Dayton signs Minnesota tax cut bill

Minnesota Capitol
The Minnesota State House on Thursday, Jan. 3, 2013.
Hart Van Denburg/MPR News, file

After several twists and turns this week, Minnesota lawmakers have finally passed the tax cuts that nearly all of them support.

The state Senate passed it Friday on a 58-5 vote and sent it on to the House, where the vote was 126-2. Gov. Mark Dayton signed the bill Friday evening.

In a statement, Dayton said the tax cuts will put "more money in the pockets of Minnesota families and businesses" and "make taxes simpler for Minnesotans."

Dayton, who'd implored lawmakers earlier in the week to move faster on the tax bill, praised senators following the vote.

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"This is the first time in my memory that the Legislature has passed a major tax bill in less than a month after they came into session," Dayton said. "The urgency was apparent, and I'll thank the House leadership in advance for passing a bill, and I look forward to signing it into law this evening."

ā€¢ Related: Dayton hammers Senate on tax vote delay

Dayton, who is running for re-election this fall, wanted the bill passed in time to benefit hundreds of thousands of Minnesotans on their 2013 tax returns.

The $440 million tax cut package provides a long list of credits and deductions by lining up state and federal tax codes. It also repeals three new business sales taxes including a warehousing tax that was scheduled to start April 1. The bill also increases the state budget reserve by $150 million and sets up future increases each time there's a budget surplus.

The hedge against future economic downturns is a "monumental" step, said Senate Majority Leader Tom Bakk, DFL-Cook. "It's much easier to spend it or to cut taxes with it. Those are very popular," he said. "It's probably not quite as popular to put it away."

Most Senate Republicans eventually voted for the bill, but not before several failed attempts to take away some of that reserve money.

GOP Sen. Julianne Ortman of Chanhassen wanted to make a benefit to married couples retroactive to the 2013 tax year, arguing that family budgets should take priority over the government budget.

"Let's make sure our families can thrive first. That's far more important," she said. "Government will always survive. Let's make sure that we don't imperil any more Minnesota families. Let's get them the tax relief they've earned, that they expect and that they've overpaid. Give them back their money."

State conformity on the marriage penalty will begin with 2014 taxes, Senate Tax Chair Rod Skoe, DFL-Clearbrook, said.

"This large number of filers, many of whom have already filed ā€” it's unfortunate for this year," he said. "But I think it would have been a very hard thing to accomplish, and neither the House nor the governor supported this either because of the cumbersome nature of it."

Republicans tried unsuccessfully to undo another provision from last year's tax bill: the authorization of a new legislative office building.

The dispute between House and Senate Democrats over that project was the reason this year's tax bill took so long, said Senate Minority Leader David Hann, R-Eden Prairie.

Hann called the building an "albatross around the necks of this Legislature. It is preventing us from doing our business. It is a wasteful use of taxpayer money and it is not needed."

Hann voted against the bill, and explained later that the tax cuts simply didn't go far enough.

The bill's retroactive tax breaks affect mortgage insurance, employer adoption assistance, college loans and tuition and the working family credit. The delayed items include the marriage penalty fix and a dependent care credit. An elimination of the gift tax and adjustments to the estate tax are also part of the bill.

Revenue Commissioner Myron Frans suggested that some Minnesotans who have not yet filed their returns should wait until Monday.

"If you've already filed, we will do three things. We will examine your return to see if we can make the adjustment for you, after we make our changes. We will notify you, a taxpayer, if you need to give us more information, and we'll notify you if you need to file an amended return. But we'll give more concrete information on Monday."

Frans said that as of this week, about half of all Minnesota taxpayers have already filed their 2013 returns.

The Department of Revenue is working with tax preparers and online tax preparation services to update tax filing software for the estimated 1.4 million Minnesotans who have not yet filed their taxes.

The Associated Press contributed to this report.