Democrats in the Minnesota Senate were moving quickly Thursday to try to pass a tax relief bill and send it to the House, but Republicans managed to block the action for at least another day.
The Senate Tax Committee approved the $432 million package that repeals three business sales taxes and aligns Minnesota tax policy with federal tax policy. Lawmakers were poised for a vote of the full Senate in the afternoon, but DFL leaders did not receive the needed Republican votes to waive the rules to allow for same-day action.
• Related: Dayton hammers Senate on tax vote delay
Senate Minority Leader David Hann, R-Eden Prairie, said his caucus needed another day to study the bill.
"This was a bill that was given to us literally, I don't know, an hour ago to read and digest," Hann said. "And it is not a strict conformity bill. There are a number of other provisions in this bill that our members have not seen."
Several other Republicans shared similar concerns. State Sen. Sean Nienow said he didn't understand the rush, as another day won't mean any extra benefits for taxpayers.
"I heard the tax chair say time and again, 'We need to properly vet all of these proposals. We need to go through the process and not go too fast. We want to make sure we do it right,'" said Nienow, R-Cambridge. "But suddenly now, there's an urgency, and the only thing that I've seen that changed is the governor picked a very public fight with the majority leader and said 'get it done.'"
The delay came just two days after Gov. Mark Dayton publicly scolded lawmakers for moving too slow on taxes.
Dayton has been pushing lawmakers hard to finalize a tax bill this week. The governor, who is running for a second term this fall, wants to make sure the tax breaks are available yet this year. He also wants to head off the sales tax on warehousing services before its scheduled start on April 1. The sales taxes on business equipment repairs and telecommunication equipment purchases started last summer.
Dayton said the latest delay was "inexcusable." He said Republicans will be solely responsible for denying income tax cuts to thousands of Minnesotans if they cause any further delays.
"I wouldn't be surprised if this was something they thought would work to their advantage," Dayton said. "If they delay it long enough they have plausible deniability and Revenue can't get this put together and people who will file this weekend under the old tax laws and then literally find out a couple days from now they need to refile to claim the retroactivity that they're due. That's the only reason I can conjure up that somebody would take this step."
Senate Majority Leader Tom Bakk said he was worried about losing a few of the provisions that the Senate included in its bill but that the House left out of the one it passed two weeks ago. Those provisions affect the working family credit, the gift tax and the estate tax. Bakk also said Republicans have already had more than a day to study the bill.
"Everyone had the language in this bill more than 24 hours ago," said Bakk, DFL-Cook. "So, let's just be honest with the public that we've all had it, and I would argue that we've probably all read it. But if you want to wait until tomorrow to process it, that's certainly in your control here today."
The tax savings in the Senate bill are about $70 million less than in the bill the House passed two weeks ago. But both bills have key similarities, and House DFL leaders were ready to take up the Senate version as soon as it arrived. House Speaker Paul Thissen said they'll now take that vote on Friday.
"I mean I liked a lot of the pieces that we had in the House bill, and most of those pieces remain in the Senate bill," said Thissen, DFL-Minneapolis. "They did make a couple of changes that we obviously would have done differently. But they are making important progress on business-to-business repeal, on middle class tax cuts, and we really appreciate the progress the Senate has made this week. They've worked very hard to move a bill forward."
One of the biggest differences between the House and Senate tax bills is the $150 million that the Senate puts into the state budget reserve. The Senate version also adds more money to the reserve each time there's a budget surplus. The entire package of tax breaks and reserve enhancement uses about half of the $1.2 billion surplus lawmakers have to work with this session.