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Legislative Update: Budget targets are revealed and key bills are on the move

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By Amanda Bilek, senior public policy director for the Minnesota Corn Growers Association

As Minnesota’s legislative session enters the final eight week push, potential outlines of a two-year budget are coming into a little bit of focus, but intense negotiations among various differences give the legislature plenty to do with the remaining time.

Last week, Governor Walz presented a revised budget in response to the decreased February budget forecast. The February budget forecast decreased the projected surplus from $1.5 billion to just over a billion dollars for the next two-year budget cycle, or biennium. The revised budget from Governor Walz totals $49.35 billion over the next biennium, which is $121 million less than his original proposal but still a nearly $2.5 billion increase over the base budget.

On Monday, Minnesota House DFL leadership announced budget targets for various finance divisions, and the House budget resolution was adopted by the Ways and Means committee on a split voice vote. Although there are several details that need to be revealed in House budget bills, the overall two-year budget would total $49.8 billion.

The Senate Republican leadership is expected to announce their budget targets on March 28th, which will be different than proposals from House leadership and the Governor. The degree of difference between the two targets will give an indication of all that will need to be overcome through final negations in the time remaining.

Here is a look at how the top Minnesota Corn Growers Association (MCGA) policy priorities are faring at this point in session:

Tax Relief and Conformity

State Conformity on Section 179 – Capital Equipment Expensing

The Governor’s revised budget maintains full conformity for Section 179 beginning in tax year 2018. In the revised budget, the Minnesota 80-percent addback modification is available only in tax year 2018 but is removed for property placed in service starting in tax year 2019. HF 515 (Poppe), HF 235 (Gruenhagen) and SF 575 (Lang) have been heard in House and Senate Tax committees and have been laid over for possible inclusion in the omnibus tax bill in each body.

Increasing Ag2School Property Tax Credit

An increase in the Ag2School credit would provide much needed property tax relief for farm property taxes attributable to school bonding projects. HF 1391 (Marquart)/SF 1512 (Eken) was introduced earlier this year and proposes increasing the credit from 40 percent to 100 percent. HF 1391 was heard by the House Property and Local Tax Division and was laid over for possible inclusion in the division report. SF 1512 has not been heard in the Senate, and the Governor’s proposed budget does not include an increase for the Ag2School credit.

Buffer Property Tax Relief

Governor Walz’s revised budget recommendation maintains the $50-per-acre buffer property tax credit at a cost of $15 million. HF 1430 (Torkelson) proposes to reduce property taxes on acres in compliance with the buffer law to zero, and the state would annually reimburse local taxing jurisdictions for lost property tax revenue from buffer acres. HF 1430 was heard in the House Property and Local Tax Division and the bill was laid over for possible inclusion in the division report. MCGA President Brian Thalmann testified in support of the bill, and you can watch his testimony here. MCGA supports both proposals and encourages legislators and the Governor to negotiate differences and address the issue this year.

Agriculture Research

The Agricultural Research, Education, Extension and Technology Transportation Program (AGREETT) shows we’re making positive progress on agricultural research, but must do much more to advance Minnesota as a leading agriculture and food state and to discover scalable farming practices that improve the environment. You can read about the success of AGREETT here and here.

HF 1136 (Hamilton) and SF 1840 (Dahms) have both been heard by agriculture finance committees in the House and Senate, and the bill has been laid over for possible inclusion in an omnibus finance bill. The bill would maintain base funding for AGREETT and increase the annual appropriation by $5.7 million per fiscal year. Governor Walz’s proposed budget maintains base funding for AGREETT.

Transportation Investments

The House Transportation Policy and Finance committee has begun to hear HF 2403—the Governor’s transportation funding package including an increase in the gas tax by 20 cents and an increase in sales taxes and vehicle license tab fees. You can read more about the bill and hear testimony from Transportation Commissioner Margaret Anderson-Kelliher here.

The Senate committee budget targets will give an indication for how much one-time money Senate Republicans are likely to devote to transportation. Transportation will be a point of contentious negotiation for the rest of session and final negotiations on the overall budget.

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There are a lot of other issues and funding related to agriculture included in omnibus finance and policy bills currently being assembled. Next week’s update will include an update on the items in omnibus bills of most interest to farmers.

Be sure to follow the MCGA blog and its social channels (FacebookTwitter) throughout session for updates from the Capitol. You can also follow me on Twitter (@AjBilek).

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