K-12 schools in Minnesota are funded by a combination of state aid and local property taxes. Some school districts operate in communities that have a low tax base, though, making it difficult to provide comparable services to those available in communities with a high tax base.
In an acknowledgement of the potential education inequities this could cause, the state provides “equalization aid” for school districts to lessen the local taxpayer burden of certain property tax levies.
However, the rates of aid have remained unchanged for many years. Some lawmakers believe now is the time for the state to increase equalization aid under various circumstances.
On Tuesday, the House Education Finance Committee approved three bills pertaining to this issue — HF879 (as amended [https://www.house.mn.gov/comm/docs/eEls-j2Xq0eCxjkFwmBr9Q.pdf]), HF1271, and HF1396. All three are now heading to the House Taxes Committee.
“Equalization helps level the playing field for the property-poor districts,” said Rep. Cheryl Youakim (DFL-Hopkins). By looking at the value of taxable property within a school district’s boundaries, calculations are made to provide state aid, helping some districts shoulder the costs of particular school levies.
Youakim sponsors HF879, dealing with equalization aid in regard to local optional revenue, a subsection of each district’s general education revenue. She said local optional revenue rates have remained frozen since 2013, even as inflation has soared. Her bill would both simplify the formula calculation for determining state aid and substantially increase the assistance to local districts.
In fiscal year 2025, districts would receive $840 per pupil unit as a starting point and would then be equalized at $880,000 per pupil unit. In subsequent years, the former number would automatically increase in conjunction with any basic formula increases.
Ann-Marie Foucault, superintendent of St. Michael-Albertville schools, noted her district has faced significant budgetary shortfalls in recent years as state funding has not kept pace with inflation. Her district could net another $845,000 in state aid and hire another 11 teachers if this bill passes.
Youakim also sponsors HF1271, which would increase equalization aid for the operating referendum program. This program empowers local districts to gain voter approval for increasing their general fund revenue beyond the limits set in state statute. Youakim’s proposal would increase the equalization factor to 150% of the statewide referendum market value per pupil unit for one tier of this program.
She argues this is necessary because statewide referendum market value has skyrocketed 300% since the equalization factor was first established nearly 30 years ago. The change would take effect in fiscal year 2025 and is estimated to reduce local property tax levies used to raise this revenue by nearly $90 million per year.
The last bill in the package is HF1396, sponsored by Rep. Amanda Hemmingsen-Jaeger (DFL-Woodbury). It would increase access to, and raise payouts from, the debt service equalization program, which assists low property wealth school districts in paying off debt incurred via new construction building bonds. Her proposal is expected to lower local property taxes by about $41 million per year beginning with fiscal year 2025.
The trifecta of bills drew bipartisan support, notably from Rep. Nolan West (R-Blaine).
“This benefits people across the state, and I appreciate [how these bills would take] a more statewide approach,” he said.
Two longtime legislators representing St. Louis Park, Hopkins and a section of Edina find themselves in influential positions this year.
Sen. Ron Latz (DFL-St. Louis Park) is prominently the chair of the Senate Judiciary and Public Safety Committee while Rep. Cheryl Youakim (DFL-Hopkins) is the chair of the House Education Finance Committee.
Latz is working with Zaynab M. Mohamed (DFL-Minneapolis) on legislation that would increase penalties for a broader range of crimes when they are motivated by bias.
“It would enhance training for police officers and the community to recognize when crimes are motivated by bias, which are particularly pernicious beyond the individual victim,” Latz said. “They’re really crimes against whole communities that are represented by the particular cultural, religious or gender affiliation of the victim.”
The state already has penalty enhancements for hate crimes involving assault, but the legislation would expand the list of applicable crimes.
Latz is continuing to carry gun legislation that would expand criminal background checks when firearms are acquired and would enable courts to confiscate firearms “from people who are exhibiting signs of dangerousness to themselves or others,” he said.
Asked whether he expected the legislation to pass this year, Latz responded, “It’s never been an easy lift. I don’t expect it to be an easy lift now, but we will do everything we can to pass both of them.”
