End of Session Update from Rep. Jenifer Loon

Dear Neighbors,

The 2013 Legislative Session adjourned Monday, May 20 with major pieces of legislation falling into place and passing just minutes before the clock struck midnight.  One of the most notable efforts this session was the Democrat Majority’s push for a dramatic increase in taxes.

TAXES

The 2013 Tax bill (HF 677) raises $2.1 billion in new taxes starting this summer.   Click here if you’d like to watch the speech I gave on the floor before voting against the tax bill.

Here are some details on those tax increases:

• New 4th tier tax, Mom & Pop Shop Tax: $1.12 billion by increasing income tax on the top bracket by 25 percent ($150,000/individual and $250,000/couple), including small businesses through an income tax rate of 9.85 percent. This makes Minnesota’s income tax rate the 2nd-highest in the nation for comparative income.
• Large Employer Tax: $424 million in tax increases on large employers, which may result in fewer jobs or less take-home pay for hardworking employees.
• Cigarette Tax: $408 million from an increase of $1.60/pack (from $1.23 to $2.83) – the 6th highest cigarette tax in the nation.
• Sales and Gift Tax: $137 million by expanding the sales tax to business services like warehousing and storage, IT services and telecommunications and gift tax.

Governor Mark Dayton signed this bill into law last Thursday, effective July 1, 2013.

EDUCATION

The K-12 Education budget spent $485 million more than what would be required to continue current policies and programs. Notable areas of new spending include:

• $234 million for basic formula increases of $78/pupil in FY14 and $80/pupil in FY15.
• $134 million for expanded Optional All-Day Kindergarten
• $40 million in Early Learning Scholarships with fewer options and limited access for parents
• $40 million in special education spending in FY15

There are some concepts in the education bill I support such as early education scholarships.  Unfortunately, the language included in the final education package strays far from the market-driven model I authored in the 2011 session. Even more troubling, the education bill not only fails to pay back the money owed our schools, it actually extends the shift of funds for yet another budget cycle.

The K-12 Education bill also eliminates GRAD standards for graduating high school students. While I believe we should allow some flexibility and alternative measurements for ensuring Minnesota students obtain the workforce tools they need, I do not support eliminating standards altogether. Governor Dayton signed this bill into law last Wednesday.

PUBLIC SAFETY

The Public Safety and Judiciary budget spends $1.928 billion or about 5 percent of the overall state budget. This bill allocates your tax dollars to fund our court system and keep our citizens safe from criminals.  Improvements to public safety and our judicial system made in this bill include:

• Specialty courts better able to help solve problems that contribute to repeat offenses
• Public defender case backlog eased, making the court process move more smoothly
• Bureau of Criminal Apprehension (BCA) will be able to process evidence more quickly and use new technology to help solve cases
• Law enforcement training program to better identify victims of sex trafficking
• 36-month presumptive prison sentence for repeat sex offenders
• Savings in medical care of prisoners through interagency agreement between Departments of Corrections and Human Services
• Electronic transmittal of offender and civil commitment information to federal National Instant Criminal Background Check System (NICS) for persons prohibited from possessing a firearm

I joined lawmakers on both side of the aisle in support of this budget bill because our role as legislators is to prioritize spending and ensure core functions of government, like keeping our communities safe, receive the necessary funding.

DAYCARE PROVIDER UNIONIZATION

On the last day of session, with the state budget still unfinished, the bill unionizing in-home childcare providers and personal care attendants (PCAs) passed by a narrow margin in the Minnesota House.  This effort takes taxpayer dollars intended to help low-income families and vulnerable disabled or elderly citizens and redirects it toward unions.  I voted against this bill because there is no place for politics between Minnesota’s working families and the independent business owners and people who provide care for their children or their vulnerable loved ones.

EVERYONE PAYS MORE FOR WASTEFUL SPENDING

As a result of this legislative session, everyone will pay more for necessities. 

• Groceries, medical products and gas prices will rise due to the warehousing tax being passed onto consumers
• Electric bills will go up due to additional mandates on utility companies
• Health Insurance Premiums will rise for small businesses and families not eligible for subsidies under the Health Insurance Exchange
• Drivers’ licenses, vehicle registration and vehicle title fees are increasing

All in all, the budget increases state spending by about 9 percent.  In some cases, state agencies will be funded above their requested amounts.  Furthermore, tens of millions of dollars went toward eliminating debt for facilities in Minneapolis and St. Paul and state government added more than 1200 new full-time employees.

According to the February Forecast from the Minnesota Department of Management and Budget, our GDP growth is projected to be 1.9 percent in the private sector economy for 2013. In 2014, that number is projected to be 2.8 percent. For 2015, the projection is 3.3 percent.

The simple fact is our state spending is far-outpacing our state’s economic growth.  Even with new revenues, continuing this rate of spending will once again put Minnesota’s budget on an unstable course.  In my opinion, the best pathway forward is government reform, aiming to make core functions operate more effectively and efficiently with your taxpayer dollars.

Sincerely,

Jenifer