Madelia’s bill not signed – future of the funding uncertain

The ideas and viewpoints expressed in this article are solely the view of the author.

By Michelle Van Hee, editor of the Madelia Times-Messenger
Originally appeared in the Thursday, June 16, 2016 issue of the T-M; Reprinted with permission

At the construction site on Main Street in Madelia, progress continues in the rebuilding efforts. As we all know, a fire last February destroyed a large section of the north side of the community’s downtown area. It is good to see a foundation still coming together and infrastructure being installed, as well as curb and street being replaced, because the funding to help the business owners pay for that work is, at the moment, in limbo.

Monday, June 6 was the deadline for the Omnibus Tax Bill – of which Madelia’s Biill is a part of – to be signed. The bill allots extra funds to help with the rebuilding efforts that are not covered by insurance and helps the property owners with tax relief they will need to bridge the gap between the taxes on their former historic buildings to the brand new ones that will replace them. In short, without assistance from the state, the new buildings going up would be too expensive to build and likely not happen. However, Governor Mark Dayton refused to sign the bill and it die d in what is known as a pocket veto.

The tax bill also included significant tax relief for veterans, farmers, college graduates paying off student loans, families with young children, and more. Key provisions include (over the next three years):

  • $90.6 million in tax relief for Minnesota farmers. In 2016, more than 61,000 farmers would benefit from an ag bond credit.
  • $110 million in tax relief for college graduates paying off student loans through a refundable tax credit up to $1,000, the first of its kind in the country. In 2016, about 52,300 graduates would be eligible for this credit.
  • $49 million in tax relief for families who contribute to 529 plans to save for their children’s college costs. An estimated 21,000 families would claim the credit in tax year 2016. An estimated 40,400 families would claim the subtraction (some tax-payers would be eligible for both).
  • $146 million in tax relief for every small business in Minnesota by exempting the first $100,000 of commercial/industrial property.
  • $13 million in tax relief for Minnesota veterans by raising the income eligibility threshold, and increasing the total credit from $750 to $1000.
  • $150 million in tax relief fro working families by expanding the working family tax credit. Nearly 386,000 families would be affected in tax year 2016.
  • $32 million to reduce the cost of childcare tax credit, families could earn a tax credit up to $960. For tax year 2016, the number of families receiving the credit would be 41,400.
  • Federal conformity provisions that Minnesotans to deduct higher education tuition expenses, mortgage insurance premiums, classroom expenses for teachers, charitable giving (for seniors), and more.
  • A substantial increase in Local Government Aid (LGA) and County Program Aid (CPA).

That much everyone can agree upon, but why it was not signed and what happens now varies depending on to whom you are speaking. There was an error in part of the bill – a one word error – where it should have said “and” it said “or” on a charitable gambling tax rate that would have meant a difference of $101 million over three years. Also, another portion of the bill needs to be amended to restore a sales tax exemption to the Minnesota State High School League. They are corrections that legislators have said they are willing to fix. The only way to make corrections, and to pass any of the other bills included with them, is to call a special session, which is something only the governor can do. And Dayton said that he will, but he wants to add other needs to the list of what will be discussed, such as investments in higher education, job creation and public safety, before he will call a special session.

Dayton criticized Republicans for their unwillingness to negotiate on the special session terms. “It is now time for the Legislature to come back to St. Paul and finish their work,” said Governor Dayton in a written statement June 8. “Minnesotans deserve better college classrooms, clean water infrastructure, tax cuts for 650,000 people and thousands of jobs from comprehensive bonding and transportation bills. I have offered to meet the House Republicans halfway between their position and mine so that we can reach an agreement for the good of all Minnesotans.”

Many lawmakers are not happy and accused the governor of holding the bonding bill hostage to pass things that he wanted, but did not make it through the regular session.

“Minnesotans, especially those in the city of Madelia, are waiting for this tax bill, and hopefully we can come to an agreement and get it passed quickly,” said Representative Bub Gunther in a written statement last week after the bill was not signed. “We were disappointed by the Governor’s unnecessary veto but we are ready and willing to compromise so we can deliver this badly needed tax relief for farmers, college grads with student debt, Main Street businesses, veterans, families with childcare costs, families saving for college, and more.”

