The Minnesota Legislature wrapped up second committee deadline week, marking the last opportunity for committees to act favorably on bills, or companions of bills, that met the first deadline in the other house.

GOP Budget Targets

House Speaker Kurt Daudt (R-Crown), Majority Leader Joyce Peppin (R-Rogers) and House Ways and Means Chairman Jim Knoblach (R-St. Cloud) announced targets for budget adjustments on Thursday. In light of the Legislature establishing a two year budget last year, House Republicans are proposing no net increase in spending in the supplemental finance bills.

Speaker Daudt said that House Republicans will focus on tax relief for families and fixing Minnesota’s roads and bridges. The transportation and tax relief bills from last year currently remain in conference committees. The Republican transportation plan spends $7 billion on roads and bridges over the next 10 years without an increase in the gas tax. It would repair or replace more than 15,500 lane miles of road and 330 bridges statewide. Proposals in the Republican tax relief bill include phasing-out the tax on social security benefits and military pay, tax credits for families saving for college and students paying off their loans, expanded deductions for families with school-aged children, and property tax relief for farmers and small businesses.

Among the adjustments, House Republicans are proposing additional funding of $35 million for broadband in rural Minnesota. There is an equal amount of cuts in other budget areas. State government finance is reduced by $9.5 million, and there are also cuts in agriculture and public safety. Bonding is set at $600 million.

The House GOP targets contrast sharply with DFL Gov. Mark Dayton’s proposals. Dayton wants to spend $700 million of the surplus. His bonding bill proposal is $1.4 billion. Senate Democrats plan to release their competing budget outline next week. Senate Majority Leader Tom Bakk (DFL-Cook) said the Senate plan will include some one-time spending to limit the impact on future budgets.

Taxes

House Republicans are pushing for tax cuts with a renewed focus this session on phasing out the state tax on Social Security income. GOP leaders say the move is needed to keep retirees from leaving the state, although Senate Democrats and Gov. Mark Dayton warn that the loss of revenue from such a large cut would threaten future state budgets.

The tax bill House Republicans passed last year, when the state budget had a $1.9 billion projected surplus, would have cut the Social Security tax by 20 percent a year for five years. The proposal remains alive this session in a conference committee. This year, the estimated surplus dropped to $900 million. Cutting the Social Security tax, however, is still a top priority, said House Taxes Committee Chair Greg Davids (R-Preston). He wants Minnesota to be a friendly place for retirees.

The Minnesota Department of Revenue estimates the GOP phase-out plan would affect 381,000 returns in the current tax year, with an average reduction of $213. In Minnesota, Social Security benefits are fully exempt from state and federal taxes for married couples with annual incomes of less than $32,000. The full exemption applies to individuals with income of less than $25,000. There is a 50 percent exemption on slightly higher incomes.

Rep. Paul Marquart (DFL-Dilworth) and other Democrats want to raise the income thresholds, which haven’t changed since 1994. Dayton also supports an adjustment, but he did not include one in his supplemental budget plan.

Senate Taxes Committee Chair Rod Skoe (DFL-Clearbrook) said the state could spend about $15 million a year and exempt everyone who makes less than $60,000. Skoe said the full exemption favored by Republicans would primarily benefit people with the highest incomes. Skoe said Senate Democrats won’t support any tax cuts that put the budget at risk. Some Republicans see room to negotiate a phase-out schedule agreeable to Democrats. House and Senate negotiators will begin working again on a potential tax bill compromise later this month.

Gun Cell Phone Cases

Divided over proposed regulation of actual firearms, Minnesota lawmakers gave bipartisan support to a bill outlawing smartphone cases made to look like pistols or revolvers. Legislation making it a crime to buy, possess, manufacture or sell the gun-replica phone cases cleared committees Wednesday, and now awaits action on the House and Senate floors.

Rep. Joe Atkins (DFL-Inver Grove Heights) and others first raised their concerns last year and hoped retailers would voluntarily pull them from the shelves. However, when some began filtering into the state through online sales, Atkins said a state ban became necessary. Maplewood Police Chief Paul Schnell, speaking on behalf of the Minnesota Chiefs of Police Association, described the cases as no win situations and recipes for disaster.

Under the bill, violations would be a petty misdemeanor punishable by a fine of up to $300.