DFLers will likely also consider approving laws requiring firearms to be stored with gun locks and requiring gun owners to report firearm thefts, which Latz said could help prevent incidents in which young people obtain their parents’ guns, for example.
Latz also anticipates reviewing marijuana legislation on the judiciary committee and as a member of the Senate Commerce and Consumer Protection Committee. He is not working directly as an advocate for the bill to more broadly legalize cannabis, but he said he does support it. On the question of whether local governments should be able to prevent the sale of products in their communities, Latz said he believed the law should be uniform statewide. He made an analogy to the Clean Indoor Air Act, which prevents smoking cigarettes or vaping inside bars and restaurants statewide, without the ability for a local government to opt-out.
While DFLers can act without Republican support on most legislation this year, the parties would have to work together if they approve a bonding bill to provide funds for local and state projects. A borrowing bill would require three-fifths of legislators in each chamber to support it.
“I’m hopeful, but we’re going to have to find a way to get a strong bipartisan consensus,” Latz said.
While many interests are vying for state funding this year given a forecast for a state surplus of $17.6 billion, Latz cautioned that $11.6 billion of that is one-time money that could not be used for ongoing expenses. Additionally, he said inflation has an impact of about $5.5 billion to maintain current levels of service.
“I’m trying to temper expectations,” Latz declared. “We don’t have gobs and gobs of money to spend.”
Some lawmakers hope to change the forecast process so that it factors in inflation along with expected increases in revenues. Politicians from both parties supported the current forecasting method that does not include inflation when considering expenses.
“It was never a good fiscal or budgeting approach, and we’ve regretted it ever since because everyone has these expectations and everyone gets their hopes dashed,” Latz said. “It’s kind of a mess.”
Youakim’s focus
Meanwhile, Youakim said she is laser-focused on education finance, which makes up 40% of the state’s budget.
She said she is working with the education finance teams of the House, Senate and governor’s office “to make sure we get our students what they need to learn and have an environment where they feel safe.”
Topics include increasing state funding for special education and English language learner programs so that they are not a strain on local school district budgets. Additionally, legislators are considering funding school breakfasts and lunches for all students. Federal funds helped provide meals at no cost to students during much of the pandemic. However, the system in which some students pay full price while others from lower-income households pay a reduced price or no cost has returned. Advocates of free meals for all say it would eliminate a stigma associated with free and reduced-price lunches for some students. The bill cleared the House Education Policy Committee, which Youakim also serves on, before heading to her education finance committee.
Legislators are also considering more funding for mental health support staff in schools through additional counselors, social workers and school nurses.
Youakim is seeking to provide funding to train paraprofessionals and education support professionals in schools. Districts would control the training, which could focus on responding to the cultural, social, emotional and medical needs of students. Youakim has worked as a paraprofessional on and off since 2014 and currently works as a substitute paraprofessional in St. Louis Park and Hopkins.
Discussions on the increase for the formula for state aid overall for school districts are underway. One bill would index the state support for school districts to inflation and would increase the amount by 5% in the next two-year state budgeting period. The bill would add another 5% to the formula in the following two-year period.
However, Youakim said, “These are all proposals that are going to have to work through the committee process.”
She is supporting a grant request from Building Assets – Reducing Risks, an organization with ties to St. Louis Park High School that focuses on ensuring teachers build relationships with students.
In another request relevant to constituents, Youakim and Latz are supporting changes to special rules for a Hopkins tax-increment financing district that would give the city more flexibility when it provides city assistance to building projects. The bill would allow the city to spend more money on housing and blight correction in areas outside the official TIF district, among other changes.
Youakim is also supporting a bill that would allow any Minnesotan to file state income taxes for free. Programs the Minnesota Department of Revenue lists online offer free electronic filing for taxpayers with an adjusted gross income of up to $41,000, a cap that increases to $73,000 or less for active-duty military members.
The challenge of buying a used vehicle might involve fewer unknowns thanks to one of several new laws passed during the Minnesota Legislature’s 2022 session, which took effect Jan. 1.
