Legislative Update: Building on our Economy’s Momentum
I was proud to join my fellow legislators and Governor Dayton earlier this month in our near unanimous approval of a tax relief package that will put more money in the pockets of Minnesota families and businesses while stabilizing our state budget going forward.
Just four weeks into the 2014 Legislative Session, this bi-partisan tax bill was passed quickly enough for many of this year’s filers to experience tax breaks (if you already filed, don’t worry—the Minnesota Department of Revenue will contact those eligible for additional refunds). Even more taxpayers will see further relief kick in on next year’s taxes.
These tax cuts come just over a year after this same legislature was staring down a $627 million deficit and a massive I.O.U. to our schools. Since then, DFL lawmakers and the Governor passed a responsibly balanced budget to pay back our schools and erase the deficit. Thanks to our state’s workers, innovators and businesses, our economy continued to gain momentum and our budget grew out of balance once again—this time in a positive direction.
With a projected $1.2 billion surplus announced last month, the legislature moved efficiently to deliver $508 million in tax relief, around half of which targets middle-class Minnesotans.
Among the tax cuts, eliminating the marriage penalty will save joint filers an average of $115 starting next year. Deductions for tuition payments and student loan interest will help families with college expenses, and most homeowners will be able to deduct their mortgage insurance premiums. Additionally, by expanding the Working Family Tax Credit, families earning between $25,000 and $40,000 annually will be eligible for an average savings of $334.
The other major component of the tax bill provides relief to thousands of Minnesota businesses. With our economy’s continued growth, we were able to eliminate certain business sales taxes enacted last session, including the tax on warehousing services, and increase funding for tax incentives to help startups grow jobs across the state.
While it did not get as much attention as tax cuts, I was also pleased to allocate $150 million of the surplus to our state’s budget reserve account. Much like a family’s emergency savings, the budget reserve protects our most essential services, like our schools, from bearing the brunt of any future economic downturns. With the state just coming out of a decade of deficits and borrowing from our K-12 schools, building our budget reserve will ensure Minnesota’s progress through unexpected economic volatility.
Looking ahead, the legislature will now turn its focus to considering how best to invest what remains of the surplus in common sense priorities. I am supporting a long overdue wage increase for long-term care employees in our community and would also like to see bi-partisan agreement on a robust bonding bill that supports our infrastructure and our public higher education institutions while creating construction jobs in every corner of Minnesota. In particular, I am working hard to support law enforcement in our region by pushing for funding for the HERO Center that will serve police officers and first responders in South Washington and Dakota counties.
In an era of politics when partisan stalemates have become all too common, Minnesota’s 2014 Legislative Session is off to an encouraging start. As we continue to work toward solutions that will build on our recent progress, I encourage you to stay in touch and share your views on the most pressing issues facing our state and our community.
State Sen. Katie Sieben, DFL-Cottage Grove, is the Assistant Senate Majority Leader and Chair of the Senate Subcommittee on Elections.