While the debates over GAMC and budget bills have taken prominence this session, the state’s cash flow problems haven’t gone away. Last Friday, the House Finance Committee heard a bill that would attempt to ease the cash flow crunch.
The bill, HF 3741, includes three provisions that would help to shift state revenues and expenditures around to help timing issues:
- Delay payments to the University of Minnesota. Currently, the U of M gets their annual appropriation divided into monthly payments on the 21st of each month. The bill would delay the payments until the 25th - allowing a little extra time for sales tax revenues to come in.
- Accelerate statewide property tax payments from counties. The counties collect this tax, and then pay a portion to school districts and a portion to the state. The bill would change the payment schedule so that the state gets its share at the same time that school districts are paid – which would be earlier than under current law.
- Accelerate monthly sales tax payments. Currently, vendors that collect the sales tax are required to submit sales tax payments to the state on the 20th of the month. The bill would require businesses (only those with more than $120,000 or more in sales tax liability in a year) to pay 90 percent of their estimated sales tax liability on the 14th of the month. The remaining 10 percent would be paid on the 20th as usual.
These changes would be permanent to help the state out with the even larger cash flow problems that await us in the next biennium. Not surprisingly, the bill is already sparking some controversy. The next stop is the House Tax Committee sometime after the Easter/Passover recess.
-Christina Wessel
