Back from Break to Budgets and Bills
By Quinn Cheney, Director of Public Policy
When Minnesota lawmakers return from spring break on April 18, they will be faced with some major decisions. With five weeks left until the end of legislative session on May 22, there remain many hurdles to cross to achieve the House and Senate’s top priority this year—tax relief.
First, House and Senate members will begin to work out differences between their budget bills in conference committees, and then they will start the process of compromising with Governor Dayton. The governor has warned that only if budget numbers “add up” can negotiations begin, noting that several current provisions in omnibus budget bills could draw his veto. And the Governor’s staff has been publicly discussing legislative budgets in disparaging terms, setting the stage for potentially difficult discussions to find a compromise.
Governor Dayton proposes about $300 million in tax relief. The House bill proposes $1.3 billion in tax cuts, while the Senate bill cuts taxes by $900 million. A key provision in both bills is a freeze on the annual inflator in the state general levy. The House provides an exemption of the first $200,000 of commercial-industrial property from the state general levy and freezes the annual inflator at the 2017 level. The Senate reduces the first-tier income tax rate from 5.35% to 5% by 2018. You can find a detailed comparison report here.
With one of the highest property tax rates in the country, Minnesota lags other states as tax burden restricts growth and investment. The majority of Minnesota businesses and job creators are located in commercial real estate buildings, and Minnesotans see an 114% return on investment for every $1.00 spent by the state’s commercial real estate industry. Tax relief not only benefits property owners and businesses—it benefits workers and consumers far more.
Commercial real estate in Minnesota deserves tax relief, but it is not clear whether current proposals will make it into law. NAIOP Minnesota has been deeply engaged in this year’s tax and budgeting process, but it may require more input from the MnCRE community, not only to legislators but also to the Governor’s office. We need to remind them how important tax relief really is. If you have any questions or need help contacting your legislator, feel free to contact me.
Entry filed under: Public Policy | Government Affairs.