March 31, 2008

House and Senate Debate Tax Proposals

After Easter Break, the House and Senate continued their discussions on tax proposals and how to balance the current budget deficit.  One of those proposals,  House File 4103-- sponsored by Rep. Ann Lenczewski (DFL-Bloomington), would remove nearly all corporate tax subsidies, including various research credits and JOBZ incentives.  In return, the bill would lower the corporate tax rate one percent and provide sufficient revenue to offset budget balancing cuts to agencies like Health and Human Services. 

In the Senate, a different approach is being discussed. Along with changes to several corporate tax subsidies, Senate File 2869-- sponsored by Senator Bakk (DFL - Cook), proposes significant changes in the property and personal income taxes.  Specifically, the Senate proposal would eliminate the foreign operating corporation loophole (generating approximately $100 million) but includes several other revenue raisers (raising $150 million total) to "buy-down" the deficit in the current biennium. 

More importantly, however, the Senate proposal also increases taxes on commercial and industrial properties statewide and sets increases on autopilot for future years. The MRCC opposes any shifts in the property tax burden for commercial and industrial property owners. Property taxes on C/I properties can have a big impact on retaining current employers in the region, as well as attracting new jobs to the state.  

There are many additional provisions in these tax proposals.  The Senate version, currently 196 pages long, includes financing plan for the Mall of America expansion and an appropriation to study of a new stadium (see below).   Earlier Friday, both bill sponsors were on MPR's Midday to outline their proposals in greater detail. 

To listen to an archive broadcast of their discussions, click here or on the icon above.

Discussion Over Bonding Bill Continues

The Governor met with leaders from the House and Senate this week to continue discussions regarding the size and scope of this year's bonding bill, House File 380.  According to the Governor's Office, the Governor made it again clear to Legislative leadership that the 3% debt service limit as traditionally calculated must be met this year.  After the meeting, the Governor express some optimism that the Legislature would adhere to his advise and present a bill that meets the 3% requirement.

The current bonding bill awaits conference committee action in the Legislature. There are several projects in the bonding bill that the MRCC supports, including funding for the Central Corridor Light Rail project, Urban Partnership Agreement, and the Minnesota Orchestra Hall renovations.

To view a side by side comparison of the House and Senate bonding bill, click here.

Last Year's Transportation Policy Bill Is Back

A bill that screeched to a halt in 2007 has been given a green light this year.  Sponsored by Rep. Frank Hornstein (DFL-Mpls) and Sen. Steve Murphy (DFL-Red Wing), an omnibus transportation policy bill was approved by a conference committee. Hornstein said it should be on the House floor “pretty soon.”

HF1351*/SF1971 was approved by the same group on the final day of the last year’s session, but was awaiting action when the final gavel was pounded.

The bill has not significantly changed from last year. Among the minor changes agreed to by the committee were shifting effective dates by one year from 2007 to 2008; removing obsolete or duplicative provisions, such as things included in the transportation finance law passed earlier this year; and replacing last year’s language with updated verbiage.

Hornstein said this is the first of two projected transportation policy bills for the year, with “Transportation Policy II: The Sequel” working its way through the House and Senate.

The bill, in part, addresses traffic regulations, vehicle registration, Department of Transportation planning reports, towing authority, Metropolitan Council planning, railway safety and truck size and truck weight restrictions.

Committee Approves Funding for Stadium Study

Yesterday, the Senate Tax Committee approved a $2 million study by the Metropolitan Sports Facility Commission (MSFC) on how to replace the Metrodome.  The study would be completed by January of next year.

This summer, the MSFC released findings on the economic impact of professional sports franchises to the state. Conducted by RSM McGladrey, the report provides "an analysis of the estimated historical tax revenue benefit to the state, county and local government agencies from activities associated with major professional sports facilities in Minnesota." To view the findings contained in this report and/or provide comments and feedback to the MRCC, visit the Chamber's Public Policy Message Board.

The Minnesota Vikings lease at the Metodome is set to expire in 2011.  Given this timeline, the MRCC supports efforts by the Minnesota Vikings and the MSFC to move the discussions forward on a new stadium development proposal. 

Acting in "Good Faith"

As he presented the so-called “good faith” bill on the House floor, Rep. Joe Atkins (DFL-Inver Grove Heights) said insurance holders have this type of protection in every other state.

Approved 81-51 by the House, HF3115/SF2822*, sponsored by Atkins and Sen. Tarryl Clark (DFL-St. Cloud), now awaits signature by the governor. The Senate approved it March 19 on a vote of 50-15.

According to the bill, a policy holder would be allowed to sue their insurance company for not settling a claim in “good faith,” meaning they can prove that the insurance company did not have a reasonable basis for denying a claim. The insurance company must also have known that it had no reasonable claim, or acted with “reckless disregard” for the lack of reason.

Amendments added to the bill included a cap on attorney reimbursements at $40,000, and an exclusion of insurance agents from liability under the “good faith” provisions.

Photo-Cop May Be Back

Cameras taking pictures of motorists going through red lights in Minneapolis may be turned back on. House File 3863, sponsored by Rep. Paul Thissen (DFL-Mpls), would authorize local units of government to operate traffic light cameras. Drivers caught would be mailed a ticket, but the ticket could not serve as grounds for a license suspension, and would not appear on the driver’s record.

Approved by the House Public Safety and Civil Justice Committee and the House Local Government and Metropolitan Affairs Committee, the bill's next stop is the House Public Safety and Finance Division Committee.  The Senate companion is Senate File 3656.

A similar bill, HF1058, also sponsored by Thissen, failed to get committee approval last year.

For answers to questions or to provide comments,
call (612) 370-9100 or visit the website at www.minneapolischamber.org
info@minneapolischamber.org