Dayton rejects GOP-backed tax bill as session wanes

Published 8:22 am Friday, May 18, 2018

ST. PAUL — Gov. Mark Dayton on Thursday vetoed a GOP-backed bill that would have aligned Minnesota’s state tax code with federal changes passed last year, raising doubts about whether he and lawmakers can reach agreement on a top priority before time runs out on the session.

The Democratic governor rejected the bill with about 20 grade-school students standing behind him at St. Paul’s Bruce Vento Elementary School, who counted down and shouted “Veto!” as he stamped the legislation. Dayton said the bill tilted toward the wealthy and corporations and left “crumbs to people who need it.”

Dayton had warned he wouldn’t sign the bill unless the Legislature provided $138 million in emergency aid to schools facing financial shortfalls. Republicans have resisted, saying the Democratic governor’s request came too late and would provide money to all public schools — not just those with budget trouble.

Email newsletter signup

Compromise happens fast and late at the Capitol. But with less than four days of work remaining, Dayton and Republican leaders were still trading barbs in press conferences rather than negotiating in search of a deal on drastically different tax plans and other spending proposals.

There’s not the same level of pressure to agree because Dayton and the Legislature already met their constitutional obligation to pass a two-year budget last year. Dayton isn’t running for a third term this fall, and state senators won’t face voters until 2020; only the 134 House members are on the ballot.

Still, there is plenty on the line. A tax bill could help avoid a logistical nightmare for tax filers next year as well as some incidental tax hikes. Lawmakers hope to pass bills addressing opioid addiction and abuse of elders at state-regulated facilities. Dayton said his school funding request was necessary to forestall layoffs at 59 school districts across the state.

“Teacher layoffs are going to be draconian around the state if this funding doesn’t go through,” Dayton said.

Republicans who control the Legislature had hoped Dayton would sign their bill, which would cut taxes for lower- and middle-income Minnesotans through modest reductions to income tax rates. And they argued Dayton’s school funding was unnecessary, pointing to $1.3 billion in new school funding passed last year and millions more for school safety upgrades and mental health resources being proposed this year.

“What the governor did today was veto a bill that would have put money in lower- and middle-income Minnesotans’ pockets,” House Speaker Kurt Daudt said.

Conforming to the major federal tax overhaul passed late last year has been a mammoth undertaking for state lawmakers. And failing to do so would make tax filing more complicated for Minnesotans and hit them with higher bills.

Senate Majority Leader Paul Gazelka has suggested lawmakers could try again early next year if this year’s push falls short. But Daudt said he’s concerned the state would be unable to change the state’s tax code in a matter of weeks in time for tax filing season.