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Dayton warns that tax, budget deal not done

ST. PAUL -- State lawmakers appear ready to cut Minnesotans' taxes nearly $260 million before they leave for the year Monday, but Gov. Mark Dayton said he will veto the plan if he does not get provisions he wants in a spending bill.

ST. PAUL -- State lawmakers appear ready to cut Minnesotans' taxes nearly $260 million before they leave for the year Monday, but Gov. Mark Dayton said he will veto the plan if he does not get provisions he wants in a spending bill.

Legislative leaders announced the tax relief plan late Friday afternoon, perhaps signaling the start of the end of a legislative stalemate that has gone on for days.

The tax agreement would provide $258 million of tax cuts in the next year. It also calls for $544 million of cuts in 2018-2019. Lawmakers can change that next year, but Senate Tax Chairman Rod Skoe, DFL-Clearbrook, said that the public will expect tax cuts they get in the next year to be permanent. 

The agreement also includes a $950,000 tax break for potential redevelopment of the Duluth Central High School site.

A vote is to come before midnight Sunday, the last day lawmakers can pass bills this year.

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Tax provisions include a student loan tax credit, an expansion of the child care tax credit, tax deductions for families contributing to college savings plans and an expansion of tax credits for veterans.

Other provisions in the plan include giving farmland owners a 40 percent property tax credit on some school levies and eliminating taxes on the first $100,000 of a business' property value.

Skoe said that small, family businesses will get significant benefits, such as the property tax change.

The tax bill also increases state aid to cities, counties and townships.

Dayton said he can accept the tax bill, but only if a budget bill that had not been settled Friday night includes money for racial economic disparities, expanding high-speed Internet broadband service and a $25 million boost for pre-kindergarten education.

"I have a say in this," Dayton declared.

Besides having his priorities in the budget bill, which tweaks a $42 billion, two-year budget passed last year, Dayton said there is at least one provision being considered for the bill that would force his veto: a proposal to provide a tuition tax credit for students to attend private schools. He said that while it was being sold as a way to help the poor, the aid would be available to families making up to $90,000 a year.

In talking to reporters shortly after meeting with legislative leaders, Dayton said: "I told them I think it is time to stop these maneuverings and get down to final decisions."

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If lawmakers do not finish their work by midnight Sunday, as the state Constitution requires, Dayton said that he has no plans to call a special legislative session. "If they haven't gotten their work done, they haven't gotten their work done."

While House and Senate negotiators are expected to approve the tax plan Saturday morning, with full House and Senate votes coming later, other issues are less certain.

Negotiators have worked on the budget bill for days, and legislative leaders say they are close to a deal with talks continuing late Friday.

Public works funding negotiators gathered in public twice Friday, but did little other than introduce themselves to one another.

Senate bonding Chairman LeRoy Stumpf, DFL-Plummer, said at mid-afternoon that it would be 36 hours before any deal could be reached. He blamed House Republicans' refusal to compromise.

Several sources said that in private public works negotiators were looking at a $950 million bill, financed by the state selling bonds. But legislative leaders had not blessed that number.

Nothing new was evident in transportation funding, one of the major issues Dayton and legislative leaders said would happen this session. As it has been for more than a year, the major problem was that Republicans do not want to fund transit projects such as a light rail train in the southwestern Twin Cities while Democrats insist transit be part of the package.

While legislative leaders were negotiating, the Minnesota House passed a number of bills, including approving labor contracts for state workers and moving to a presidential primary.

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Beginning in March 2020, Minnesota would use a primary rather than a caucus to pick presidential nominees. Caucuses would still be used to pick candidates for other races.

The House approved 10 state labor contracts, but not before arguing over modifications to union rules in one of the bills. The changes included new regulations for how union dues are used for political purposes and make it easier for the public to attend bargaining sessions.

DFLers called the changes a "poison pill" that likely result in a veto by Dayton, but he said he was not familiar with the provision.

“We do not need Wisconsin-style politics and union busting in Minnesota,” said Debra Hilstrom, DFL-Brooklyn Center.

Minnesota looks at tax breaks

Below are a few tax cuts provided in a Minnesota legislative agreement that is expected to pass this weekend.

-- $9.8 million: Child and dependent care tax credits

-- $36.1 million: Student loan credits

-- $48.8 million: Expansion of working family credit

-- $27.4 million: Changes in state tax law to conform with new federal law

-- $4.5 million: Expand military veteran credits

-- $2.3 million: Tax break for new northeast Minnesota siding maker

-- $950,000: Tax break for Duluth Central High School site redevelopment

-- $31 million: Eliminate property taxes on first $100,000 of a business' property

-- $24.7 million: Tax breaks for areas near North Dakota and South Dakota

-- $90 million: Reduce by 40 percent some school levies assessed to farmland

The bill also increases some aid to local governments:

-- $20 million: To cities

-- $20 million: To townships

-- $10 million: To counties

-- $20 million: To counties to implement buffer law

St. Paul Pioneer Press reporter Christopher Magan contributed to this story. The Pioneer Press is a Forum News Service media partner.

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