Dayton Vetoes Scaled-Back Bill with Business-Tax Cuts

The governor said that the tax bill-which included property tax breaks and other benefits for the state's businesses-ignored his requirement that "any new spending increases or tax reductions had to maintain the current budget reserve and avoid increasing future deficits."

Governor Mark Dayton on Monday signed several bills into law-but he vetoed a second tax bill that was passed by the Minnesota Legislature.

In a letter to House Speaker Kurt Zellers, Dayton described the bill as “a reduced version” of a tax bill that he vetoed earlier this month, saying that it “shares some of the same defects.”

The bill sought to freeze the statewide property tax on businesses in 2013. It would also have increased research and development tax credits and boosted the annual limit on the state's angel investor tax credits from $12 million to $16.5 million. In addition, it included an upfront tax break on capital equipment for businesses with 50 or fewer full-time employees.

The bill also included tax credits for businesses that hired unemployed veterans and an extension of tax-increment financing for an expansion of the Mall of America.

In his letter to Zellers, Dayton re-emphasized his position that “any new spending increases or tax reductions had to maintain the current budget reserve and avoid increasing future deficits.” He claims that the bill would cost the state more than $46 million during the current two-year budget cycle and an additional $73 million in the following biennium-which would add significantly to a deficit that is currently projected to be $1.1 billion.

Dayton also said the bill contains a “large imbalance,” as it reduces business taxes but doesn't offer tax relief for homeowners, renters, senior citizens, or farmers.

He voiced support for some provisions in the bill, including the credit for businesses that hire veterans. Dayton said he also supported increasing research and development and angel investor tax credits.

Dayton on Monday signed the Vikings stadium bill, which was passed by the Legislature on Thursday. According to a report by the Star Tribune, some people had wondered whether Dayton would sign the tax bill as a goodwill gesture after some Republicans supported the stadium deal.

State business leaders were unhappy with Dayton's veto, the Star Tribune reported. David Olson, president of the Minnesota Chamber of Commerce, told the Minneapolis newspaper that Dayton “showed a great amount of flexibility on his top priority, the stadium, and little or no flexibility on issues related to small-business job creation.”