Monday, April 13, 2009

Weeks of April 12 & 19, 2009

During the week of April 19th, we have been taking up our omnibus finance bills. Every two years, our finance committees put together a budget within a funding target set earlier in the session. There are about 10-12 of these bills.

Schedule: On Monday, April 13th, I met with a business owner and constituent about how S-Corps fit into the state tax code. On Tuesday, April 14th, I attended the House Taxes Committee and we heard my bill HF1118 about the solid waste management tax. We had a short floor session and did a cable TV interview. On Wednesday, April 15th we had two Taxes Committee meetings and two caucus meetings and I met with our GIS office about a map. Thursday, April 16th included a Taxes Committee meeting, a floor session, and a meeting at the North Metro Mayors Association. On Friday, April 17th we had the Taxes Committee meeting, a meeting with Rep. Dean Urdahl and his Lincoln Bicentennial Commission. Later in the afternoon we had a short floor session and a Taxes Committee meeting. On Saturday, April 18th, the Taxes Committee met and then the committee caucus met until about 9:00 a.m. to discuss the omnibus tax bill. I also went to a town hall meeting in White Bear Lake with Rep. McFarlane about health care. On Sunday, April 19th, we had a tax committee caucus in the evening.

On Monday, April 20th, I met in Tax Committee where the committee unveiled its tax bill. (More info below.) Afterwards we had a caucus meeting and a floor session, followed by a committee caucus meeting and another Tax Committee meeting where we took public testimony on the tax bill. On Tuesday, April 21st, I met with a Centennial high school student who is a page this week. Then I attended the Taxes Committee where we marked up the bill. We had a floor session in the afternoon and had a lengthy House DFL Caucus meeting.

On Wednesday, April 22nd, on the floor we voted on the agriculture and veterans affairs finance bill, the higher education finance bill, and the environment and energy finance bill. In the agriculture and veterans affairs budget, we cut ethanol subsidies by 20% and when a vote came up to eliminate the remaining subsidy (about $26 million or so) I voted in favor, although the amendment failed. Last year the amendment only got about 37 votes and this time it got 49. Find out more at this MPR story. (We received a report from the legislative auditor about biofuel subsidies and how we need to change them.) The higher education bill included a cap on tuition. After a recess we handled the environment bill, in which my legislation regarding compost and bioplastics are located. We started at 9:30 a.m. and finished at 12:15 a.m.

On Thursday, April 23rd, we took up the early childhood education finance bill, the K-12 education finance bill, and the state government finance bill.

Minnesota leads in public health: The New York Times ran a strong article about how the Minnesota Department of Health did excellent work for the rest of the country on detecting food-borne illness including the recent peanut food poisoning issue. Way to go!

35W bridge collapse fund: Survivors of the collapse praise the work of the special master appointed to administer the compensation fund. MPR did a good story.

House and Senate Tax Bills and Mortage Deductions: The House has set "budget targets" where the body decides how many dollars will be available for spending and how much will be cut, how many payments would be deferred to the next fiscal year (a "shift"), and how much new revenue must be raised. Our target for new revenue is $1.5 billion for the budget. The House Tax bill (HF2323) raises the revenue this way:

$11,535,000 resulting from conformity with new federal tax laws
$913,656,000 from individual income taxes increases and modifying a lot of income tax breaks
$122,925,000 from corporate sources, mostly closing of loopholes
$20,600,000 from changes to the estate tax
-$11,570,000 from loss of sales tax revenue (mostly due to modification of transportation taxes)
$413,272,000 from special taxes (half from alcohol and half from tobacco products)
$21,250 from "other"

That adds up to $1,501,363.

Here's how the individual income tax increases of $913,656,000 break out.

$489,365,000 from ending or modifying tax breaks for individuals
$467,700,000 from raising the highest income tax bracket to 9% on single filers making $156,000 or more or joint filers making $300,000 or more
-$43,409 from various changes in tax code

Here's the deal about the $489 million in tax breaks. A big amount of this comes from changing the current state (not federal) income tax deduction for mortgage interest and from eliminating the deduction of property tax payments. There is a lot of misunderstanding about the mortgage interest payment deduction. A homeowner would still be able to deduct up to $10,000 from their state taxable income but not beyond that. A deduction is a deduction from your taxable income, not a dollar-for-dollar subtraction from your income taxes. The House bill would replace the deduction with a dollar-for-dollar tax credit so everyone would get a credit whether or not they itemize their taxes. The idea here is that we stop subsidizing million dollar mortgages and let all homeowners benefit. This has the same net effect as raising taxes on the wealthiest Minnesotans because people who are wealthier tend to live in big houses with big mortgages. Wisconsin has tax law similar to this. Our researchers have put together a one-page summary that is linked to this Politics in Minnesota web page.

While I support progressive taxation, the parts of the House tax bill that I find objectionable include a local option sales tax and street improvement districts. Under the bill, counties would be able to levy a 1/2 percent sales tax in their county to pay for local expenses. However, the bill's language about how citizens are made aware of this possible tax increase and how they can have a reverse referendum on this tax is extremely weak, and counties are just going to levy this tax without much public input. In addition, the language about what counties can use the money for is WAY too vague and I am concerned that it will not be used for reducing property taxes. We are asking for Minnesotans to sacrifice a lot in this recession, either through program cuts or higher taxes, and I am concerned about this method to increase the sales tax, which has been raised twice in the last year already. It is for this reason that I did not support the bill in committee.

The Senate proposes raising $2.2 billion, mostly from the rolling back of income tax increases from 1998 legislation. These dollars would come from all taxpayers, not just the highest earners. I am opposed to the Senate version because even people making less than $33,000 would pay higher income taxes.

Visitors: Shoreview constituent and U of M student who introduced me to about half a dozen immigrant students; Circle Pines and Lino Lakes residents representing American Parkinson's Association; lobbyist for MN Grocers Association about HF403; Environment Minnesota about nuclear power plant moratorium; kindergarteners from Island Lakes Elementary in Shoreview; building trades lobbyist about a construction stimulus package; two constituents about GLBT issues

Constituent contacts: hard to keep up with--hopefully I will get this in soon