The law, sponsored by state Rep. Cheryl Youakim, DFL-Hopkins, and Sen. John Jasinski, R-Faribault, will help buyers seeking older, less expensive, vehicles will find out when the vehicle they’re considering has previously been significantly damaged or deemed to be totaled.
The law updates the state’s salvage title regulations by creating a “prior salvage” brand. It aims to solve an issue of less expensive vehicles holding a clean Minnesota title, despite incurring damage that costs more than 80% of its value or causes an insurance company to declare the vehicle a total loss. The requirements for a “salvage” brand on high-value or late-model cars — those costing $9,000 or more or are five years or newer — remain the same.
Based on recommendations developed by a Salvage Title Task Force, the law broadens disclosure requirements to include all brands on the title, requires written notice from dealers that must be signed by the purchaser, and clarifies that oral disclosure is not required for online sales.
In-state and out-of-state vehicles will be treated consistently. Motorcycles as well as heavier commercial vehicles are now subject to the same title branding and disclosure requirements as other types of vehicles.
The law also makes clarifying changes for readability of the statutes and to conform to Department of Public Safety titling and branding practices.
Postnatal care coverage required
One of the new laws taking effect Jan. 1 was actually passed in 2021, and made changes to private and public health coverage. Among its provisions, health plans will be required to cover:
a comprehensive postnatal visit with a health care provider not more than three weeks from the date of delivery; any postnatal visits recommended by a health care provider between three and 11 weeks from the date of delivery; and a comprehensive postnatal visit with a health care provider 12 weeks from the date of delivery.
The law was carried by Rep. Zack Stephenson (DFL-Coon Rapids) and Sen. Gary Dahms (R-Redwood Falls).
Consumers’ financial interest comes first
Another new law updates best interest standards in annuity sales to help protect consumers, especially older adults. Insurers can not put their financial interests ahead of the consumer.
According to the new law, when recommending an annuity, insurance agents should follow revised National Association of Insurance Commissioners standards, satisfying four conduct obligations: care, disclosure, conflict of interest and documentation. Under the law:
producers have a care obligation to know their customer and have a reasonable basis for their recommendation; producers have an obligation to disclose their licensing and how they will be compensated for the sale. For example, if they will be paid by commission or an asset management fee; producers must avoid and disclose conflict of interest, including sales incentives such as quotas, bonuses, or limited time contests; and producers have an obligation to document the basis of their recommendations.
Franchise renewal date changed
A new law, effective to initial registrations filed on or after Jan. 1, 2023, changes the due date for franchise renewals.
The deadline to renew a business registration will be the anniversary of the initial registration instead of 120 days after the end of the fiscal year.
Ericca Maas, director of policy and advocacy for Think Small, which administers the scholarships in Hennepin and Ramsey counties, said this week the group will continue to promote a middle-income expansion, even with legislators preaching austerity.
Thank you to the Edina LWV for hosting a candidate forum for SD46B & SD46. There were great questions and conversations that mirror what I am hearing when I talk to folks at their doors. Check out the forum here https://youtu.be/1oExWscJv6k.
The “dream big” approach seems to have worked in forging a compromise tax bill.
The two tax chairs came in with one highest-priority item on each of their to-do lists, and they both made it intact into the final bill announced Saturday afternoon.
For the Senate, it was elimination of all income taxes on Social Security benefits. For the House, it was property tax relief, primarily in the form of making the renter’s credit into a refundable income tax credit.
Both provisions are in the final version of HF3669, a bill sponsored by those tax chairs, Rep. Paul Marquart (DFL-Dilworth) and Sen. Carla Nelson (R-Rochester). After they signed their conference committee’s agreement, it’s now up to the House and Senate to approve the compromise legislation, and House Speaker Melissa Hortman (DFL-Brooklyn Park) has said that it may be the last bill passed off the House Floor on Sunday night.
“We have in this bill the largest tax cuts in the history of this state,” Marquart said. “And it’s going to affect families and individuals across the state.”
“We have worked hard to come up with a great tax bill,” Nelson said. “Minnesotans all across our state are struggling with rising prices, and it is our duty to get this money back to them.”
As amended, the compromise legislation would reduce total taxes by $1.4 billion in the current biennium and $2.4 billion in the next one. Almost all of that change would be in individual income taxes.
