Mary Liz Holberg: Most Talked About Constituent Issue—Tax Omnibus Bill

Editor's note: The following is a newsletter from Lakeville's State House Representative Mary Liz Holberg, R-Lakeville.

Greetings from the Capitol:

Most Popular Constituent Contact Issue This Week – Tax Omnibus Bill

Many of you have contacted me about new taxes and fees being proposed this year. Ironically, as Minnesotans rushed to file their taxes by the April 15 deadline, Democrats in the House used the day to celebrate and announced their Omnibus Tax Bill, the plan to raise taxes by $2.6 billion over the next two years through higher income taxes, tobacco sales taxes, and a much higher tax on alcohol. The bill creates a Fourth Tier income tax rate of 8.49% for couples with taxable income greater than $400,000 or individuals above $226,200, and then a temporary 4% income surcharge on incomes greater than $500,000 for two years to pay back money owed to schools. We are told the surcharge will “blink off” after the school shift is paid back. With this temporary surcharge, the top Minnesotans’ state tax rate would hit 12.49%, the second highest in the nation. 

Just this month, we received news that tax revenue in February and March came in $145 million above projections, closing our relatively small deficit even further. By the time the new budget begins in July, our projected shortfall will be quite small compared to the massive $5 billion problem the GOP legislature had to fix in 2011.

Combined with the Senate’s plans for new transportation fees and taxes, the House and Senate saw nearly $4 billion in new tax increase proposals come through committees this week.

Environment Bill Hurts Cities and Businesses

On Thursday, the Minnesota House approved a comprehensive agriculture and environment finance proposal that spends $822 million in order to better protect our land, air, and waterways and to promote the ag industry. Many lawmakers were taken aback by fee increases included in the bill. Most controversial: increases in water permit fees, lake property, and a “product stewardship” recycling program, which will directly increase the price of paint, carpet, and all batteries that you use for products in your home.

Lakeville’s cost for water will increase significantly because of this bill. Based on 2012 usage, fees paid by the City of Lakeville will triple and water rates to residents will have to increase 2.7% just to cover these fees. 

The following shows the annual impact to Lakeville, using 2012 water usage:

Current: $42,921

Proposed: $125,000 (estimated)

Increased cost to the City of Lakeville: $82,079 

This MPR article covers some of the other fees moving forward in various bills that will take in hundreds of millions of dollars more from hardworking taxpayers. I am frustrated with the fees and surcharges that go above and beyond what we need to balance our budget.

“Jobs” Bill Spends More and Could Cost Jobs

The first budget bill was approved in the Minnesota House on Monday, a $436 million proposal that’s designed to promote economic development in Minnesota. While the goal of the bill is to grow jobs, the proposal contains at least $8 million in wasteful spending on programs that will be paid for with new fees on Minnesotans. The bill is also around 25% larger than the same budget was just two years ago. 

Education and Health & Human Services Omnibus Bills Next Week

Next week, the House will take up both the House K-12 Education and Health & Human Services Omnibus bills. The Education Finance plan is the largest part of our budget and will spend almost $16 billion on schools over the next two years, incorporating a large per-pupil funding increase similar to what the Republican majorities passed in 2011. The bill puts in place another layer of unnecessary bureaucracy by funding regional “centers of excellence” and also fails to pay back the remaining money schools are owed from the school shift. You may have heard that this DFL education plan fully funds all-day kindergarten for every student, but it actually shortchanges districts for the full cost and provides $600 less per pupil than other grade levels receive. 

The Health & Human Services Omnibus Finance package proposed would spend around $11 billion but cost patients more through a higher hospital surcharge tax. At the same time, the bill cuts funding for nursing homes and county job training and also counts on federal “funny” money that we shouldn’t be reliant on. 

Meetings with Groups and Constituents

Here are some of the folks I’ve met with recently in St. Paul:

• Brianna Klein, Lakeville constituent and massage therapist – met about streamlining massage regulations.
• Sabrina Peterson, Lakeville constituent and St. Kate’s student, visiting with MN Private Colleges.

Sincerely,

Mary Liz Holberg