Senate Omnibus Tax Bill Focuses on Tax Relief, Economic Development

ST. PAUL, Minn. – The Senate Omnibus Tax Bill provides property tax relief, addresses the statewide workforce housing crisis, and invests in getting unemployed veterans back to work. The bill passed the Senate Floor Monday with a bipartisan vote of 42-25. Sen. Rod Skoe (DFL-Clearbrook) authored the omnibus bill as chair of the Senate Tax Committee.

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“This tax bill adds responsibility to the state’s budget by undoing a previously used shift and increasing aids to local governments. All Minnesota property taxpayers will see relief from this bill, including farmers, businesses, homeowners, and cabin owners,” said Skoe.

A highlight of the Senate bill is the Veterans Jobs Tax Credit, which would provide a tax credit for Minnesota businesses that hire unemployed veterans.

“Minnesota has one of the highest veteran unemployment rates in the nation, particularly for those in service since 9/11, and the Senate is doing something about that,” said Sen. Ann H. Rest (DFL-New Hope). “This tax bill puts people to work and helps Minnesota’s businesses.”

The bill provides $268 million in tax relief and meets a total budget target of $459.8 million for fiscal years 2016 and 2017. Provisions in the bill include:

Property taxes:

  • Repaying the LGA shift: $222 million one-time appropriation. This provision adds responsibility to the state’s budget by undoing a previously used shift of Local Government Aid payments.
  • Aids to local governments: $54 million for the biennium. State aids to cities, counties, and townships are increased to help them continue to take pressure off local property taxes and improve local services.
  • Property tax relief: Business, railroad, and seasonal recreation property tax changes deliver property tax relief to all property taxpayers. The average reduction will be 2.2% for homeowners, 2.1% for agricultural homesteads, and 4.3% for cabin owners.

Economic development:

  • Veterans Jobs Tax Credit: $24 million for the biennium. This provides an income tax credit to businesses that hire unemployed veterans and creates a similarly-valued grant program for nonprofits and local governments that hire unemployed veterans.
  • Research and Development Tax Credit expansion: $25.1 million for the biennium. This appropriation bolsters a credit that is particularly effective at attracting and creating high-tech, high-paying jobs.
  • Workforce Housing Tax Credit: $5 million for 2016, $7 million each year in 2017 and 2018. This bill addresses the statewide workforce housing crisis by creating a tax credit for workforce housing projects outside the 14-county metropolitan area. This provision will help cities provide affordable housing so Greater Minnesota businesses can attract and retain the highly skilled workers they need.

Education:

  • K-12 Education Credit expansion: $14.5 million for the biennium. The K-12 credit helps families who are paying early childhood and school-related expenses. The expansion will reach 16,800 new families and save the average taxpayer $285 each year. In addition, money paid for Head Start or public pre-K programs is now eligible for the credit, helping working families better afford quality early childhood education.
  • Minnesota College Savings Plan Credit: $7.4 million for the biennium. Thirty-three other states have tax incentives to help families save for college. Minnesota’s incentive disappeared during past budget deficits, but this bill reinvests in that priority.

This bill is a responsible approach to maintaining a balanced budget and represents about $268 million in property, income, and sales tax relief for Minnesota taxpayers – on top of the $20 million in federal conformity passed in February.

The Senate Omnibus Tax Bill will now head to a conference committee with the House of Representatives.

Senator Ann Rest
Ann Rest represents District 45, which includes portions of the western suburbs of Hennepin County in the Twin Cities metro area.

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Senator Rod Skoe
Rod Skoe represents District 2, which includes all or portions of Becker, Beltrami, Clearwater, Hubbard, Lake of the Woods, Mahnomen, Otter Tail and Wadena counties in the northwestern part of the state. He chairs the Tax Committee.

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