DFL Gov. Mark Dayton is proposing a $300 million package of tax cuts that would benefit an estimated 450,000 Minnesotans.
The proposal announced Thursday is a pared down version of the tax bill he vetoed last spring. But with a projected $1.4 billion budget surplus available, Republicans who now control the House and Senate are looking to cut a lot more.
Dayton says his plan will expand tax credits available to low and middle-income families, make child care more affordable and reduce the property tax burden on farmers. Cities and counties would get a bump in state aid, and college students would get a tax break on tuition.
The bill is about $180 million smaller than the 2016 bill that Dayton vetoed due to a potentially expensive drafting error.
The governor said he eliminated tax breaks he viewed as unnecessary, including one for tobacco products. He’s also concerned about costs. Dayton said his initial $300 million, two-year plan would top $500 million in subsequent budget cycles.
“We worked very hard to bring fiscal integrity back to Minnesota,” Dayton said. “And I’m not going to allow anyone to sacrifice that fiscal solvency for any measure through this process.”
Still, Dayton said he’s willing to give cautious consideration to other tax ideas in context of the overall state budget.
Lt. Gov. Tina Smith emphasized the potential economic impact of expanded child care tax credits to an estimated 75,000 families. Smith said making the cost of child care more affordable will help to strengthen the state’s workforce.
“This is all part of a big strategy to help make our families be able to work and have them have higher disposable income at the end of the day,” Smith said.
Dayton is proposing relatively modest tax relief for businesses. One provision would simplify the paperwork needed for research and development tax credits. Another would extend state filing deadlines for business that receive federal filing extensions.
Even as the governor announced his plan, the House took action on one component of tax relief.
By a unanimous vote the House passed a bill that conforms Minnesota’s tax forms to federal law changes. That bill, which now heads to the Senate, will provide nearly $22 million in tax relief to about 220,000 people.
Republicans say they’re ready to discuss the governor’s other ideas, but they’re also intent on advancing many of their own.
“We’re going to aim for equitable tax relief for every Minnesotan, from lowest income to highest income. That includes business relief as well. Business and small business drive this state’s economy, and that’s what we’ll have to focus on,” said Sen. Roger Chamberlain, R- Lino Lakes, the new chair of the Senate tax committee.
House Tax Chair Greg Davids, R-Preston, said he views the governor’s tax bill as only a starting point.
“It’s a little lean. It’s a little skinny as far as the relief to Minnesotans. But we’ll work on that,” Davids said.
Davids said there are parts of the bill he likes, including the child care tax credit expansion and the property tax breaks for farmers. But Davids is looking at additional property tax help for businesses.
“That’s very important for our small businesses and the big businesses. All businesses combined win on that issue,” he said.