Republicans vexed over new taxes

MARSHALL – From same-sex marriage to day care and personal care unionization, legislators in St. Paul dealt with a number of contentious, headline-grabbing issues during the 2013 session. But of all the takeaways from this year’s session, the issue likely to affect Minnesotans the most is the tax bill.

The new 9.85 percent tax rate will apply to taxable income above $250,000 for married filers and $150,000 for singles and takes effect for this tax year.

The new top tax rate will put Minnesota’s upper bracket in the nation’s top five.

But Republicans say the DFL-proposed taxes – put into play to erase a $627 million projected deficit, provide $400 million in property tax relief and invest more than $750 million in education – go too far, as they hit more than just the top wage earners.

“They talked about taxing the top 1 or 2 percent, but they’re catching a whole lot more people than what they proposed,” District 22 Sen. Bill Weber, R-Luverne, said. “In many areas, these taxes will make us all pay more.”

“It’s just not a good day for Minnesota,” District 16 Sen. Gary Dahms, R-Redwood Falls said. “I’m afraid (the tax bill) is going to slow our economy down, and if that happens, we’ll have another deficit issue to deal with for the next biennium. That’s always an issue, but we’re just compounding it.”

While some taxes like a clothing tax, a gas tax increase and an alcohol tax increase that were originally proposed ended up not becoming a reality, others will. Taxes on cigarettes, for example, will go up by $1.60. Weber said trying to get smokers to quit by making cigarettes more expensive doesn’t justify raising taxes.

“They talk about discouraging people from smoking, but the thing they forget is the effect as far as stopping people from smoking is small. Those who continue smoking will go over the border to buy cigarettes. We would all like everyone to stop smoking, but the reality of it happening probably isn’t realistic.”

Weber wondered about the consequences should the state lose the money that comes in from the revenue stream tobacco creates.

“I think there would be a real consternation in St. Paul if everyone quit smoking, because all of a sudden bureaucrats would have to figure out a way to replace that money stream,” he said. “It gives new meaning to the term nicotine withdrawal if these taxes couldn’t be collected in Minnesota.”

Weber noted that for the first time sales taxes have been incorporated into farming and warehousing, among other things. Dahms said the “unexpected” taxes on warehousing and the agriculture-related taxes will hurt businesses and farmers.

“Some of these taxes are going to put some businesses in a tough position,” he said. “There’s a lot of warehousing done in Minnesota.”

The $2.1 billion tax bill also includes tax breaks for cities and counties, but it’s too early to tell how those breaks will affect communities.

“I’m interested to see how some of the tax credits might be helpful in rural Minnesota,” District 16A Rep. Chris Swedzinski, R-Ghent said. “It’s a wait-and-see period as far as how businesses will be affected. We’ll try and do our best to keep businesses in the state; that’s our job.”

Weber said a positive that came out of the session was garnering disaster relief for communities in southern Minnesota hit hard by the April ice storm that caused an estimated $6 million in damage. Under the bill, the state will provide $1.75 million, with FEMA picking up $4.5 million for public improvement, which includes powerlines, tree damage and rural cooperative electric line damage.

Swedzinski said he wasn’t surprised the session again went down to the wire, considering all the issues legislators faced this year, a number of which stirred up a frenzy at the Capitol on a weekly basis and were magnets for the media.

“There were a lot of people at the Capitol this year,” he said. “With gun rights, when the bills were being heard there was a line of people wrapped around the building to hear testimony on anti-gun bills; that started early. There were some very passionate issues this year.”

Weber said this session will be remembered as one where Democrats imposed government upon people’s lives more now than ever before.

“There are people at the Capitol every year, but it was magnified by the fact that the majority decided to take on a bunch of social issues, which they criticized Republicans for doing when they were in the majority,” said Weber. “I think we saw it as a year of political payoffs.”

Dahms said it’s impossible to ignore the sign-carrying, vociferous protesters and promoters of various issues, but he doesn’t pay much attention to them since they typically don’t represent his district.

“There’s always people there who want their voice to be heard, so it’s pretty common,” he said. “With day care unionization and gay marriage the numbers were much, much higher this year, but once you get onto the senate floor, you don’t really hear all the noise.”

The bill to allow the unionization of two groups of workers whose customers are eligible for taxpayer subsidies – in-home child care providers and personal care assistants who work with the elderly and disabled – passed on the final day of the session after a total of 27 hours of House and Senate debate. Republicans found nothing positive about the bill, while Democrats argued that the two groups of workers deserve a right to organize for collective bargaining.

“I don’t understand why we even had this bill in the House or the Senate, but we did and it passed,” Dahms said. “I think it’s really unfair we’re not listening to our constituents on this.”

Dahms said the bill could have a severe impact in smaller communities that only have one or two daycare providers and would affect both providers and parents.

DFL Rep. Andrew Falk of Murdock said the Omnibus Environment, Natural Resources and Agriculture finance bill, passed by both the House and Senate, takes steps in addressing shrinking water supplies in Minnesota.

The bill, he said, provides support for farmers and the ag economy and equips the Department of Natural Resources with new resources and tools to address the water supply issue without raising water fees.

“We invested more resources into agriculture to further enhance opportunities for beginning farmers,” Falk said in a news release. “We also focused on providing greater access to markets for Minnesota farmers ranging all the way from Farm-to-School programs to growing our international exports.”

The bill, he said, also aims to protect Minnesota’s economy from the spread of invasive species like Asian Carp by funding recommendations from Legislative-Citizen Commission on Minnesota Resources, including money for the University of Minnesota to create an aquatic invasive species research center to develop new techniques to stop the spread of aquatic invasive species.