acted quickly to provide middle-class tax relief.

E-Cigarette Legislation

My legislation regulating e-cigarettes has passed out of both the House Health and Human Services Policy Committee and House Government Operations Committee. My bill would prohibit e-cigarettes in public schools, give municipalities more control in how they choose to regulate e-cigarettes, and would provide for harsher punishments for electronic cigarette retailers who sell the products to minors, among other provisions.

We’re not proposing prohibiting adults from purchasing e-cigarettes. We just want to make sure that e-cigarettes — like regular tobacco products — aren’t getting into the hands of minors. While e-cigarettes may not have the dangerous smoke that regular cigarettes have, the vapor does contain formaldehyde and other dangerous chemicals.  

Public Integrity Legislation

This session, I’m working on legislation to require more economic disclosure from candidates for public office. The bill would require a candidate’s spouse to disclose their financial interests and require candidates working as independent contractors or consultants to list the business category they’re working in.

Minnesota is known as a state with great integrity and we need to keep it that way. The bill has continued to move through the process, passing on of the House Elections Committee last week. It now moves to the House Government Operations Committee.

Property Tax Refunds

We learned this week that property taxes are down statewide for the first time in over a decade, due in large part to direct property tax relief included in last year’s budget. That budget included $133 million in direct relief for homeowners and renters through the new Homestead Credit Refund and expanded Renter’s Credit.

I encourage you to see if you are eligible for the Homestead Credit Refund or Renter’s Credit. Some of you who may not have been eligible in the past may be eligible this year due to expanded refunds and credits. You can find more information on eligibility and how file for your property tax refund at the Department of Revenue website.

Thank you for the honor of representing you in the Minnesota House of Representatives.

Sincerely,

Laurie Halverson

State Representative

District 51B