Representative Tony Cornish sent out a statement also in response to the governor’s decision not to sign the bill. “After a fire devastated Madelia’s Main Street, I joined community leaders in welcoming Governor Dayton to the city. I sat three seats away from him when he said that he and his staff would do everything possible to help the town recover. Now he has left Madelia hanging.”

On Wednesday, June 8, Dayton continued to push for the issues that he wants addressed in a special session by going to Rochester and North Mankato. He held a press conference at South Central College to highlight some of the reasons that they need $8.6 million in bonding funds to renovate and repair significant structural building issues, as well as bring their classrooms, labs and facilities up to par for today’s demands and what students need to learn to be competitive in the workforce. SCC President Annette Parker spoke about the school’s desperate need for upgrades and repairs, including to the classroom where the press conference was being held. She said, should it begin to rain that the roof would most certainly leak on everyone there.

Dayton is also seeking funds to update the facilities and hire more staff for St. Peter Security Hospital and improving the sex offender treatment program at St. Peter Regional Treatment Center.

At the press conference, along with staff, students and instructors from SCC, Representative Paul Torkelson, Representative Bob Gunther and Representative Clark Johnson were all in attendance, as well as many city officials from Mankato and North Mankato and a wide variety of other interested parties.

From Madelia, I (Times-Messenger Editor Michelle Van Hee) was there, City Administrator Jane Piepgras attended as well as Madelia Area Chamber of Commerce Executive Director Karla Angus, American Family Insurance owner Brian McCabe and Shari and Dale Williams; all wearing “Madelia Strong” shirts.

While many things were discussed, Madelia and the need for our bill to be passed did come up. Dale Williams spoke saying that what really drove home the impact of the fire on Madelia for him were the statistics that, comparatively, if the fire took place in Mankato, it would be 100 businesses that had burned and 3,500 people out of work. “Do whatever you can to get the $1.2 million for Madelia,” Williams implored the governor.

“I admire the resiliency and courage of everyone there and the way you pulled together and moved forward. We need to assist that and I want to do that,” Dayton said. “I am here to urge legislators and to urge all of you to urge legislators to come to an agreement so we can come back to special session this month and pass the tax bill corrected for the $101 million error and also a bonding bill, which I would like to see larger than the one that was passed separately by the house and the senate. I said yesterday and I will say again today, that I am willing to meet int eh middle and find common ground.”

Gunther made a pitch as well, saying that the tax bill has so much in it for communities like Madelia and was a great bipartisan piece of legislation. “there are some things in there that have never been done in any other state and I think it is so important that we get that tax bill passed,” Gunther said.

“I absolutely agree with you,” Dayton said. “For Madelia’s sake and for a lot of others. It is a good bill, and I said before the end of the session I would have signed it irrespective of everything else going on, and I would have signed it if not for this $101 million error discovered after the conclusion of the legislative session, so it could not be corrected there.”

Dayton went on to say that he was told emphatically by the Commissioner of Revenue, as well as by his own legal counsel, that the only way to correct something that is in a statute is to come back and have the legislature correct it, you cannot write a letter or indicate some other reference.

“I think everyone can understand the difference between “or” and “and”–it is pretty clear English and there is not any wiggle room there,” Dayton reiterated.

He added that those who would benefit from the tax have indicated that they would be prepared to go to court if the Department of Revenue was to administer it any differently than how the letter of the law is written.

“So we need to come back and I remain hopeful that we will,” Dayton said. “I would have signed the bill if it had not been for discovering this $101 million error. So let’s correct that and let’s get it all done in a way that will benefit the people of Minnesota.”

Dayton said that the tax bill is scheduled to take effect the first of July, so it is important to get the special session done this month – but he said he is not setting a hard deadline. At that time, Dayton was scheduled to meet with lawmakers on Wednesday, June 15 to see if they can make progress.