There is some meat attached to the bones of the tax cut deal that led to the passage of the omnibus environmental and agriculture bill in the final hours last week’s special session of the Minnesota Legislature.
Republican minority leader David Hann, who struck the deal with DFL majority leader Tom Bakk, revealed some of the details at a Republican senate district meeting in Edina earlier this week.
Hann said Bakk promised that a tax bill with “substantial” tax reductions will emerge from the Senate in 2016 in exchange for Republican votes on the controversial agriculture and environment bill.
Bakk was falling short of the necessary votes to pass the bill because of strong opposition from members of his caucus who objected to changes in environmental protection policies. So Bakk asked for Hann’s help in securing some Republican votes.
“I said, ‘Let’s talk about next year,’” Hann said. “We are going to have left over a significant amount of money…. that didn’t get spent, didn’t get committed. To me that’s money that has the opportunity of being spent as a way of providing some kind of tax relief, tax reductions.”
Hann said the conversation involved Bakk, the DFL chair of the tax committee, and a Republican member of the committee. Hann said he suggested using the 2015 tax bill (which did not get passed) as a starting point.
“Can we take the bill that you’re working on right now that’s in the conference committee, that has a very small amount — about 90 million — in tax reduction; can we take that as a baseline and build up from that and add a significant amount of tax reduction to that bill?” Hann said, recalling the discussion with Bakk. “Can we agree that we in the Senate will pass a good tax bill that Republicans can have input in, and [Bakk] said ‘yes.’ So that was the agreement.”
That agreement yielded enough Republican votes to allow passage of the environment bill, ending the special session.
In an interview, Hann said the agreement to produce a tax bill next year is still not specific but “we did talk about some dollar amounts. There’s always uncertainty about how much money is going to be available.”
The state started the 2015 legislative session with a $1 billion surplus, which later grew to $1.9 billion. Yet more than $800 million was left unspent. Hann said that additional revenue could boost that amount.
“What I will say is that it is a significant amount of tax reduction and it is ideas or things that Republicans think are worth doing,” he said. “This is not just stuff that Democrats would necessarily be opposed to but we think it would be things that are beneficial to the state and have support among some Democrats.”
Hann said he couldn’t offer details on what taxes would be affected but he emphasized that the changes would have an impact. Next year’s Senate bill will contain not just tax credits, he said, but actual tax reductions.