Activity at the Legislature slowed this week, providing time for committee chairs to piece together omnibus bills and start the process of moving the bills through committees. By the end of next week, the omnibus bills should have passed through their committee of origin to the Senate Finance Committee or the House Ways and Means Committee. The chairs of the Finance and Ways and Means Committees have already started scheduling hearings on omnibus bills for next week. DFL Leaders in the House and the Senate have indicated that they plan to pass all of the budget bills for the Governor to sign by the end of April. Next week, the House Capital Investment Committee will release a bonding bill that is expected to total around $750 million in new capital projects.
Property Tax Division Report
During a House Property and Local Tax Division hearing this week, Rep. Davnie (DFL-Minneapolis) introduced the Property Tax Division Report as a delete-all amendment to HF2. The Report included a compilation of bills relating to property and local taxes, ultimately creating a package that provides $250 million in property tax relief for Minnesotans. The bill includes $157 million for the Homestead Credit Refund, which will provide a refund to more than 300,000 homeowners across the state. The proposal also includes $15.5 million for the renter's credit, $60 million for local government aid and $28 million for county program aid.
HF2 also includes a tax increase on silica sand mining that was proposed by Rep. Hansen (DFL-South St. Paul). The mining tax solely hits the silica sand industry by increasing the existing aggregate tax on silica sand, imposing a new tax on mined raw sand, and adding a percentage tax on processed sand. HF2 passed the Division and was sent to the Committee on Taxes.
HF1440, sponsored by Rep Frank Hornstein (DFL-Minneapolis), seeks to change the definition of a domestic corporation. The bill would take account of the income and factors of corporations that derive 20 percent of their income from "tax haven" countries to be included in the combined report of the unitary business. The bill defines "tax havens" as a list of foreign countries with low tax rates and other favorable tax provisions for corporate taxpayers. By treating these entities as domestic corporations, the bill will subject their income to tax based on the unitary business's Minnesota factors of property, payroll and sales taxes. Present law excludes all foreign corporations from the combined report except for foreign sales corporations. The bill was laid over for possible inclusion in an omnibus tax bill. If this bill is included and becomes law, it will be effective for the beginning of 2013.
HF1493 is authored by House Tax Chair Rep Ann Lenczewski (DFL-Bloomington). It is essentially the first draft of the omnibus tax bill in the House. At this point, the bill makes significant changes to the individual income, corporate franchise and occupation taxes. The legislation would repeal the subtraction of a foreign operating corporation similar to the language found in HF1440. The omnibus package will change drastically over the next few weeks as the tax chair selects which provisions and rate changes to include in the proposed legislation. Under Minnesota law, tax and spending proposals must originate in the House so the Senate will wait and see what the House version includes before taking action on a Senate omnibus tax bill.
House Omnibus Jobs Bill
The House omnibus jobs bill passed out of committee on Thursday and is headed to the Ways and Means Committee. HF729, sponsored by Rep. Tim Mahoney (DFL-St. Paul), seeks to spend $234 million in the 2014-15 biennium, including $153 million from the General Fund.
The financial highlights of the bill include $20 million in new money for the Minnesota Investment Fund, $18.5 million in new money for a job creation fund that will enable DEED to help businesses make capital investments and create jobs, $5 million more for the FastTRAC program that trains people looking to start their own business and an extra $1.14 million for the Youth Workforce Development Competitive Grant program.
The companion bill, SF1057, sponsored by Sen. Kari Dziedzic (DFL-Minneapolis), awaits action by the Senate Finance Committee.