Terri Bonoff

Senate Takes Up Omnibus Tax Bill
The Senate will today take up the Omnibus Tax Bill, one part of a three-tiered approach to solving the $6.4 billion budget deficit. The Senate is filling one-third of the budget gap by cutting state spending, another one-third by committing federal stimulus funds to the budget, and the final one-third by raising new revenue.

The bill raises new revenue by restoring tax rates close to the 1998 levels for all tax brackets. In addition, a fourth tax bracket is created for the wealthiest Minnesotans. I oppose these increases in the income tax because I think now is the wrong time to unilaterally place more burden on every Minnesotan. I do think we need to raise revenue, and I have been a long-standing advocate for a clothing tax with a low income offset. We are one of five or six states to omit clothing from our tax structure. When I ran in 2005, I stated my view on this. I think it’s time to close this. We would generate 1.5 billion dollars in the biennium. With a low income offset, those who buy more pay more. I began my career in retail clothing and even felt back when my family had its stores that this tax would have provided much needed resources for things like education and health care. In addition, I believe that before all is said and done we ought to use the education payment shift, if in fact this shift would go directly to schools. This shift, as I see it, would add an additional 1.5 billion dollars of revenue for the biennium. I would oppose the shift if it was going to balance the budget in some other area.

It is my position that we must maximize the value of every dollar we spend in state government and seek efficiencies in our operations. This has been my focus this session. A comprehensive approach to balancing the budget must begin with this reevaluation of our processes. Cuts should be made strategically to ensure that vital programs are left intact, and new, more palatable sources of revenue should be looked at to shore up any remaining gaps.

After the House passes its tax bill, lawmakers will be assigned to a conference committee to find a compromise plan and, after re-passage, the bill will be sent to the Governor for approval.

State Agencies Cut Significantly in Senate Bill
Nearly every state government received a significant budget cut in the Omnibus State Government Finance Bill.  The legislation included $641.7 million in direct appropriations, with an overall cut of roughly $44 million in each year of the 2010-11 Biennium.

The legislation cut 5% or more from most state agencies including:  a $6.8 million reduction for the State Legislature, a $2.4 million cut from the Attorney General’s office, a $7 million cut from the Office of Enterprise Technology, and an $8.2 million cut from the Department of Revenue.

Among the notable policy initiatives in the bill were increased use of electronic business entity filings with the Secretary of State, and establishment and implementation of a statewide electronic licensing system for professional license holders. The bill also eliminated base funding for the Campaign Finance and Public Disclosure Board, which will mean a reduction in the public subsidy to some candidates in the future.

Due to the lack of funds, there was no action taken on many proposed programs in areas such as state procurement, computer security, and consolidation of data centers.

Senate Passes Judiciary Budget Bill
This week the Senate passed a Judiciary Budget Bill that provides funding for the state courts, public defenders, and other judiciary-related state agencies. The bill reflects a 7% base budget reduction of $52.6 million. The bill includes a one-time federal appropriation of $5.6 million for the district courts and several cost-saving judicial policy reforms. The bill also gives the Judicial Council the authority to raise approximately $34 million in increased fees. The bill is part of a larger effort by the Senate to proportionally reduce state spending in all budget areas.

The bill includes a number of policy changes to streamline court processes by keeping less serious crimes out of court, ensuring that our courts can focus on the most serious criminals.                                                                 

The bill:

• Authorizes courts to use special masters, in place of judges, for pretrial matters in district court cases.
• Automates the process of handling approximately 1.2 million annual citations and parking tickets processed by the courts.
• Improves the court collection program relating to misdemeanor payable offenses, which will result in increased revenue for state and local governments.

The House is expected to approve their companion bill this week. The differences between the two bills will then be worked out in conference committee before it is sent to the Governor for final approval.

Senate Committee Hears Minnesota Stimulus Proposal
The Senate Business, Industry and Jobs Committee this week heard a proposal aimed at jumpstarting the state’s “vertical construction” industry, the sector of the economy based on commercial, housing, industrial and institutional building projects.

The bill is designed to augment the federal stimulus package, which provides substantial new funding for road and transit projects but does little for the vertical construction industry and its workers. Despite the federal stimulus package, the Minnesota construction industry is expected to lose a minimum of 12,000 jobs in 2009. While some details are still being finalized, the Minnesota stimulus bill sets a framework for jumpstarting the state’s vertical construction industry.

The bill:

• Creates a state-backed loan guarantee program to thaw the frozen credit market for businesses seeking to expand and grow Minnesota’s economy.
• Gives local governments more flexibility to grow new jobs through capital investments and local tax incentives.
• Establishes state income tax credits to provide incentives for historic structure rehabilitation and the construction of low-income housing.
• Creates an advance loan program for first-time home buyers receiving an $8,000 tax credit through the federal stimulus bill.  This is modeled after similar programs in Missouri, Ohio, and other states, and will help first-time home buyers take advantage of one of the best buyers’ markets in a century.
• Funds new senior continuous care housing projects.
• Streamlines the environmental review process for stimulus projects.

Have a great weekend,