A weekly message from your Senator

Dear Constituents and Friends,

Committee hearings are starting to gain traction and we prepare to take bills on the Senate floor. I am focusing most of my time meeting with constituents, introducing bills and tackling the tax conformity issue. I’ve been meeting with CPAs, the business community and many individuals who are hoping we conform to certain federal tax provisions in order to simplify and make the tax filing experience more palatable for taxpayers in our state. I will be providing as much detail as possible to allow you to follow this complicated process forward.

Thank you,

Melisa

P.S. The nonpartisan House Research Department posted this tax calculator that could prove helpful: http://www.house.leg.state.mn.us/hrd/inctax.aspx

Effects of federal tax conformity becoming clearer

Since Congress passed the tax reform package at the end of 2017, the Minnesota Department of Revenue has been diligently working to determine potential effects on Minnesota tax filers. This week, the department released a preliminary estimate of Minnesota tax impacts if the legislature simply conforms, or updates Minnesota’s tax code to match the federal government’s changes with no corresponding changes to definitions at the state level.
Under that scenario, about 658,516 filers would see a Minnesota tax increase of $150 or more, while 354,897 taxpayers would see a tax cut of more than $150. Broken down, the highest number of filers experiencing a tax increase – 299,473 – would be those upper-middle-income filers earning $80,000-$150,000, who would see an average tax hike of $493. In that same income range, 221,929 filers would see an average tax decrease of $173.

In the $30,000-$80,000 range, 298,074 taxpayers would see an average tax increase of $340, while 579,249 filers would see an average $100 tax decrease.

This is not a complete estimate because it does not include the effects of another federal change, which allows more opportunities for business pass-through income, but it provides a preliminary landscape for lawmakers to consider. Typically, the legislature passes a “conformity bill” each year that delivers tax savings to almost all filers. This year is different because Minnesota tax calculations begin with federal taxable income (FTI). Congress’ changes increased FTI but also included new federal rates and credits that partially offset the increase. Aligning Minnesota’s tax code would capture the higher FTI definition but not the new federal decreases, unless lawmakers develop similar adjustments for Minnesota taxes.

It’s a complicated subject that will take some time to navigate. Governor Dayton’s supplemental budget recommendations are scheduled to be released on March 15 and will include recommendations for updating Minnesota’s tax code, which will be the starting point for conversations among House and Senate leaders as the session progresses.

Below are distribution tables from the Department of Revenue showing individual income tax effects of Tax Cuts and Jobs Act conformity.

Corridors of commerce

The Senate Transportation Committee passed a bill this week that would require the Minnesota Department of Transportation (MnDOT) to provide at least 50% of Corridors of Commerce funding to projects located outside the seven-county metropolitan area. The Corridors of Commerce program was designed to improve the efficient movement of freight and business activities throughout the state.

MnDOT has been using a guideline of splitting Corridors of Commerce roughly 50/50 between metro and greater Minnesota projects, depending on what projects submitted for consideration and legislatively mandated criteria, such as the need for safety improvement, return on investment, and connecting regions of the state.

The bill undercuts provisions that became law in 2017, requesting that MnDOT complete an examination of their project selection process by November 2018, and issue a report to the legislature by 2019. The mandate to fund projects in certain areas of the state over others reduces flexibility and efficiency that was afforded to the Corridors of Commerce program when it became law in 2013 by requiring dollars be spent in areas with less freight traffic and congestion when those dollars could be more effectively used elsewhere. (S.F. 2547)

Enhancing school safety: a multi-pronged approach

At least 879 Minnesotans have died as a result of criminal gun violence since the Rocori High School shooting in 2003 and 21 known threats have been made against Minnesota schools in the last three weeks. It is impossible for students to learn and succeed in environments where they are worried for their safety.

Governor Dayton introduced his Safe and Secure Schools Act this week, including $15.9 million in needed investments to enhance safety for students, teachers, parents, and staff at schools throughout Minnesota. The proposal would increase school funding by $18 per student to help school districts and charter schools identify and assist students who exhibit red flags to school officials and law enforcement and make needed safety improvements to school facilities. The Safe and Secure Schools Act also proposes an additional $5 million for school-based grants to provide mental health services to students who need extra support.

The Governor also spoke on the importance of passing sensible gun violence prevention legislation, including criminal background checks, clarifying the existing ban on bump stocks, funding public health research, implementing age restrictions on assault rifles, and enacting a Red Flag Law to remove firearms from those who pose a serious threat to themselves or others.

One proposal included in the Governor’s list is a bill that would raise the minimum age to possess a semiautomatic military-style assault weapon from 18 to 21. Exceptions would be provided if the person is a member of the armed forces, a peace officer, has been honorably discharged from the armed forces, or is under the direct supervision of a parent or guardian. Current Minnesota law prohibits those under 21 from possessing a pistol but allows 18-year-olds to possess assault weapons. This bill would correct that inconsistency. (S.F. 2959)

Academic balance legislation

A bill that would require school districts to outline and adopt an academic balance policy has been introduced and recently passed through the Senate E-12 Policy committee (S.F. 2487). There are a number of questions looming over this bill in regard to free speech infringement and academic freedom. The bill disallows classroom teachers from expressing views and prohibits the introduction of controversial matters. It would also mandate school districts to include reporting procedures and disciplinary action for students, teachers, administrators and all school employees who violate those policies.

The bill is a response to the local issue affecting Edina families after an article alleged “indoctrination and persecution” at Edina schools. As teachers and school staff prepare our students to be critical thinkers, decisions on how to educate our children should be kept at a local level with parental involvement and elected school boards, rather than a one-size-fits-all approach at the state level.

Health facility complaints

The Office of the Legislative Auditor (OLA) released their report this week on the Office of Health Facility Complaints (OHFC) at the Minnesota Department of Health. OHFC is responsible for investigating reports of abuse and neglect in Minnesota’s long-term care facilities.