Daily Digest: One more week

Good morning, and welcome to Monday, the start of another work week. There is exactly one week to go in the 2018 legislative session, and that's where we'll start the Digest.

1.  There's plenty to do this week if legislators want to do it. With the adjournment date for the 2018 session a week away, it’s the final lap for lawmakers before the focus turns entirely to the fall campaign. It might not surprise close followers of the Legislature, but all of the dominant issues from taxes to school funding still need to be sorted out. At the top of the to-do list for lawmakers is conforming Minnesota’s tax code with the new federal overhaul. The conference committee hashing out the tax bill has been clipping away. On Friday evening, the House and Senate negotiators, predominantly Republican, announced they had agreed on a way to cut taxes for most people and hold nearly everyone at least harmless. DFL Gov. Mark Dayton has not signed off on the deal, so there’s work left to do. (MPR News)

2. More about that tax deal. The House and Senate deal lowers the state’s first tax bracket from 5.35 percent to 5.25 percent. The change affects a single filer’s earnings below $25,890 and a couple’s below $37,850. The second tax bracket rate drops from 7.05 percent to 6.85 percent. This decrease affects a single filer’s income between $25,891 and $85,060 and a couple’s between $37,851 and $150,380. The rate reductions would take place over two fiscal years, so the lower rates would be in place by 2020. The changes would cost $137 million this year and $341 million by 2020. “This proposal would be a victory for middle class families including what would be the first income tax rate cut in nearly two decades, and represents a serious effort on the part of the Legislature to reach agreement with the governor,” said Rep. Greg Davids, R-Preston, who chairs the House tax committee. Gov. Dayton has proposed tax credits for working families rather than rate cuts. (Pioneer Press)

3. Businesses have a big stake in the outcome. Real estate developers, farmers and multinational corporations all stand to gain or lose depending on what the Republican-controlled Legislature and DFL governor wind up doing — or not doing — before lawmakers adjourn in a week. In the wake of the largest federal tax overhaul in 30 years, passed late last year and signed by President Donald Trump, the Legislature has to make changes to the state tax code — which is chained to federal tax rules — or thousands of businesses will face a confusing mess next year at tax time. Just one example: The federal tax overhaul allowed far more businesses to use a simpler, more flexible accounting system. But the Legislature must act to enable firms to do the same for their state taxes. If state lawmakers don’t do that, businesses would have to keep two sets of books with two different accounting systems. “A nightmare” is how Mark Bakko, a partner and tax law expert at Baker Tilly, described the situation if the Legislature does not act on this seemingly arcane provision. (Star Tribune)

4. Report: Terrorist group may be getting a cut of stolen daycare subsidy money. Fox 9 points  to the case of Fozia Ali, who pleaded guilty to daycare fraud in federal court earlier this year. She sent some of the stolen money overseas. Some suspect the Somali terrorist group al Shabaab is taking a cut of money sent to people in Somalia. The state Department of Human Services says 10 day care operations are under investigation for fraud, and the TV station found most are owned by Somali immigrants. DHS says several million dollars may be involved. (Fox 9)

5. Twin Cities LRT trains are rolling homeless shelters. Authorities estimate some 200 people are using the light rail transit system for shelter each night and the number is rising at an alarming rate. They are people of all backgrounds and ages, said Chris Knutson, who works for the Minneapolis nonprofit St. Stephen's Human Services and checks in regularly with those living on the light rail system. Some have jobs, kids traveling with them, or are between homes. Without a home, getting a steady job, substance abuse treatment or anything else is nearly impossible.  Metro Transit Police Chief John Harrington said the problem has gotten worse since his tenure began in 2012. "If you were a cop and you worked the system, you recognized it because there were ones or twos out there" but it's "hundreds now at several different platforms," he said. "It has become very noticeable and it's also become increasingly disruptive." Harrington, a former state lawmaker and St. Paul police chief, said he is in constant talks with city and state officials about how to help the homeless population using the trains, but there continues to be a lack of available shelter space and funding to add shelter beds. "Being homeless is not illegal, and when we checked, about 85 percent of the homeless do, in fact, have paid fares," he said. (MPR News)

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