As we finally wave goodbye to a long winter and get to enjoy some warmer weather, everyone seems to be in a slightly better mood, which is great! I’m happy to let you know that the Minnesota House has passed all of its budget bills. As the Senate finishes passing their omnibus bills, conference committees will begin meeting to work out the differences between the House and Senate versions.
Earlier this week, the House passed the Omnibus Education Finance and Policy Bill. The bill sets the ambitious goal of closing the achievement gap, reaching the nation’s highest high school graduation rate, 100 percent literacy by third grade, and 100 percent career and college readiness by graduation — all by 2027.
The bill fully funds all-day, every day kindergarten and invests $50 million in early learning childhood scholarships. All-day K and early childhood education are proven tools to improve test scores, close the achievement gap, and prepare students for future academic success. In addition to increased funding for kindergarten and early childhood, the bill also increases the basic funding formula for K-12 schools by four percent over the biennium, an increase of over $315 million, or $209 per pupil.
Under this bill, Willmar Public School District would receive a formula increase of $731,328 or $178 per-pupil (1.8 percent) in fiscal year 2014 and an increase of $2.2 million, or $527 per-pupil in fiscal year 2015 (5.2 percent).
The New London-Spicer School District would receive an increase of $152,444 or $109 per-pupil in fiscal year 2014 (1.2 percent) and an increase of $619,922 or $448 per-pupil in fiscal year 2015 (5.2 percent). The Atwater-Cosmos-Grove City School District would receive an increase of $89,923 or $121 per-pupil in fiscal year 2014 (1.2 percent), and an increase of $373,243 or $451 per-pupil in fiscal year 2015 (4.5 percent).
The Omnibus E-12 Education Finance and Policy Bill also contains a new strategy to close the revenue equity gap and reduce property taxes. The bill enhances the equity formula guaranteeing all districts at least $300 per student of equity and referendum revenue, and raises and indexes operating referendum levy equalization factors to reduce property taxes.
Yesterday, we passed Omnibus Higher Education Finance Bill with strong bipartisan support. The bill includes $150 million in funding that will directly benefit students by freezing tuition at both the University of Minnesota (U of M) and the Minnesota State Colleges and University system (MnSCU).
The House bill also includes new reforms to expand the oversight function of the legislature. By 2018, 70 percent of all jobs in Minnesota will require some form of post-secondary education. We have to make sure that our colleges and universities are accessible and affordable if we want our young people, our economy, and our state to succeed.
Health and Human Services
On Monday, the House approved the Omnibus Health and Human Services bill. The bill reduces the HHS budget by $150 million over two years through targeted cuts, reforms, and re-prioritization while still protecting the poor and vulnerable. Despite the $150 million reduction, the bill provides a 3 percent cost-of-living increase for nursing home providers and a 2 percent cost-of-living increase for long-term care providers.
After a decade of cuts and four years of wage freezes for caregivers, this increased funding is desperately needed and it’s absolutely the right thing to do. Our seniors and nursing homes are a vital part of our communities and they deserve our support.
The House HHS bill achieves cost savings in several ways. It finds $66 million through managed care payment reforms. It makes about $93 million in targeted reductions to existing programs and reforms of services in areas like dental and prescription drugs. The bill also recognizes savings from budget decisions made in other areas of the budget. For instance, by fully funding All-Day Kindergarten, the state will reduce the number of children on welfare requiring child care.
The fastest growing part of our state budget is health and human services. We have to slow the growth of spending in HHS, make some difficult cuts, and find cost savings. This bill does that while reflecting the right priorities: increasing funding for nursing homes and long-term care workers, and protecting Minnesota seniors, poor and vulnerable. I will continue working with my colleagues and advocating for our vulnerable as this bill moves on to conference committee.
Balancing the Budget Honestly, Proving Property Tax Relief, Paying Back Schools
On Wednesday, the House approved a bill providing $270 million in middle-class property tax relief for nearly 1 million Minnesotans through the Homestead Credit Refund, retooled renters’ credit and increased aid to cities and counties.
Property taxes have nearly doubled in the last decade and are a tremendous concern for our families, seniors, farmers, and small businesses. This bill provides direct property tax relief and puts money back in the pockets of hard-working, middle-class Minnesotans, who are the economic engine of this state.
The Homestead Credit Refund provides universal, targeted property tax relief to middle-class homeowners. Under this program, more than 300,000 homeowners (75% of filers) will see a refund increase. More than 100,000 additional homeowners will be eligible for a refund. Homeowners will be notified if they are eligible for a refund, increasing filers by 100,000. The average homeowner will see their refund increase by $212.
The previous Legislature raised property taxes on renters who earn less than $55,000 a year by cutting the Renter’s Credit. This provision enhances the Renters’ Credit, providing property tax relief to Minnesota renters (including elderly and disabled renters), so that the neediest renters see the greatest benefit. Under the improved Renter’s Credit, 66,000 filers will see a bigger refund, 10,000 additional renters will qualify, and the average renter will see their refund increase by $179.
The bill also increases Local Government Aid by $80 million and Country Program Aid by nearly $30 million. Willmar would see a 15 percent increase in LGA, Kandiyohi a 22 percent increase, Spicer a 49 percent increase, New London a 17 percent increase, and Atwater a 14 percent increase.
Two years ago, the previous legislature chose to borrow a record amount from Minnesota schools. The House Tax Bill pays back the $854 million still owed to Minnesota schools through a temporary, two-year income tax surcharge on only the wealthiest 0.5 percent of Minnesotans — taxable income greater than $500,000 per year for joint filer.
We made a promise to the people of Minnesota that we would pay back the school shift, and this bill keeps that promise. Minnesotans told us loud and clear that they were tired of irresponsible budget gimmicks and paying this back is the right thing to do.
The bill asks the wealthiest 1.1 percent of Minnesotans to pay their fair share by raising the income tax rate to 8.49 percent for individuals with a taxable income greater than $226,000 or $400,000 for joint filers. That 1.1 percent would pay an addition $3,700 per year on average. This increase would only affect 3.3 percent of businesses. This group currently pays a smaller percentage in income taxes than low-and middle-income earners.
The third revenue component in the bill recovers state costs from tobacco and alcohol consumption. The proposal increases the user-based fees on cigarettes to $2.83 per pack and catches Minnesota up with Iowa, South Dakota and Wisconsin who all have a higher cigarette tax. The bill increases the user-based fees on alcohol by 7 cents per beer. The alcohol tax hasn’t been raised since 1986. Alcohol and cigarette use cost the state billions of dollars annually in related health care, public safety and other costs.
After a decade of deficits, gimmicks, property tax hikes, and fiscal mismanagement, this bill responsibly balances the budget and invests in a brighter future for the state of Minnesota.
Feel free to contact me with any questions, comments, or concerns on any legislative issue. Thank you for the honor of serving you in the Minnesota House of Representatives.