Taxes, Tobacco Settlements

Revenues are forecast to grow $2.364 billion or an average of 9.3 percent per year in the 2000-01 biennium over the preceding biennium. the Governor recommends tax cuts totalling $2.459 billion for FY 1999, FY 2000, and FY 2001. Two-thirds of available surplus funds are recommended in tax reductions.

• Deposits $1.3 billion in one-time tobacco settlement revenues over five years into endowments, that will enable the state to save these funds, while using some of the interest earnings to help families and individuals reduce their reliance on government, improve the health of our citizenry and invest in health professional education and medical research, and medical education and research costs.
• Provides a sales tax rebate of $1.087 billion to "settle-up" with taxpayers for 1998-99.
• Permanently reduces the Motor Vehicle registration tax, so that no car owner will pay more than $75 per vehicle for renewals after December 31, 1999.
• Reduces income taxes by eliminating the "marriage penalty", cutting the lower tax bracket rates from 6% to 5.75%, and expanding the lower tax brackets so more taxpayers' income is taxed at the lower rate.

• Increases K-12 education funding $561 million. $150 million is allocated to reduce K-3 class sizes to improve student achievement, with a goal that no classroom should have greater than a 17:1 student/teacher ratio, while $372 million is provided to ensure adequate operating funds for schools.
• Makes key investments that improve services to Minnesota citizens, including $25 million for a new senior drug subsidy, $57 million for cost of living adjustments for nursing homes, dentists, and other health care service providers, and substantial funding to support electronic government services and other technology initiatives.
• Sets aside $60 million for the state share of cots to complete the Hiawatha Avenue light rail transit line, contingent on an appropriate review of the long term transportation policy implications.