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Highlights
Revenues
Local Property Tax Aids and Credits
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Highlights
The 1999 session of the Minnesota Legislature passed and the Governor signed appropriations of more than $35 billion. Of this amount, $8.5 billion was from federal funds. Net state-generated appropriations totaled almost $26.8 billion. The largest source of state-generated appropriations is the General Fund with more than $23 billion appropriated.
The largest General Fund appropriations went for education, with over $7.9 billion for elementary and secondary education, over $2.6 billion for higher education, and more than $460 million for early childhood and family education.
The largest program area appropriations, counting both state-generated and federal funds, were for human services. The total appropriations for this purpose are almost $10.9 billion. Of this amount, more than $5.3 billion is from federal funds.
Other program areas exceeding $1 billion in appropriations are: |
- Transportation (more than $3.5 billion, including more than $1.1 million in federal funds);
- Aids and credits to local government units and individuals (more than $3 billion);
- For FY 1999, the 1999 Legislature appropriated more than $1.2 billion for a sales tax rebate program; and
- Public safety - Department of Public Safety, Department of Corrections, and other related agencies (more than $1.1 billion).
Taxes
With the large surplus in the state General Fund, the dominating issues in the 1999 session centered around taxes, including a sales tax rebate, future automatic rebates, permanent adjustments to income taxes, and adjustments to farm property taxes.
Sales Tax Rebate
The Legislature enacted a tax rebate based on the estimated amount of Minnesota sales tax paid by taxpayers with respect to their income tax filing status and income category. The rebate for married couples filing joint returns and head of household returns ranged from a minimum of $358 to a maximum of $5,000. For single filers and married couples filing separately, the minimum rebate was $204 and the maximum rebate was $2,500. The aggregate amount of the rebate is $1.25 billion which was a cost in FY 1999. The total rebate was authorized to be increased to $1.3 billion if an additional $50 million was forecast to be available at the end of state FY 1999.
Automatic Rebate
The Commissioner of Finance is now required to designate a revenue surplus exceeding 0.5 percent of General Fund biennial revenues at the end of a biennium as available for a tax rebate. The surplus designation must be made for the November forecast of each odd-numbered year and the February forecast of each even-numbered year.
The Governor must present a plan to the Legislature to rebate the surplus revenues by August 15 of each odd-numbered year. The Legislature must enact, reject, or modify the Governor's rebate plan by April 15 of each odd-numbered year. If the forecasted revenue surplus is less than 0.5 percent of biennial revenues, the money is deposited in a tax relief account.
The income tax rates for individuals were reduced by one-half to three-quarters of one percent for all taxpayers for the tax year beginning January 1, 1999.
Income Tax
The income tax rates for individuals were reduced by one-half to three-quarters of one percent for all taxpayers for the tax year beginning January 1, 1999.
Farm Property Tax Cuts
A new Education Agricultural Credit was added which is equal to 54 percent of the general education tax on homestead farm land and 50 percent of the general education tax on nonhomestead farm land. Also property tax class rates were reduced on certain agricultural land and seasonal recreational property effective for taxes payable in 2000.
Kindergarten through Grade 12 Education
The 1999 Legislature approved one of the largest increases in revenue for schools in recent history. Total kindergarten through grade 12 education appropriations for the 1999-2001 biennium were $7.9 billion, with an additional $50 million contingent upon surplus revenue available in the 1999 November forecast. Excluding the previous year's state appropriations dedicated to "buy down" a property tax recognition shift in aid payments, the 1999 Legislature's appropriation for kindergarten through grade 12 education increased by 16.1 percent over the previous biennium. Compared with the base budget for the 1999-2001 biennium, total state appropriations were increased by $815 million for new spending when adjusted for inflation and enrollment.
Human Services
The state-generated total for human services is over $5.5 billion. The largest portion of this total, almost $3.7 billion, goes for health care programs (Medical Assistance, General Assistance Medical Care, and Health Care Management). In addition to this amount, over $330.6 million was appropriated for MinnesotaCare and more than $418.9 million went for regional treatment centers.
Tobacco Endowments
The Legislature set aside $968 million of the tobacco settlement payments Minnesota will receive by the year 2001 and created two Endowment Funds; the Medical Education Endowment Fund and the Tobacco Prevention and Local Public Health Endowment Fund. The Medical Education Endowment Fund receives 39 percent of the total amount available, or $378 million. The Tobacco Prevention and Local Public Health Endowment Fund receives 61 percent of the total amount available, or $590 million. Interest earned on the Medical Education Endowment Fund will be used for clinical training of medical health professionals and for the University of Minnesota's Academic Health Center. Interest earned on the Tobacco Prevention and Local Public Health Endowment Fund will be used for local tobacco prevention initiatives and community health boards.
Transportation
The Department of Transportation budget exceeded $3.5 billion. Of this amount, almost $945 million went for county and municipal roads, $109.9 million went for metropolitan transit, and over $32.4 million went for outstate transit assistance. Federal aid appropriations are over $1.1 billion or nearly one-third of the total appropriations for transportation.
As part of the Capital Budget Bill (Chapter 240), the Legislature appropriated $60 million to construct light rail transit in the Hiawatha Avenue corridor.
Agricultural Relief
The 1999 Legislature provided about $70 million in agricultural relief to farmers due to the difficult financial situation in the farm economy during 1998. Farmers could apply for relief under one of two programs. The first program provided a $4 per acre payment for farm operations with over 40 acres, up to a maximum of $5,600. The second program provided that in lieu of the per acre payment, livestock producers who own and operate 160 acres or less and have at least $10,000 in sales may apply for a property tax refund of up to $5,600 on their first half homestead property tax payments in 1999, excluding the house, garage, and one acre. No person may receive more than $5,600 in farm relief payments.
Governance and Miscellaneous
The 1999 Legislature also:
- Provided a window of opportunity for additional closed landfills to enter the Closed Landfill Cleanup Program. The current program consists of 106 closed landfills. Seven more landfills are expected to enter the program through this new window of opportunity;
- Created the Minnesota Minerals 21st Century Fund and appropriated $20 million to the fund;
- Authorized and provided initial funding of $200,000 for a generic environmental impact statement on urban development; and
- Appropriated over $120 million for housing the Minnesota Housing Finance Agency. This is a 49 percent increase from the previous biennium.