Tax Conforminty Bill, School Funding Bill Sent to Governor

Earlier this session, Governor Dayton vetoed the GOP-led tax conformity bill because Republican leaders failed to support $138 million dollars in emergency aid to schools to prevent some teacher lay-offs and budget shortfalls. In response, the Senate and House passed a plan that meets many of the GOP tax initiatives and provides about $225 million dollars for schools through appropriations from the budget reserve and by shifting dollars from school trust lands, staff development funds and community education.

The bill would cut the tax rate in the lower income bracket from 5.35 percent to 5.25 percent, and it would reduce the rate in the second income bracket from 7.05 percent to 6.85 percent. It also preserves major deduction and personal and dependent exemptions.

In the area of education, the bill transfers $50 million from budget reserves to schools and temporarily suspends requirement that schools set aside two percent of the basic aid formula for staff development. The bill allows schools with money available in their community education funds to transfer it to their general fund to cover shortfalls.