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Legislative Update: April 11, 2017

Posted By Administration, Tuesday, April 11, 2017

Broadband and Taxes Update

With the Minnesota Legislature on Easter/Passover Break until April 18th, the down week at the Capitol is a great time to step back and take a look at all the moving pieces and key differences between House and Senate positions. On Monday, EDAM members were sent an action alert regarding funding levels of the Minnesota Investment Fund, Job Creation Fund and the Redevelopment Grant Fund. We hope that, if these programs are key to your communities, you will help us out and contact your legislators. If you did not receive that action alert, please email Nick de Julio at nickd@edam.org

As EDAM members, you all know that we have a unique membership that has interests in a lot of policy areas. Two key areas where our membership has shown an interest in are the Border-to-Border Broadband Grant Program and the status of the tax bill. Like yesterday’s email, we encourage you all to contact your legislators and leadership on these issues. Here is a recap on where they are at on key points:

Border-to Border Broadband Program

The Senate jobs bill (SF 1937, chief authored by Sen. Jeremy Miller (R-Winona)) includes a proposal for funding the Office of Broadband Development and the Border-to-Border Broadband Program:

  • $250,000 each year (FY 18 and FY 19) for the Broadband Development Office.
  • $10,000,000 each year (FY 18 and FY19) for the Border-to-Border Broadband Program.

The senate bill also lays out policy changes/limitations regarding granting awards. They are:

  • No grant awarded under this program may fund more than 50 percent of the total cost of a project in an underserved area.
  • Grants awarded for projects in unserved areas require a 35 percent match.
  • Grants awarded to a single project under this section must not exceed $3,000,000.

However, included in the bill is a policy change that allows that a local government entity may receive more than one award in a fiscal year.
The proposal in the House bill (HF 2209 authored by Rep. Pat Garofalo (R-Farmington)) does not go as far as the Senate's in funding the Border-to-Border Programs and puts limitations on the Office of Broadband Development. The House proposal funds the bill at:

  • $7,000,000 for FY 18 for the Border-to-Border Broadband Program.

Policy changes included in the House proposal would place a cap on the on the Broadband Development Office. This cap would limit the number of staff and their ability to administer the grant awards and would cut the mapping program.

As an organization, EDAM has concerns with the funding levels in each bill, but is very concerned with the policy changes that the House proposal has laid out. To date, the Border-to-Border Broadband grant program has resulted in over $65 million in state grants over the past three years. These grants have leveraged over $81 million in matching dollars.

If the policy language was to move forward, Minnesota could be losing or severely cutting a program that has been successful in expanding broadband across the state.

House and Senate Tax Bills

HF 4, the House Omnibus bill chief authored by Rep. Greg Davids (R-Preston), contains numerous items that were included in the tax bill vetoed in 2016 by Gov. Mark Dayton due to a drafting error. With the bill being well over 400 pages long, it also includes tax provisions linked to funding roads and bridges contained in the House Transportation omnibus bill, including $450 million in reprioritized General Fund vehicle-related fees and taxes.

Providing $1.3 billion in tax relief, the bill also contains:

  • Tax Increment Financing policy changes and authorizations for a number of cities
  • $585 million in reduced individual income taxes
  • $205.3 million in changes to the state general levy
  • $161.7 million in changes to the estate tax
  • $97.1 million in reduced corporate franchise taxes
  • $92.9 million in sales and use tax reductions
  • Relief for first time home-buyers
  • Sales tax exemptions on building materials for local governments and non-profits

The House Omnibus Tax Bill includes over $300 million in recommendations from the House Property -Tax and Local Government Finance Division, but does not include increases to Local Government Aid, County Program Aid or working family tax credit.

The Senate Tax Omnibus bill SF 2255, chief authored by Sen. Roger Chamberlain (R-Lino Lakes), proposes $900 million in tax relief focused mainly on individual taxes, rural Minnesota and business owners.

Highlights of the bill include:

  • Tax Increment Financing policy changes and authorizations for a number of cities
  • $393 million for permanent reduction to the lowest bracket
  • $64 million federal conformity for Section 179 expensing
  • $75 million for Social Security income subtraction
  • Tax credit for student loans
  • $85 million for exemption from the statewide business property tax for first $100,000 of market value
  • Phase-out statewide business property tax automatic inflator
  • Tax incentives for new small businesses to purchase equipment
  • Increases Local Government Aid to cities by $12 million for 2018
  • Workforce housing credit for 2018
  • Simplify research and development credit
  • Estate Tax subtraction federal conformity
  • First-time homebuyer program

The bill also increases the working family credit, encourages online filing and conforms to the federal government level of estate tax.

Call to Action

As mentioned yesterday, now is the time to call your legislators. As the conference committees, leadership and the Governor begin to negotiate these bills, many dollars will be shifted around to fall within an agreed upon budget. We need legislators to know about the importance of funding the Border-to-Border Broadband Program and that there are many important pieces in the tax bill that drive economic development across the state. Please take five minutes to shoot a quick email or leave a phone message.

To find out who your legislators are or to locate their contact information, please click here. We also ask that you contact Senate and House Leaders.

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