Taxes and bonding need Minnesota Legislature's prompt attention

The Legislature's 2018 session is two-thirds spent; the constitutionally mandated adjournment date is May 21, just four weeks away. That's not a lot of time to accomplish what ought to be this year's two top lawmaking priorities — adjustment of the state's tax code to prevent adverse consequences from the 2017 federal tax changes and authorization of borrowing for public works, aka a bonding bill.

Gov. Mark Dayton sent the Legislature his bonding recommendations on Jan. 16; his tax proposal was released on March 16, along with recommendations for about $300 million in additions to the fiscal 2018-19 budget set last year.

Finally, in an e-mail on Saturday afternoon, House Republicans tipped their hands on taxes. The Senate's intentions are still unknown, as are the bonding-bill plans in both bodies. The delay is worrisome. It's time for Minnesotans who want action on bonding and taxes to make that case to their legislators. Here's ours:

• Minnesotans deserve to know this year what the state's income tax claim on this year's earnings and other taxable receipts will be. They ought not to have to wait until weeks before their 2018 state income taxes come due next year to learn how large that burden is. And the state's tax administrators and private tax preparers ought to have ample time to implement changes.

That's why we're rooting for Republicans to compromise with DFLer Dayton on tax conformity this year. Prolonged uncertainty is unnecessary and unsettling. Delay also adds to the risk that no accord will be reached in time for next year's filing season. Officials estimate that if Minnesota makes no response to the federal changes, 300,000 filers — many of them with low incomes — will pay an average of $200 per person more next year.

The House Republican proposal unveiled Saturday appears to be a move in a positive direction. It shares several features with Dayton's plan, including a shift in the calculation of state income tax liabilities that divorces the state from some features of the federal tax code. But it also signals a desire to reduce income tax rates, featuring a proposed drop in the second-­bracket rate from 7.05 percent to 6.75 percent. Dayton's plan targets relief more directly at low-income taxpayers.

Last week's tax action featured a dust-up over the implications of Dayton's proposal to continue the tax on health care bills — the provider tax — past its scheduled sunset at the end of 2019. GOP legislators bashed Dayton for recommending its extension, noting that it falls disproportionately on lower- and middle-income people. The governor conceded Thursday that the provider tax issue won't be settled this year. That's unfortunate, given the tax's importance to state health care services. But this year's focus must be federal tax conformity.

• A GOP delaying strategy is rumored for the bonding bill: Keep the bill under wraps until the waning days of the session, then trot out a small package and tell the DFLers whose votes are needed (bonding bills require a 60 percent supermajority) that it's this bill or none at all.

That's a risky ploy. A small bonding bill is often harder to pass than a large one. An $825 million bonding bill — the size indicated in House budget targets released on April 12 — would omit popular projects on Dayton's $1.5 billion list. DFLers have shown in the past a willingness to reject bonding bills they consider inadequate.

Winding up empty-handed on building projects this year would be particularly disappointing in light of the backlog of deferred maintenance that has developed as the Legislature refused to boost bonding bill totals in the past two decades. A $1 billion bill was adequate when that threshold was first met in 1998; it would be skimpy today.

We're rooting for a bill large enough to be generous in funding wastewater treatment plant upgrades in greater Minnesota, where the need for wastewater improvement projects over the next 20 years has been pegged at $5 billion. It should significantly pare the deferred-maintenance lists in the state's two higher-education systems and make provision for the long-awaited revival of one of the University of Minnesota's most historically significant buildings, Pillsbury Hall. It should provide the $30 million needed to finish the visitor's center project at Fort Snelling in time for its bicentennial in 2020. And it should continue the state's efforts to provide more affordable housing for low-income Minnesotans.

A bonding bill large enough to meet those needs should be easy for legislators to enact and to defend in this fall's campaign. We'd call it one worth bragging about.

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