Currently the Governor has on his desk waiting for a signature or veto the Higher Ed. Bill, E-12 Bill and the Tax Bill.  He is threatening to veto the tax bill primarily because he does not like the provision in the bill that insists that the Budget Forecast include inflation on both the income and the spending side of the budget.  Currently the Forecast accounts for inflation only on the income side.  This is what allowed the Governor and other Republicans to project a $3 billion surplus.   

Actually the surplus was much smaller and caused Democrats to realize that there was need to raise some revenue if the state was going to meet all of its obligations and plan for the future.  

Also included in the Tax Bill, which makes this a challenging veto for him, are provisions for property tax relief, increases in LGA and the provision the Governor insisted upon a line of credit for the Republican National Convention.  The Republican Party insists that this be provided in order to grant a state the right to hold the convention.

No doubt this will be a challenging choice for the Governor, as he must secure the line of credit somewhere else in order to host the convention.  He could go to St. Paul and Minneapolis as well as the Counties.  But he has already denied through line item vetoes and outright vetoes many funding provisions that would help St. Paul get back on its feet after cutting funds very deeply in ’03.

Here are some of the tax related provisions passed by the House:


– Closed corporate loopholes: Closed tax loopholes used by Minnesota corporations to shelter income through phony overseas corporations to avoid paying their fair share of taxes.

– Tax compliance: Tax compliance efforts increased to ensure that individuals and businesses pay the taxes they already owe.  

– Property tax refund: Expanded Property Tax Refund (PTR) program.  An additional $32 million will be provided directly to eligible homeowners.

– Property tax relief: Increased local government aid by $70 million; county program aid by $13 million; and reinstated at $5 million township LGA, which was eliminated in 2001. These will help hold down property tax increases.  (A property tax relief package that would have provided greater relief to 90% of Minnesotans was vetoed.)
– Homestead agricultural property rate reduction:  Class rate on the first tier reduced from 0.55 to 0.50 percent.
– Tuition and related expenses deduction:  For tax years 2006 and 2007 allow low- and middle-income taxpayers to deduct up to $4,000 of higher education tuition and related expenses.  
– Classroom teacher expenses deduction:  For tax years 2006 and 2007 extend the $250 deduction for K-12 educators of the amount paid for books and supplies for their classrooms.  

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