Key components of Budget for a Better Minnesota take effect today
New investments in education, job creation, and property tax relief will strengthen Minnesota's middle class
ST. PAUL, MN - During the 2013 Legislative Session, Governor Mark Dayton and the Minnesota Legislature passed a fair and balanced budget that makes key investments in the middle class. Many of those investments take effect today - Monday, July 1. Budget measures passed this session provide for needed improvements in education, job creation, and property tax relief that will benefit Minnesota families and businesses. The following is a summary of those investments, and the impact they will have on Minnesotans.
E-12 Education
The budget enacted this session increases E-12 funding by $485 million, including the following measures:
- More Funding for Every School in Minnesota. The budget invests an additional $234 million in the school funding formula, increasing funding for schools in each of the next two years.
- All Day Kindergarten for Every Child. Starting in the fall of 2014, for the first time in our state's history all Minnesota school districts will have the option to provide free all-day Kindergarten to every student. The budget provides $134 million to fund that effort. Currently, only 54 percent of Minnesota Kindergarteners have access to free all-day Kindergarten - a service that thousands of families pay for out-of-pocket every year.
- Reforming the Special Education Formula. Starting in the 2014 school year, this budget invests $40 million in special education reform, providing needed funding reform and greater funding equity for schools.
- Early Learning Scholarships for 8,000 Kids. The budget invests $40 million to help thousands more children attend high quality child care and preschool to ensure that children are prepared for Kindergarten and beyond. Families will be eligible for up to $5,000 in scholarships.
- Repaying Our Schools. The budget accelerates repayment of the money that the state borrowed from our schools in previous bienniums.
- Testing Reform to Improve How We Measure Student Achievement. The budget will help move away from punitive testing standards and will help school districts implement college and career readiness exams.
Higher Education
The budget enacted this session makes a $250 million investment in higher education, including the largest increase in direct student aid in 25 years, as well as the following measures:
The Largest Investment in Direct Financial Aid in a Generation. State financial assistance has not kept pace with rising tuition and the other increased costs of post-secondary education. That is why the budget enacted by Governor Dayton invests an additional $46 million in the State Grant Program, which will provide more than 100,000 students with financial aid.
- Helping More Than 100,000 Students. The budget adjusts the State Grant Program to ensure middle class students have the help they need to afford higher education. This will provide financial assistance to another 9,000 Minnesota students.
- An Average Award of $1,740 per Student. The budget adjusts the current State Grant Program formula to better-reflect all of the costs of a higher education. Between rising tuition and the costs of living associated with going to school, the current system is inadequate. On average, this budget provides each State Grant Program recipient an additional $181 per year. The average total grant through the program is $1,740 per student
- Freezing Tuition for College Students. This budget freezes tuition at all MnSCU and University of Minnesota campuses starting this fall. This will continue to help put the dream of a college education within reach for Minnesota students.
- Preparing Students for Careers of the Future. The budget also provides funding for the MnDRIVE initiative to invest in research and development in four emerging fields of study - ensuring that students at the University of Minnesota are prepared for the careers of the future.
- Increasing Tuition Relief and Improving College Choice for Minnesota Students. The budget invests $15 million in tuition reciprocity programs, ensuring that Minnesota students have a wider range of affordable higher education options.
- Greater Accountability for How Schools Spend Taxpayer Dollars. A portion of the funding allocated for the University of Minnesota and MnSCU schools will be withheld until schools meet certain performance standards. This will ensure Minnesotans are getting the greatest value for their taxpayer dollars.
Job Creation and Economic Development
Minnesotans need a strong economy for good jobs, living wages, and a strong middle class. That is why Governor Dayton and the legislature made major investments in job creation and economic development this session that will get thousands of Minnesotans back to work. Those measures included:
- Major New Investments in Job Creation. Highlighted by the Mayo Clinic Destination Medical Center, the budget contains provisions to support growth and expansion for a number of Minnesota companies. State investments in 3M, Mall of America, and Baxter International will help create tens of thousands of new jobs in Minnesota.
- New Incentives to Leverage Private Investment. The budget provides $30 million in ongoing funding for the Minnesota Investment Fund (MIF). The MIF initiative provides loans to bring new businesses to Minnesota, and helps existing businesses expand. The budget also establishes a Minnesota Job Creation Fund - a performance-based incentive program for businesses.
- Building Affordable Housing for Minnesota's Workforce. The budget invests $10 million in affordable housing to support business expansion in Greater Minnesota communities.
- Keeping Minnesota Globally Competitive. The budget invests $1.5 million to: 1) establish three new trade offices in foreign markets; 2) help small businesses participate in trade activities; and 3) communicate the benefits of doing business in Minnesota.
- Cutting Unemployment Insurance Taxes for Minnesota Employers. The budget cuts UI taxes by $364.5 million, saving Minnesota employers more money to invest in their businesses and our economy.
- Providing Upfront Tax Exemption for Capital Equipment. Right now, when businesses invest in new capital equipment, they pay sales tax and get reimbursed later. More than 1,700 companies received capital equipment sales tax exemptions in 2012, totaling over $182 million in refunds. Under this budget, businesses will instead receive an upfront tax exemption on these purchases, starting in September 2014. This will provide simplicity for businesses and spur additional growth.
- Leveling the Playing Field for Main Street Businesses. The budget collects sales tax for online transactions, totaling around $5 million per year, which will level the playing field for small businesses that compete with online retailers.
- Helping Greater Minnesota Businesses Recruit Workers. This budget provides a sales tax exemption for established businesses in Greater Minnesota that add employees and a tax credit for those who hire interns in Greater Minnesota.
Property Tax Relief
Over the last ten years, property taxes have skyrocketed by 86 percent, placing a huge burden on the middle class. The Governor's budget provides significant property tax relief by increasing funding for local governments, increasing funding for the renter's credit, and fully-funding the homeowner's property tax refund. In all, this budget provides hundreds of millions of dollars in property tax relief for homeowners, renters, and small businesses.
- Increasing Aid to Cities, Counties, and Towns. Aid to local governments is one of the most effective tools in holding down property taxes. Since 2002, County Program Aid (CPA) has been cut 37 percent, and Local Government Aid (LGA) has been cut 24 percent. The budget passed this session increases LGA by $80 million and CPA by $40 million annually. The budget also reinstates township aid at $10 million per year. The budget simplifies the distribution formula for aid to local governments, making the system more predictable and reliable, and establishes a one-time 3 percent levy limit for cities and counties of a certain size for taxes payable in 2014.
- Tax Relief for Cities and Counties. The budget provides a sales tax exemption for city and counties, allowing them to collect less in property taxes from their residents. The change will provide property tax relief for Minnesota homeowners and businesses by reducing local government expenses by $172 million for the biennium.
- Increasing Funding for Homeowner's Property Tax Refund. The budget expands a program to provide Minnesota homeowners with millions in direct property tax relief. It will increase the number of homeowners receiving a property tax refund by 137,000 filers - meaning 547,000 filers will benefit from the refund. Their average refund will be $823.
- Property Tax Relief for Renters. The budget provides more property tax relief to renters by increasing funding for the Renter's Property Tax Refund program. The budget will provide refunds for 30,000 renters in addition to the 334,000 renters who already receive this property tax relief. That means 336,000 Minnesotans will benefit from this refund with the average renter receiving about $602.
