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New Minnesota Laws Take Effect July 1: Taxes On Top Incomes, Cigarettes; More Money For Schools

The new laws also include a total of $496.1 million to fund dozens of arts, parks, trails, and natural resources projects throughout the state.

Many of the laws passed in the past legislative session will take effect July 1, including more money for all-day kindergarten, higher education and millions more for city and county budgets.

Some of that money comes from a new tax rate on the highest incomes and a $1.60-per-pack cigarette tax increase.

Some of the key changes, courtesy of House Information Services:

Education

An estimated $15.7 billion on K-12 over two years, an increase of $485 million. About half of the new money will go on the basic school funding formula, another $134 million will fund optional all-day kindergarten statewide starting in the fall of 2014. Special education will get an additional $40 million.

An end to high-stakes state graduation exams, but now students will take, but not have to achieve a minimum score on, a new set of tests in reading, writing and math. Students in grade 11 will take a nationally recognized college entrance exam such as the ACT. 

Employment and Economic Development

Adds $30 million to the Minnesota Investment Fund, for loans to assist expanding businesses. An additional $24 million for a job creation fund to help businesses make capital investments and create jobs in the state. The Minnesota Film and TV Board gets $10 million to offer financial incentives, such as production cost rebates.

Environment and agriculture

  • $20.4 million for the Agricultural Growth, Research and Innovation program to develop new markets for Minnesota farmers, facilitate livestock operations and provide for biofuel and other energy development including renewable energy projects for rural residents
  • $2 million for the state’s county fairs to enhance arts access and education to preserve and promote Minnesota’s history and cultural heritage
  • $300,000 to protect pollinator habitat

Health and Human Services

An overall cut of $50 million over the next two years, but still has increases in services and wages for some who recently have seen cuts to programs and paychecks. Nursing homes will receive a 5 percent funding increase, with the majority earmarked for employee pay raises. Personal care attendants will receive a 1 percent increase, with more available based on the quality of service they provide

Employers with 50 or more employees who purchase insurance through the individual market must include autism spectrum disorder coverage in their policies.

Higher Education

An increase of $250 million over two years, bringing the total to $2.8 billion. A two-year tuition freeze for resident undergraduates at the University of Minnesota and for all undergraduates at the Minnesota State Colleges and Universities system.

Legacy Funds

A total of $496.1 million to fund dozens of arts, parks, trails and natural resources projects:

  • Clean Water Fund—$194.9 million
  • Arts and Cultural Heritage Fund—$115.9 million
  • Outdoor Heritage Fund—$100.05 million
  • Parks and Trails Fund—$85.1 million

Additionally, the Minnesota State Arts Board will receive $42.6 million to support artists and arts organizations.

Public Safety and Judiciary

More than $100 million in new funding, with $52 million for the courts  and $50.5 million for public safety. Included are salary adjustments for Corrections Department personnel of 2 percent per year and $2.6 million for additional sex offender or chemical dependency treatment.

State Government

Minnesota Public Radio gets $920,000 to buy equipment and upgrades to the AMBER Alert system; $750,000 is appropriated each year for the Minnesota Assistance Council for Veterans, a nonprofit that helps homeless veterans and families.

Taxes

A new 9.8 percent top tier for high earners that affects:

  • Married people who file jointly with a taxable income of more than $250,000
  • Married people who file separately with a taxable income of over $125,000
  • Heads of household with a taxable income of over $200,000
  • Single filers making over $150,000

State tax on a pack of cigarettes will rise $1.60 to $2.83. Part of the revenue from the first year of the cigarette tax increase will be used to help fund the new stadium to house the Minnesota Vikings, if needed.

More backup revenue for the stadium, if needed, will come from closing corporate tax loopholes, which will raise approximately $26 million in the first year and $20 million per year thereafter.

Local Government Aid will increase from the current $426 million to $507.6 million for calendar year 2014. In 2015 and 2016, the amount is increased by $2.5 million each year and then frozen at the 2016 amount.

The state will provide aid sufficient to fund $327 million in public infrastructure projects during the 20-year life of the Mayo Clinic/Rochester expansion project. The city is expected to pay an additional $128 million to qualify for the aid. The state and the county or city will also pay for up to $116 million of transit-related projects; with state aid covering 60 percent of this cost.

Transportation

The state highway budget calls for:

  • Increasing state road construction funding by almost $360 million over the biennium
  • Increasing base appropriations by $10 million annually from the trunk highway fund for use in a newly-established Transportation Economic Development program
  • A $5 million increase in the base appropriation for operations and maintenance of state roads
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