Monday, May 06, 2013

Two Week Warning.  Two weeks from tonight, the 2013 regular session of the Minnesota Legislature will come to a close.  While there's a lot of work remaining to be done, it looks as though things will fall together fairly quickly after the tax target is determined by the conference committee on HF 677, the 2013 omnibus tax bill.  There is little doubt that taxes will be raised this session, but the obvious question is, "By how much?"  Both the Senate and the House have ambitious revenue increases in their respective bills, but the approaches differ dramatically.  Both bills raise state income tax rates for high income earners and make changes to the sales tax that broaden the sales tax base by taxing transactions currently not subject to tax.  The increased revenue generated by these changes in state taxes are used to:  (1) balance the state budget for the coming biennium, (2) put additional revenue into several areas of the state budget beyond what was included in the Governor's budget released in January, and (3) provide property tax relief.  The greatest departure that exists between the two bills is that the House proposes to implement a temporary income tax increase with the proceeds of the tax going to eliminate the property tax early recognition shift and set the education aids payment schedule at 90%/10%.

The tax conference committee has been meeting regularly, but no headway has been made on the major issues facing the panel, which leaves pretty much everything else in flux at this point.  The conference committee will be discussing the Senate's education property tax provisions tomorrow (Tuesday) evening.  As many of you recall, the Senate tax bill contains a $300/PU roll-in of the referendum levy (and equalizes the roll-in at an extremely high rate), increased equalization of the remaining referendum levy, and a re-establishment of the integration levy.  It is also important to remember that the Senate also buys down education property taxes in their version of the omnibus education funding bill by combining a set of levies that are either unequalized or equalized at a fairly low rate and reducing the total levy by $150 million.  The House has approximately $30 million in referendum equalization in their version of the omnibus education funding bill.

It will be a busy two weeks, but I have seen the Legislature cover more ground in less time, so it's not like the session has reached a point where things will simply be thrown together at the last minute.

Follow-up on Referendum Freeze.  As I've reported before, the Senate tax bill contains a provision that would prevent districts from going before the voters this fall to add to their current level of referendum revenue.  Senator Karin Housley offered an amendment on the Senate floor that would exempt districts that have already passed a board resolution outlining their intention to seek additional revenue through a voter-approved referendum to put a question before the voters this fall.  This will not exempt many districts (I can only think of one) from the freeze, but Senator Rod Skoe, the Senate Tax Chair, expressed support for making a larger exemption in conference committee with the only question being how to accomplish that.  I would urge all districts that are considering going out this fall to pass a resolution as soon as possible.  It is my guess that if the freeze survives (and there is a strong chance it won't), districts that pass a resolution by a certain date will be exempted from the freeze.  Everyone will have a pretty good idea of their revenue situation for the coming year and should be in a position to know whether (and how much) they will be embarking on a referendum campaign in the fall.

Anti-Bullying Bill Passes House.  After several hours of debate on a slate of amendments that reached double digits, the House passed HF 826 (the anti-bullying bill) by a party-line vote of 72-57.  There wasn't much new ground plowed in the debate, as questions over free speech, parental notification, and privacy were once again brought forth by those objecting to the implementation of a statewide anti-bullying policy.  Representative Jim Davnie, the bill's chief author, added an amendment to the bill that made clear the free speech rights of students and to not have those rights infringed upon in the implementation of the new policy. The difficulty will be--and this has always been the case--in determining the point at which speech becomes an exercise of opinion and morphs into harassment which then morphs into a pattern that would resemble--and may well prove to be--bullying.  The Senate is taking up its version of the bill--SF 783--in the Senate Education Funding bill tomorrow and it will then have to return to the Senate Finance Committee before hitting the floor.  The earliest the bill would hit the floor is likely to be Thursday and only then if the timing of the Senate floor sessions is such that it will accommodate the re-referral of the bill and the processing of committee reports.  I will keep you posted on the bill's progress.


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