The Free Press, Mankato, MN

State, national news

March 17, 2014

Deadline nears for tax relief plan without a deal

ST. PAUL (AP) — With tax breaks on everything from child care expenses to college tuition hanging in limbo, Minnesota lawmakers appear increasingly unlikely to meet Gov. Mark Dayton's goal of enacting a substantial relief package this week.

The Senate is still assembling a bill to match up with the House's approved $500 million in cuts. Failure to adopt a compromise bill soon could mean taxpayers have to file amended returns to reap tax cuts, if they bother with the hassle at all.

Senate Taxes Committee Chairman Rod Skoe said Monday he hopes to pass a bill by the end of the week. He didn't say what he'll include or leave out of the bill, but strongly hinted it will differ from the House's measure. That means more steps — and more time — to get a final version to Dayton.

Minnesota's budget situation has improved dramatically since last year. The 2013 Legislature raised $2.1 billion in taxes to help close a deficit. The state now has a projected $1.2 billion surplus.

Some of the tax breaks would be achieved by lining up Minnesota's tax code more closely with federal deductions and exemptions. Some of the exemptions would be retroactive to 2013, while others wouldn't be applicable until next year. Working family credits averaging $300 for low-income households would start immediately, but an adjustment to the standard deduction for married filers averaging $115 would wait.

Also holding up the package is agreement about how extensive the breaks should be. For instance, Dayton wants to expand the child-care tax credit more significantly than the House, making it available to 170,000 households by relaxing an income eligibility standard compared with 26,000 families that would benefit in the House version. For families with two children in daycare, Dayton's administration says the credits he wants could reach $2,100.

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