The Free Press, Mankato, MN

State, national news

May 9, 2012

Revised tax bill on its way to House, Senate, Dayton

Associated Press

— The Minnesota House was set to vote Wednesday on a renegotiated package of tax breaks with smaller cuts for businesses than the bill Gov. Mark Dayton vetoed last week.

A conference committee finalized the new version Wednesday, and the Senate was expected to act swiftly on the measure if it clears the House.

"We listened very, very closely to the governor," said Rep. Greg Davids, R-Preston, chairman of the House Taxes Committee. "We want to get a tax bill signed."

The bill would cost the state about $46 million over the next year. For the next two-year budget, it would cost $73 million, about half the cost of the vetoed bill. The new proposal would also draw less from the state's budget reserves to pay for those costs: about $28 million, down from $43.5 million in the bill rejected by Dayton.

After money from reserves would be applied to costs in the next year, a leftover $18 million would be paid for by savings in other bills, according to committee staff members.

Dayton said the last tax bill disproportionately favored businesses for property tax breaks over homeowners. The governor and many Democratic lawmakers had argued that it leaned too heavily on the state's budget reserves, increasing expected future deficits.

The key element of the last tax bill — a property tax freeze for businesses_is limited to only one year in the latest version. A tax credit meant to encourage research and development is raised by less than in the previous bill and less money will be set aside for a credit to foster investment in start-up businesses. An up-to-$3,000 business credit for each veteran hired would be granted for the first 1,250 eligible veterans hired after July 1, half of the provision in the vetoed bill.

An upfront sales tax exemption for small businesses buying machinery included in the last bill will go to only those businesses with less than 50 employees in the new version. Businesses currently pay for the tax and then apply for a rebate.

What was originally a $2 million boost to the Minnesota Investment Fund, which provides grants to add and maintain manufacturing and technology jobs, was raised to $7 million. Davids said Republicans would not have approved the move, but that it was part of meeting Dayton halfway on the bill.

Sen. Julianne Ortman, R-Chanhassen said the bill doesn't accomplish as much as Republicans had wanted, but she was optimistic that Dayton would sign it.

"This is about being persistent," Ortman said. "Tax relief and jobs was our highest priority at the Capitol this year."

A member of the governor's staff said Dayton has not yet taken a position on the bill.

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