ST. PAUL, Minn. (AP) — ST. PAUL, Minn. (AP) — The stark differences among competing tax cut proposals became clearer Monday when majority Senate Democrats released a relief plan about one-tenth the size of a package sought by Republicans who lead the House.
With just three weeks before lawmakers must wrap up their session and decide the fate of an ample budget surplus, the mammoth divide in the size and approach of a potential tax cut will make striking a deal more difficult.
“There is a gap to close,” said Senate Taxes Committee Chairman Rod Skoe.
The new plan from Democratic senators, which is speeding toward a vote by week’s end, also contrasts with one put forward by Democratic Gov. Mark Dayton. It leaves out Dayton’s $100 million push for an expanded child care and dependent credit, with Skoe describing it as too costly and saying that other tax relief tied to education expenses is a wiser route.
Republicans weren’t impressed.
“It would be good if there was tax relief for all Minnesotans built into this bill,” Republican Sen. Julianne Ortman said after getting an initial look at the Democratic tax plan. “They’ve missed a great opportunity to do that with a $1.8 billion surplus.”
Ortman and others called the impact of the relief meager in comparison to increased fuel and sales taxes the Senate was preparing to vote on later Monday as part of a long-term transportation spending plan.
The transportation plan — which adds a 6 1/2 percent whole tax to gas sales, hikes license tab fees and increases the sales tax in the seven-county metropolitan area — passed the Democrat-controlled Senate Monday on a 36-27. Two Democrats joined all Republicans to vote against it.
Signature pieces of the Senate tax plan are:
— A new, up-to-$2,500 tax credit per veteran that businesses hire.
— An expansion of an education expense tax credit.
— Creation of a tax credit meant to spur workforce housing development in Greater Minnesota.
— A more-generous relief program for homeowners and farmers who see property tax spikes from year to year.
— A break in the statewide business property tax.
The bill also drives up allowances for city and county governments in hopes that local leaders won’t need to rely as heavily on property taxes going forward.
By comparison, the House tax proposal headed for a midweek vote would offer an array of new income tax credits and exemptions as well as steeply cut property tax rates for businesses. Some of the income tax breaks in the House plan are temporary while the business breaks would carry forward and grow in size.
Skoe, DFL-Clearbrook, said his goal was to craft a plan that didn’t overextend Minnesota financially, noting that cost of the House plan balloons to $4 billion in the next two-year budget. His proposal would add $450 million in costs to two-year budget that starts in July and has similar cost in the following two years.
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