MN Senate passes tax bill amid school squables

The Minnesota Senate passed a $900 million tax cut bill Monday, despite strong objections from many Democrats to a tax break related to private education.

The vote was 40-27.

Much of the debate focused on a $35 million provision in the bill that provides a new tax credit for donations made to entities that fund private school scholarships.

Supporters contend the provision will give low-income families more options and help close achievement gaps. But critics argue it would undermine public schools.

Sen. Jason Isaacson, DFL-Shoreview, said Republicans were giving rich people a tax break, not helping schools.

“Poor people aren’t going to be taking advantage of this tax credit,” Isaacson said. “You found a way to funnel money around the government to make sure that we’re still putting money into private schools. That is unacceptable to me.”

Sen. Eric Pratt, R-Prior Lake, defended the credit. He said it would bring new money into the education system.

“It’s immoral that we would deny low-income families the same choices available to families of means,” Pratt said.

Lawmakers took a couple of odd turns in the hours-long debate.

They added money for forest land easements in northern Minnesota, but without a way to pay for it.

“The bill is out of balance,” Sen. Roger Chamberlain, R-Lino Lakes said. “There’s no way to pay for the piece that you just adopted.”

They also boosted school referendum equalization aid by stripping the city of Minneapolis of nearly $29 million of its state aid. That move brought a sharp rebuke from Sen. Scott Dibble, DFL-Minneapolis.

“I’m embarrassed and I am ashamed of this chamber and this institution today,” Dibble said.

The broader bill provides benefits to an estimated 81 percent of Minnesota taxpayers.

The biggest piece is a reduction in the lowest income tax bracket, from its current level of 5.35 percent to 5 percent by tax year 2018.

It also makes significant reductions in taxes on Social Security income and business property taxes. Farmers would get a break on local school district bond levies and college graduates would get a break on paying off their student loans.

Chamberlain, the chair of the Senate tax committee, said the goal of the bill was to empower people and not the state.

“We were not looking to reform the entire system,” Chamberlain said. “We did focus on a few things: simplicity, fairness, predictability and sustainability of the tax system. To the extent we that we could impact those things, we did that in everything we addressed during the last three months.”

A proposed expansion of the state’s working-family credit, which is favored by Democrats, is not included in the bill.

Sen. Ann Rest, DFL-New Hope, raised concerns about the omission.

“It should be a higher priority for Minnesota taxpayers in terms of incentivizing people to stay at work and to make work pay for them,” Rest said.

DFL Gov. Mark Dayton is proposing only $300 million in tax reductions this session, while House Republicans want $1.35 billion.