Dayton vetoes tax bill over lack of school money

Gov. Mark Dayton spoke to children at Bruce Vento Elementary School in St. Paul before he vetoed the Republican-backed tax bill. Briana Bierschbach | MPR News

Surrounded by elementary school students Thursday morning, DFL Gov. Mark Dayton vetoed a Republican tax proposal, a move meant to keep the pressure on legislators in the final days of session to pass emergency funding for schools.

Dayton said the Republican tax bill didn’t include $138 million he wants for school districts that are facing teacher layoffs, but he also has objections to specific provisions in the bill, which he said prioritizes tax breaks for corporations and the wealthy and doesn’t focus enough on middle class Minnesotans.

“I’m vetoing the bill because they have not met the condition I have set, which is to include the emergency school aid. And also because it’s a bill that’s skewed toward the rich,” Dayton said at Bruce Vento Elementary School in St. Paul. “A family of four making $65,000 a year is about the median family income. They get $92 a year in tax breaks. A family making $250,000 would get three times that amount.”

Lawmakers are working to pass a tax conformity proposal this session, after Congress overhauled the federal tax code late last year. Now federal and state tax codes don’t line up, and if lawmakers do nothing before next tax season, Minnesotans will be faced with more complicated tax forms and possibly tax increases.

The Republican-backed bill reduced the rate for the first income tax bracket from 5.35 percent to 5.25 percent over two years, and dropped the second tax bracket from 7.05 percent to 6.85 percent. It keeps most personal and dependent exemptions in place. Republicans say 98 percent of Minnesotans would have seen a tax break under their proposal.  If passed, it would have been the first income tax cut in the state since 2000, costing the state budget $142 million in 2020 and $199 million in 2021.

They also think Dayton’s push for school funding came too late in session to be considered. Legislators have a $329 million budget surplus on the table to spend this session.

“The governor is trying to pit this group of Minnesotans against that group,” Republican House Speaker Kurt Daudt said Thursday. “In this case it’s low and middle income Minnesotans who get some tax relief, some really much needed tax relief. He’s pitting those people against kids in schools.”

Lawmakers have until a Sunday midnight constitutional deadline to find agreement on taxes, education and host of other issues.

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