Legislative leaders reached a deal Friday on a basket of tax cuts worth $259 million that will benefit a wide swath of Minnesotans, including outstate residents, working parents, veterans, farmers and even student loan debtors, who stand to get a first-of-its-kind break.
The bill also provides tax deductions and credits for families contributing to 529 savings plans, property tax relief for farmers and tax breaks for a professional soccer stadium planned for St. Paul.
The plan, which will cost about $544 million in future two-year budget cycles, represents the first big break in what has been a stalemate over transportation funding and other budget priorities at the State Capitol.
"House Republicans are proud to announce we have worked with the Senate DFL to provide more than half a billion in ongoing tax relief for middle-class Minnesotans," said House Speaker Kurt Daudt, R-Crown. "While the state has a budget surplus, Minnesota families are not seeing a surplus in their own budgets. For hardworking Minnesotans, relief is on the way."
Gov. Mark Dayton said the tax agreement seemed to be "in the ballpark of fiscal responsibility," a nod to his aim of keeping a tax-cut package small to avoid future budget deficits.
Dayton stressed that he would only sign it as part of a broader package that includes supplemental spending for key programs on pre-K, broadband and racial equity.
He said that while he presented his list of must-haves to legislators, he had not received a final offer on a supplemental spending bill that would divvy up the rest of the state's $900 million surplus.
The tax agreement reached Friday is expected to help outstate residents pay for school bonds, after farmers and other large landowners complained for years about the burden they carry to finance local services. Now the state will subsidize 40 percent of those bonds for outstate communities