Daily Digest: Lawmakers press ahead with tax plan

Good morning, and happy Wednesday. Here's the Digest:

1. House passes tax bill in the face of Dayton's call for school money. The Minnesota House passed a tax bill Tuesday that promises to reduce tax rates and bring the state code in closer alignment with recent federal changes. The bill, which has yet to be voted on in the state Senate, still doesn't have the approval of DFL Gov. Mark Dayton. The plan that House and Senate negotiators finalized just prior to the vote would reduce taxes for an estimated 2.2 million Minnesotans. It would cut state income tax rates for the first time in 18 years. Republican Rep. Greg Davids of Preston, the chair of the House tax committee, spoke enthusiastically about the conference committee report, which he says would not raise taxes on the overwhelming majority of Minnesotans. "I didn't believe we could get to that number, but we did. This is a great tax bill. It's so great I can hardly believe it," Davids said. The plan, passed by the House on a vote of 78-50, reduces the rate for the first income tax bracket from 5.35 percent to 5.25 percent over two years. The second bracket rate would drop from 7.05 percent to 6.85 percent. Dayton made clear this week that he won't sign any tax bill unless Republican legislative leaders provide $138 million in emergency funding to school districts that are struggling with budget problems. (MPR News)

2. Hands-free cell phone bill looks dead. Legislation requiring Minnesota drivers to only use hand-free cell phones appears hung up for the session. The chief House author of the bill, Rep. Mark Uglem, R-Champlin, said House leaders told him that his bill won’t get a vote in the closing days of the 2018 session. The broadly-supported bill cleared its final committee last week and was poised for a floor vote. Uglem, who is not seeking reelection in November, said he’s disappointed that the vote won’t happen. “I’m very concerned for all the people that have been affected by distracted driving, all the people that have been killed and maimed on the highways,” Uglem said. “I guess I just don’t understand why something as important as this will not move through the process when I’ve cleared every committee that I’ve had to.” The bill also stalled recently in the Senate. (MPR News)

3. Pawlenty to skip GOP convention. Former Republican Gov. Tim Pawlenty will bypass his party’s convention and head straight to an August primary as he tries to regain his old job. Pawlenty’s campaign announced Tuesday that he wouldn’t try for the GOP endorsement at the state convention next month. Spokesman Sam Winter said Pawlenty entered too late so it “may not be realistic” to secure delegate backing. “Tim appreciates the convention delegates, but his late entry into the race precluded a fair fight for endorsement at the convention,” Winter said. “As a result, he has decided not to participate in the convention and instead will make his case directly to the broader and larger group of voters who will be participating in the Republican primary on Tuesday, August 14th.” Pawlenty ran twice with the Republican Party’s endorsement, including a hard-fought win in 2002 during a convention that went more than a dozen ballots. His decision all but assures the GOP of a contested primary. Hennepin County Commissioner Jeff Johnson, Woodbury Mayor Mary Giuliani Stephens and former Naval Reserve officer Phillip Parrish are all in the running for the endorsement, and all pledge to end their campaigns without it. (MPR News)

4. The cost of Southwest LRT is going up. The cost of the Southwest light-rail project is expected to increase by $145 million to $2 billion total, due to surging costs of steel, fuel and labor, as well as unexpected and costly delays, the Metropolitan Council said Tuesday. The increase in the 14.5-mile line’s budget is expected to be borne by Hennepin County taxpayers through an existing sales tax for transit. The county is actually on the hook for $200 million to cover the funding gap. Southwest is slated to connect downtown Minneapolis to Eden Prairie, with stops in St. Louis Park, Hopkins and Minnetonka. The news comes after the Met Council, which will build and operate the line, opened construction bids earlier this month that came in higher than a previous round of bidding last year. The first round of bids involved four firms and ranged from $796.5 million to $1.08 billion. The two bids in the second round were $799.5 million and $812.1 million. The council is reviewing the bids, and is expected to make a decision in the next three months. (Star Tribune)

5. Judge rules pipeline system was overvalued. The state of Minnesota has repeatedly overvalued Enbridge Energy's oil pipeline system in Minnesota, a state tax court judge ruled Tuesday, possibly leaving several counties on the hook to pay tens of millions of dollars in refunds. The Minnesota Department of Revenue overvalued Enbridge's pipeline system by $2.2 billion dollars in 2014 and by $880 million and $156 million respectively in 2013 and 2012, wrote Judge Joanne Turner of the Minnesota Tax Court. "This is concerning for counties, though I can't say it's a surprise," said Matt Hilgart, general government policy analyst for the Minnesota Association of Counties. "We have been holding our breath for the worst case-scenario." Enbridge's pipelines traverse 13 northern Minnesota counties, and some of them count on Enbridge for a large portion of their tax base. At least two counties — Clearwater and Red Lake — could end up refunding more money than they raise annually from all of their taxpayers. (Star Tribune)

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