Republicans in the Minnesota Senate want to cut the statewide business property tax and pay for it through unspecified cuts.
“The bill overall reduces the state’s tax burden by $102.5 million,” said Sen. Julianne Ortman, R-Chanhassen.
Ortman, who chairs the Senate Taxes Committee, said she’s leaving the decisions on what programs to cut to Gov. Dayton’s administration. Ortman said the $100 million in savings will come from the state’s budget reserve if Dayton’s Administration doesn’t find the savings.
“I think it’s easily doable by our commissioners,” Ortman said.
The bill’s biggest tax cut is to the so-called “marriage penalty.” The federal government extended a tax break and the Senate bill would make the state’s tax laws conform with that change. The change helps married couples at the cost to the state treasury of $62.4 million in fiscal year 2013.
The statewide business property tax levy would be cut by $31 million and nearly $2 million would be go to homeowners to cushion the impact of property tax increases. .
The bill would actually increase taxes on some cigarettes and on motor vehicle paint.
The proposal does not make a significant dent in the state’s budget this year but the cost would increase dramatically in coming years. For example, the business property tax levy would be reduced by $145 million in the next two-year budget cycle.
Several Democrats on the Tax Committee were skeptical of the proposal, especially Sen. Rod Skoe, DFL-Clearbrook
“If we’re going to ask the governor and his administration to have savings then I think you have to spell them out and write them down on a piece of paper and put them in the bill,” he said.
Skoe said he was dismayed that Senate Republicans were targeting the newly replenished budget reserve.
The Senate Tax bill is dramatically different from its House companion. House Republicans are pushing a bill that cuts the business property tax and property taxes for homeowners, but they pay for the cuts by reducing the tax credit for renters and by increasing taxes on corporations that operate overseas. Ortman said she won’t back either of those measures.
Ortman isn’t the only lawmaker who is looking at the budget reserve to potentially pay for priorities. Sen. Gen Olson, R-Minnetrista, is proposing to pay back $430 million of the $2.4 billion in delayed payments to K-12 schools that helped balance the state’s budget last session.
Republicans in the House have proposed taking $430 million from the reserve to start paying back the school shift.