Senate’s tax relief includes $200M for transportation, sales tax cut

MARSHALL – The Minnesota Senate is proposing a $200 million infusion into transportation spending in its tax relief measure, but District 16 Sen. Gary Dahms said that doesn’t even go far enough.

“There’s a couple hundred million dollars in there for roads and bridges across the state, but I wouldn’t mind seeing that increased to over $200 million,” said Dahms, R-Redwood Falls. “A lot of times in Minnesota we get such a small piece of that pie, yet our roads are very instrumental to move goods and products. We need to make sure we have good roads in rural Minnesota. This is just a start.”

The Senate’s $434 million plan is the companion to a bigger House version.

Dahms said the Senate’s plan, that could get a vote today, also goes a long way in getting money back to the taxpayers with a permanent half-percent cut to the state sales tax, from 6.875 to 6.375. The cut would cost about $362 million in its first year, or about one-fourth of the projected $1.2 billion surplus.

“We feel the surplus has come from an aggressive increase in the tax policy last session, and we need to look at getting this money back into the hands of taxpayers,” he said. “Everybody would participate in this no matter what their income is; they would receive that reduction every time they purchase something.”

The large surplus would also allow for the repeal of business-to-businesses taxes, Dahms said. Senate Republicans also support providing full federal conformity on the income tax, repealing the gift tax and fully funding the 5% Campaign to give raises to those who work in long-term care.

Unlike the House version, the Senate proposal doesn’t give refunds to businesses for sales taxes they have already paid under the recent tax expansion.

There is a provision in the bill to add another $150 million to the state budget reserve, a position that isn’t part of the House tax plan.

If the Senate passes the bill today the House would face a decision about whether to agree to changes or send the bill to a conference committee for negotiations. Dayton administration officials want a deal done this week so they can promptly update filing systems and software in time for the post-April 1 filing crush.

“I think we’ll probably deal with everything tomorrow (Thursday) and still get it in under the guideline,” Dahms said.

For the 59 percent of taxpayers who have already submitted returns, Revenue Commissioner Myron Frans said those eligible for new credits would either be notified by the agency about submitting an amended return or automatically receive an updated refund. He said 300,000 to 500,000 filers could be eligible for one or more new deductions.

The Associated Press contributed to this report