Legislative Update – January 6, 2017

The marquee bill – House File 1 and Senate File 1 – is called the 2017 Health Care Emergency Aid and Access Act.

The bill would provide $300 million in premium relief to help reduce health insurance premiums for Minnesotans on the individual market. For the first three months, all eligible individuals would qualify for a 25% premium reduction. For the remainder of 2017, premium reductions would be limited to only those making less than 800% of the Federal Poverty Guidelines. Individuals who exceed that threshold ($95,040 per year for an individual, $194,400 for a family of four) would not qualify for premium assistance.

Click for more information about the 2017 Health Care Emergency Aid and Access Act.

While the House and Senate Republican majorities had identical versions for their first bills (as introduced), they had slightly differing priorities for their other top four bills.

Minnesota House

• House File 2 – enacting federal tax conformity for Minnesota taxpayers.
• House File 3 – implementing federal REAL ID standards for Minnesota driver’s licenses.
• House File 4 – providing tax relief to farmers, Minnesotans on Social Security, those saving for college, and recent graduates with student loans.
• House File 5 – overhauling state healthcare insurance operations.

As part of floor session for today, the Minnesota House suspended the rules and passed House File 2 in an effort to have certainty as early as possible for tax filers.

Minnesota Senate

• Senate File 2 – providing comprehensive transportation funding without increasing the gas tax.
• Senate File 3 – enacting federal tax conformity for Minnesota taxpayers.
• Senate File 4 – reforming teacher tenure requirements in Minnesota public schools.
• Senate File 5 – providing funding for adult workforce development initiatives in Greater Minnesota.

Governor Dayton and Lt. Governor Smith also unveiled their 2017 Tax Bill, which would provide $300 million in tax cuts for more than 450,000 Minnesotans and in aid payments to local governments for essential services, while protecting the state’s long-term fiscal health. The Dayton-Smith Tax Bill also would reduce taxes for Minnesota farmers and landowners, and would eliminate tax loopholes for corporations. A summary of the Bill follows:

• Federal Tax Conformity – By aligning Minnesota’s tax code to tax relief enacted by President Obama and Congress in 2015 and 2016, the Governor and Lt. Governor’s tax proposal would provide $21 million in targeted tax cuts for middle class families. Governor Dayton and Lt. Governor Smith’s proposal would benefit 35,000 college students and their families paying for higher education, with a total of $4.3 million in tax breaks under the plan. Teachers buying classroom supplies, homeowners who refinance their mortgages, and new homeowners paying mortgage insurance would also benefit.
• Working Family Tax Credit – The Working Family Tax Credit makes work pay by supplementing the wages of low-income workers. The Governor and Lt. Governor’s proposal would broaden the reach of the Working Family Credit, investing $93.9 million to make 107,000 new households eligible. Over 260,000 families currently receiving the credit would see an increase. The average family would save an additional $124 per year.
• Making Child Care More Affordable – Child care costs Minnesota families over $10,000 per year for each child, on average – some of the highest costs in the country. But under current law, only 33,000 Minnesota families are eligible to receive tax credits for child care. Governor Dayton and Lt. Governor Smith’s proposal would expand eligibility for these tax credits to a total of 95,000 Minnesota families, providing $61 million in tax cuts. Another 75,000 families, who were already eligible, would save an additional $379 per year.
• Cutting Property Taxes for Minnesota Farmers – Farm property taxes in Minnesota have increased 114 percent in the last decade. This problem has been compounded by low commodity prices and rising agricultural land values. To help relieve property tax burdens on Minnesota farmers, Governor Dayton and Lt. Governor Smith have proposed a credit worth $34 million for owners of agricultural property equal to 40 percent of their property taxes attributable to school district debt levies.
• Funding for Essential Services – Minnesotans rely on their municipal and county governments to provide essential services like police and fire protection. Even after investing additional funding in Local Government Aid (LGA) and County Program Aid (CPA) over the last several years, cities and counties have still not recovered from a decade of previous cuts. LGA and CPA funding is still lower than it was in 2002, causing local governments to raise property taxes to pay for these vital public services. Governor Dayton and Lt. Governor Smith have proposed a $30 million investment to support these important programs and relieve the burden on Minnesota property owners.
• Investing in 21st Century Classrooms – All Minnesota students need a world-class education, no matter where they live. However, in school districts without high-value land, the burden of paying for modern schools can fall disproportionately on just a few businesses, farms, or homeowners. The Governor and Lt. Governor have proposed a $62 million investment over four years to help school districts repay school bond levies without overly burdening private property owners.

For more information about Governor Dayton and Lt. Governor Smith’s Tax Bill, read the Tax Cuts for Over 450,000 Minnesotans fact sheet and Closing Corporate Tax Loopholes fact sheet.

Questions? Contact the Government Relations Team:

Jaime Simonsen
Bernie Omann
Jim Grathwol