- Minnesota Cities & The League
- Governing & Managing
- Risk Management
- Legislative Action Center
- Training & Conferences
Next step-conference committee to negotiate the differences between the House and Senate versions of the bill.
(Published Apr 30, 2013)
With only three weeks remaining in the 2013 regular legislative session, the Senate on Monday took up the Senate omnibus tax language which has now been amended as a delete-all amendment into the House version of the omnibus tax bill, HF 677. The bill, which includes a net increase of $1.84 billion in tax revenues during the upcoming FY2014-15 biennium, was expected to generate ample floor discussion. The debate lived up to those expectations with several interesting twists.
During the initial vote, the Senate failed to approve the bill on a vote of 32 to 34, despite having one Republican Senator, Dave Senjem, (R-Rochester) voting in support of the bill. Almost immediately, Senator John Hoffman (DFL-Champlin), who initially voted against the bill moved to reconsider the failed vote. After a lengthy floor debate, the Senate approved the motion to reconsider the vote on the bill and then ultimately voted to approve the bill on a 35 to 31 vote.
The amended House bill will now be sent to the House on Wednesday where the House will almost certainly refuse to concur with the Senate amendments. That will set up the appointment of a conference committee to negotiate the differences between the two bills. We expect the conference committee to begin as early as Wednesday, May 1.
Perhaps the most significant city provisions included in the bill are related to local government aid (LGA), an exemption for cities and county purchases from the state sales tax and an additional state general fund appropriation to backfill the recent erosion in revenues to fund police and fire pension aids.
The bill includes $80 million in additional funding for the LGA program and incorporates the revised LGA formula recommendations introduced by Senator Roger Reinert (DFL- Duluth). The revised LGA formula included in the Senate bill is identical to the House version except that in future years, the Senate bill does not include any LGA appropriation growth factor beyond the initial $80 million appropriation increase for the distribution in calendar year 2014.
The bill also includes a sales tax exemption for cities and counties as proposed in separate bills by Senator Ann Rest, Senator Dave Senjem (R-Rochester) and Senator Chuck Wiger (DFL-Maplewood). The sales tax exemption for cities is estimated to reduce city costs by $77.5 million in the first full year of implementation. The House bill does not include a general city and county exemption from the state sales tax.
The bill also includes a general fund appropriation increase of $23 million per year to provide additional resources for police and fire pension aids and to reduce the funding deficiency in the PERA police and fire plan. The Senate chose to replace the originally proposed $5 surcharge on homeowner and automobile insurance policies with this general fund alternative. The House version of the omnibus tax bill includes the surcharge language, which is estimated to generate roughly the same revenues.
The approved Senate bill includes a revised property tax savings reporting requirement tied to the city/county sales tax exemption. All cities and counties would be required to submit to the county the amount of their estimated calendar year 2012 actual or estimated sales tax payments to the state. The county would compile this information and add the information for all cities and counties to the annual parcel-specific proposed tax statement mailing. In addition, each city and each county would have to discuss the estimated benefits of the sales tax exemption on their 2014 proposed budgets and fees and other budgetary impacts. The reporting requirement does not include the provision included in the original Senate division report that would have required the commissioner of revenue to recommend re-instituting levy limits if at least 75 percent of the sales tax exemption benefits did not result in a reduction in property taxes.
For more information on the contents of the Senate Omnibus Tax Bill, please review this earlier article.
* By posting you are agreeing to the LMC Comment Policy.
The LMC Intergovernmental Relations (IGR) staff is focused on legislative advocacy for cities. Feel free to contact any IGR member with questions, concerns, or suggestions about legislative issues and League policies.
The League is here to advocate on behalf of cities, but it is important for cities to also tell their stories.