The Capitol Note: Dayton’s supplemental budget includes tax cuts, boost to reserves

1. Gov. Mark Dayton released his supplemental budget proposal Thursday, and the first-term DFLer is clearly hoping that the public takeaway will be threefold: tax cuts, tax cuts, and tax cuts. As MPR reports,  the governor’s pitch devotes $616 million – fully half of the state’s projected $1.2 billion surplus – to tax rollbacks. In addition to repealing three business-to-business sales taxes passed last year, Dayton is also proposing to spend $300 million on federal tax conformity provisions and a repeal of the state’s gift tax. That’s roughly $100 million more in conformity measures than the House included in its own $500 million tax relief package (see next item).

The lion’s share of the remaining $617 million in surplus dollars would be devoted to increasing the state’s budget reserves, which currently sit at $661 million, by $455 million. Dayton would also spend $162 million on a handful of budget adjustments, including $64 million to pay for a 4 percent pay raise for disability services providers and $30 million in additional staff and operating resources for the Department of Corrections.

2.) All but two members of the House voted in favor of a $500 million tax cut bill that would bring the state in line with the federal tax code, while also striking all three business-to-business taxes approved in 2013. The bill’s passage was never in doubt, and members mostly used the floor session to score partisan points. A series of Republican amendments sought to turn the conversation toward MNsure, the state health insurance exchange, including a Minnesota tax rebate for citizens hit with a $95 federal fine for not buying insurance, but each was shot down by the DFL majorities.  In the end, only DFL Reps. Jason Metsa (Virginia) and Ryan Winkler (Golden Valley) voted in opposition to the bill, which passed 126-2.

The bill will now head to the Senate, where leaders have been less committed to the idea of getting the bill signed into law by March 14, despite the urgency expressed from House Democrats and the governor to see the taxes in place while Minnesotans are still filing their returns.

3. The bipartisan team of DFL Sen. Roger Reinert (Duluth) and GOP Rep. Jenifer Loon (Eden Prairie) would like to sell the public on a Sunday liquor sales law in 2014, reports the Star Tribune.  On what terms?  Well, what terms would you like? On Thursday the pair announced no fewer than seven bills to implement some form of Sunday alcohol trade. As the Strib’s Jennifer Brooks writes, “The bills range from full repeal to proposals that would allow individual communities to decide for themselves whether they want to permit Sunday sales. There’s also a proposal to place Sunday sales on the ballot as a constitutional amendment, and bills – Reinert called them “baby steps” – that would allow growler sales and allow tap rooms to open on Sunday.” This flood-the-zone approach seems to reflect a new tactical approach to taking on the Minnesota Licensed Beverage Association (MLBA), which has effectively squelched any push for Sunday sales for years – long enough to leave Minnesota one of only 12 remaining states that still ban the practice.

COMINGS & GOINGS

• House Speaker Paul Thissen and Senate Majority Leader Tom Bakk, among other DFL leaders, will be on hand for a 10:00 a.m. Capitol press conference to discuss the past week and preview next week. The press conference will be in room 125.
• Both the DFL and Republican Party of Minnesota have a number of local party endorsement conventions coming up this weekend. A schedule Republican events can be found here; DFL events here.
• Republican gubernatorial candidate Jeff Johnson has formed a search committee to help him find the appropriate choice for running mate. Committee members include Jeff DeYoung, a managing partner at Baker Tilly; David Gaither, former chief of staff to Gov. Tim Pawlenty; and Rep. Joyce Peppin, R-Rogers.
• Justice Whitethorn, a consultant, has registered to run as a GOP challenger against Rep. Leon Lille, DFL-North St. Paul, in House District 43B. Lillie cruised to re-election in 2012, collecting more than 60 percent of the vote.