A look at the House budget priorities

Priorities in the House budget targets released this afternoon include $550 million in tax cuts, $488 million in new spending, and $195 million on the “bottom line.”

Taxes: $502 million of the House’s proposed tax cuts have already been passed as House File 1777, which includes two primary components:

  • Federal conformity items, including an improvement to the Working Family Credit for married filers, addressing the ‘marriage penalty’ faced by non-itemizers and several other items.
  • ‘B2B repeal,’ or the elimination of three business-related sales taxes.

That leaves about $48 million to be dedicated to property tax reductions for homeowners, renters and farmers.

It is still the case that low- and moderate-income Minnesotans pay a higher percentage of their incomes in state and local taxes than the highest-income Minnesotans. We support efforts to make our tax system more fair, and the Working Family Credit helps us make that a reality. We hope that the House’s property tax reductions will show a similar focus on these Minnesotans.

New spending: The House’s recommendations include supplemental funding in several areas of the state budget, including:

  • $172 million for economic development, including bonding, broadband expansion in Greater Minnesota, and affordable housing.
  • $92 million in education, including early childhood, K-12, school lunches, and higher education.
  • $75 million for health and human services.
  • $50 million for transportation.

‘Bottom Line’: The House leaves $195 million unallocated – or “on the bottom line” – to “ensure a stable budget into the future.” That means these funds would be available when policymakers set the next two-year budget in the 2015 Legislative Session.

It is not the same as formally allocating those dollars to the budget reserve, although both create a cushion against future risk.

You might remember that the Governor released his supplemental budget last week. Here’s how the House priorities compare:

Taxes

New Spending

Budget Reserve or Bottom Line

Governor’s Supplemental Budget

$613 million

$164 million

$456 million (reserves)

House Budget Targets

$550 million

$488 million

$195 million (bottom line)

-Caitlin Biegler

About Clark Biegler

Clark Biegler is the Minnesota Budget Project’s policy analyst. She researches and writes about state tax and budget issues. Clark holds a Master of Public Policy degree from George Washington University in Washington, DC; and a Bachelor of Science degree in Public Health from Tulane University in New Orleans, LA. She interned at the DC Fiscal Policy Institute in Washington, DC, Third Way in Washington, DC, Lutheran Social Services, and the Alabama State Office of Primary Care and Rural Health.
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