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Legislative Update: January 31, 2017

Posted By Administrator, Tuesday, January 31, 2017

Gov. Dayton Releases 2018-2019 Budget Recommendations

On Tuesday, January 24, Gov. Mark Dayton released his recommendation for the 2018-2019 state budget. Over the next month, legislators in both the House and Senate will introduce bills containing the language of Gov. Dayton’s budget recommendations, where they will be heard in the relevant finance committees. The February budget forecast will be released sometime next month and will provide legislators with one last look at the state’s revenue projections. After the budget forecast is released, the House and Senate leadership will designate budget targets to each of their finance committees, providing a look into where the priority issue areas are for both chambers.

Budget Proposal Specifics

Job Creation and Business Expansion

Included in Gov. Dayton’s budget proposal is a plan to strengthen both the Minnesota Investment Fund (MIF) and the Job Creation Fund (JCF). Both programs have had a strong history of leveraging state funds to generate private investment. Each program serves as just one tool that economic developers use across the state to attract new business as well as to keep business within our borders. Gov. Dayton is asking the legislature to invest $20 million in FY 18-19 to help restore cuts that were made to those programs last session.

Another job creation/development area that Gov. Dayton wants to bolster under his proposal is the Minnesota Angel Tax Credit. This tax credit provides a 25 percent credit to investors or investment funds that put money into new technology start-up companies. Gov. Dayton is looking to add $10 million to this program for 2019.

Along with strengthening these programs, Gov. Dayton’s recommendations also call for a $60 million investment to further expand broadband access for Greater Minnesota households and businesses under the Border-to-Border Broadband Grant Program.

View more details about the governor's proposals in the area of economic development.


Gov. Dayton’s budget focuses $300 million over the biennium in targeted tax cuts. The proposal includes an expansion of the existing child care tax credit to allow more families to access the credit by raising the income cap. The budget would also expand the working family tax credit to allow for roughly 107,000 additional families to be eligible to access these dollars. Gov. Dayton also proposes to provide property tax relief on agricultural property via a credit for 40 percent of the amount the property tax is attributed to the local school debt levy, and provides some relief from school bond debt for other property tax payers. Another credit proposes to provide tax relief for converting tillable land to buffer zones around water.

For local governments, the budget would provide an increase in local government aid and county program aid by $30 million over the biennium as well as $10 million to counties and watershed districts to implement water protection practices. For local projects, the proposal includes a property tax exemption for the Major League Soccer stadium in St. Paul, and local aid to the city of Madelia and Watonwan County for relief from a fire disaster.

Gov. Dayton’s budget also includes language to require reassessment of railroad properties, a boost to the Angel Investor Tax Credit, a repeal of the sunset of the health provider tax (which funds MinnesotaCare), and changing the net proceeds tax on non-ferrous mining to a gross proceeds tax. To help offset costs associated with tax cuts, Dayton is proposing to close some corporate loopholes and increase tax collections on tobacco products.

View more details about the governor’s tax proposals.


In his State of the State Address, Gov. Dayton expressed his support for additional funding to improve Minnesota’s state highways, roads, bridges, and public transit system. Gov. Dayton stated that Minnesota’s current investments in transportation are inadequate to maintain current conditions and do not provide for the needs of Minnesota’s growing population and economy. Dayton’s transportation budget recommendations include additional funding with increased revenues such as: $600 million in gas tax increases, $125 million in higher vehicle registration fees and approximately $400 million to fund mass transit by increasing the metro-area sales taxes. The governor has held firm on these recommendations since 2015 and called on legislators to pass a comprehensive transportation funding bill that would provide reliable funding over a 10-year span.

View more details about the governor’s transportation proposals.

Capital Investment

In early January, Gov. Dayton unveiled his 2017 capital investment initiatives, proposing to borrow $1.5 billion to fund the largest public construction package in state history. The proposal contains dozens of projects — including funding for water treatment systems, clean water improvements throughout Greater Minnesota, funding for improvements to Como Zoo’s seal and lion exhibits, a new state emergency operations center in Arden Hills, needed water leakage repairs for the Science Museum of Minnesota, funds for maintaining Minnesota’s public buildings including state colleges and universities as well as rail safety projects.

Commenting that this proposal is a “composite” of his 2016 requests and projects that legislators included in the House and Senate bills that did not receive final legislative approval in 2016, Gov. Dayton stated in January that he is asking the legislature to pass his recommendations early in session to provide as much time as possible for projects to prepare for the spring and summer construction season.

View a complete spreadsheet of the governor’s capital investment proposal.

Hearings of Interest

On Wednesday the House Property Tax and Local Government Finance Division will hear HF 414 which deals with the Valuation exclusion for improvements to homestead and commercial-industrial property authorized. The hearing is set for 8:15am in room 10 of the State Office Building.

In the Senate, the Committee on Jobs and Economic Growth Finance and Policy will hear from Commissioner Mark Phillips of the Iron Range Resources and Rehabilitation Board at 1:00pm in room 1150 of the Minnesota Senate Building.

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