Minnesota GOP lawmakers poised to tap surplus for tax cuts

State finance officials are set to release a revised economic forecast Tuesday that could change the state's budget surplus projection, but Republican legislative leaders say whatever the number is they plan to pass significant tax cuts this year.

In the first two months of the 2017 session, Minnesota House and Senate tax committees have already seen a menu of tax cut options that would far exceed the available $1.4 billion budget surplus. Some of the proposals have bipartisan support. Many don't. Only a fraction of those bills have a chance of being rolled into the big tax bill at the end of the session.

Still, House Taxes Committee Chair Rep. Greg Davids, R- Preston, said his goal is to hold a hearing on nearly every bill, if time permits, even if the cuts don't end up passing. He figures lawmakers have collectively proposed $6 billion to $7 billion in tax relief already.

"We've been hearing many, many bills," he said. "We do not have our targets by any means yet. But obviously it won't be anywhere near those numbers."

Some of the tax proposals have especially hefty price tags.

The combined cost of individual bills to phase out the tax on Social Security income, to eliminate the estate tax and to eliminate the statewide property tax on businesses would total more than $3 billion, Davids said.

"I'm guessing that my targets would be totally wiped out plus some if we did even one of those," Davids added. "So, what I'm looking at are the ideas. They're all scalable."

Some of the options for scalability are found in competing bills aimed at the same tax. For example, some proposals to phase out the Social Security tax do it over a longer period of time, while others keep the tax but adjust the income threshold to exempt more people.

Rep. Paul Marquart, DFL-Dilworth, said he thinks Republicans are trying to make a political statement by considering such a long list of tax cuts, though many are unrealistic. The focus, he added, should instead be on tax cuts that are targeted and don't break the budget.

"My first 15 years in the legislature was nothing but a bunch of ups and downs and deficits, and you were always behind the eight ball. We can't go there again," he said. "Things are good and stable. So, when we pass a bill, we have to really look closely how is that going to impact us in the future."

DFL Gov. Mark Dayton is also concerned about budget stability. That's why his tax-cut plan weighs in at a relatively modest $300 million.

The plan includes tax breaks for low and middle income families, parents who pay for child care, college students and farmers. It's a pared down version of the tax bill that Dayton vetoed last year due to a potentially-expensive drafting error.

The governor's budget is a balance of strategic investments and targeted tax relief, said Minnesota Revenue Commissioner Cynthia Bauerly.

"Some proposals cost a great deal of money and affect very few Minnesotans," she said. "I think the goal with our state budget is to do the most good for most Minnesotans that we can."

Republicans, however, say the governor's plan doesn't go far enough. They want to do a lot more.

Without revealing specifics, Senate Taxes Committee Chair Roger Chamberlain, R-Lino Lakes, told reporters last week that Minnesotans deserve to see "real tax relief" this year.

"Our plan will advance Minnesota's economy by letting families and businesses keep more of the money they earn, with tax relief packages that are broad and deep that will impact every corner of this state," Chamberlain said. "That tax relief will help drive the economy, the rural economy, the metro economy, and put money in the hands of people who know what to do best with their dollars."

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