The Senate would get what it wants in the full subtraction of 100% of Social Security benefits from income taxes. That would reduce the General Fund by $509.6 million in fiscal year 2023.
The House would get its top priority in that the renter’s credit would become a refundable income tax credit. The largest piece of property tax reform in the bill, it would reduce the General Fund by $372.6 million in fiscal year 2023.
The Senate also wanted a reduction in the first-tier tax rate, and it would get one in the compromise, in that the rate would be reduced to 5.1% from the current 5.35%, reducing state revenues by $276.7 million.
That’s significantly smaller than the reduction to 2.8% from the current rate of 5.35% in the bill that passed the Senate. The compromise on budget targets reached by Legislative leaders and the governor clearly made that outside the realm of possibility, the revenue reduction far exceeding the total agreed to for tax cuts.
Here are the other big-ticket items, along with how much they would reduce General Fund revenue in fiscal year 2023, according to Department of Revenue estimates:
an increased child and dependent care tax credit with a higher threshold for phaseout ($55.5 million);
a refundable tax credit for people whose natural gas bills soared during the February 2021 “Polar Vortex” ($14.7 million);
a higher income threshold for those eligible for the K-12 education tax credit ($13.3 million);
an extension of the small business investment — or “angel” — tax credit ($7 million);
eligibility modifications for the Beginning Farmer Tax Credit ($3.7 million);
a military pension subtraction, with expanded eligibility ($1.3 million); and
an increase in the second-tier rate of the research and development tax credit from 4% to 4.25% ($1.2 million).
According to Revenue Department estimates, the bill would also provide, in fiscal year 2023, reductions of:
$36.1 million in corporate and franchise taxes;
$15.9 million in the statewide general property tax levy;
$11.3 million in sales and use taxes; and
$1.1 million in estate taxes.
The bill also includes $44 million of increases in local government aid.
“This is going to have a real, meaningful impact on people’s lives,” Marquart said. “But nothing moves forward without the rest of the budget agreement passing. Sen. Nelson and I are both former teachers, so we’re saying to the other committees, ‘Get your homework done!’”
This article belongs to MnFIRE. View the article on the MnFIRE website here.
In July 2021, the state legislature passed the most comprehensive firefighter well-being legislation in the nation. The bipartisan Hometown Heroes Assistance Program (HHAP) dedicates $4 million per year to ensure that every Minnesota firefighter will have access to the education, prevention and care needed to handle a cardiac, emotional trauma or cancer diagnosis.
We are so thankful to the bipartisan group of legislators and fire service leaders who took action to make this happen. Over the past few months, we have had the privilege of recognizing the legislators who were instrumental in passing the Hometown Heroes Assistance Program with our highest honor – commemorative bronze axes.
token of our gratitude, these axes commemorate their leadership in the fight for firefighter health and wellness. The legislators awarded with, or soon to be awarded with, commemorative axes include:
Senate HHAP Co-Author Senator Steve Cwodzinski (D – 48)
Senator Paul Gazelka (R – 09)
Senate HHAP Author Senator Jeff Howe (R – 13)
Senate Majority Leader Jeremy Miller (R – 28)
House Speaker Melissa Hortman (D – 36B)
House Public Safety Chair Representative Carlos Mariani (D – 65B)
House HHAP Author Representative Cheryl Youakim (D – 46B)
Thanks to the generosity of the Minnesota Legislature, 20,000 volunteer, paid-on-call, part-time and full-time firefighters across the state have an opportunity to deeply benefit from these new resources.
This major milestone for firefighter health combines three vital elements: an assistance program with expanded emotional trauma resources, an up-to-$20,000 critical illness policy, and ongoing health and wellness training. All active Minnesota firefighters – volunteer, paid-on-call, part-time and full-time – can access the MnFIRE Assistance Program, are automatically enrolled in the Critical Illness insurance policy and can receive training – all at no cost.
Minnesota firefighters can receive help for a crisis, find out more information or file a claim by calling 888-784-6634 or visiting mnfireinitiative.com/hhap/.
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