Good morning. The Legislature must adjourn tonight at midnight to meet the constitutional deadline, but first lawmakers must wrap up the $38 billion budget. After a five-hour debate, the House passed the tax bill early this morning by a vote of 69-65, and the bill now heads to the Senate for a vote today.
The bill includes $2 billion in tax increases by raising taxes on the top 2 percent of Minnesota earners with a new fourth-tier income tax rate of 9.85 percent. Couples who make more than $250,000 in taxable income and individuals who earn more than $150,000 will be impacted. The bill also includes an increase of $1.60 per pack in the cigarette tax. The tax increase will solve the state’s $627 million deficit and invest in K-12 and postsecondary education, among other investments.
During the debate on the floor, Republicans argued that the tax increases will hit every Minnesota resident, forcing people and businesses to move to neighboring states. If enacted, Minnesota will have the fourth highest income tax rate in the country after Oregon, California and Hawaii. House chief author Rep. Ann Lenczewski, DFL-Bloomington, said 98 percent of Minnesotans are not going to see an income tax increase and smokers will be asked to pay more money, but she said the hope is some people will quit smoking and some will never start.
After the $800 million bonding bill did not pass the House on Friday, the Senate passed a very small bonding bill early this morning by a vote of 66-0 that includes $132 million for the State Capitol restoration. House Speaker Paul Thissen, DFL-Minneapolis, said the Senate did not consult with him before it passed the bill. As a reminder, a bonding bill needs a three-fifths majority to pass.
The House and Senate are both expected to meet today in Session at 11:00 a.m.