With 10 days left until the legislature must meet its 80 day constitutional limit, efforts to figure out how to balance the budget have hit what can only be described as a ridiculous point.
Prior to the halfway point of the current legislative session, HB 1250 passed the House almost unanimously (the vote was 92-1). The bill as passed by the House cut the personal income tax by $361 million across the board and reduces the top personal rate from 3.9% to 2.9%; and it cuts the corporate income tax by $140 million and reduces the top corporate tax rate from 5.15% to 3.3%.
Also prior to the halfway point, SB 2156 passed the Senate almost unanimously (the vote was 42-5). The bill passed by the Senate cuts personal income tax by $200 million and reduces the top personal to from 3.9% to 3.3%; and it cuts the corporate income tax by $50 million and reduces the top corporate income tax rate from 5.15% to 4.53%.
To anyone watching, these were great developments for taxpayers, and it seemed there wasn’t even going to be a Republican vs. Democrat fight over income tax cuts (which, is a far cry from just a few years ago).
Now, flash-forward to a few weeks ago when the Senate adopted amendments to the House version of income tax cuts (HB 1250) that reduced the size of the individual income tax cut from $361 million to $150 million, and places the top tax bracket at 3.41%. The Senate amendments also reduced the size of the corporate income tax cut from $140 million to $40 million, with the top tax bracket being set at 4.65%.
Why would the Senate amend the House income tax cut bill down to be less than what the Senate itself already passed?
According to the latest available state revenue figures, the state individual income tax collections are 110% above what they were at this point in the last budget cycle and 70% higher than predicted. Concurrently, the corporate income tax has generated 67% more than this time last budget cycle, and 200% more than predicted.
Now, flash-forward again to just yesterday when the Senate further amended HB 1250 down to only a $125 million TOTAL income tax cut.
Why? Because the Senate Appropriations Committee urged the Senate to do so to help them balance the budget.
Yes, that’s right – the Senate decided that the only way to balance the budget (which is currently set to grow by more than 30% including one-time spending) is to hijack the House tax cut bill and make it amount to half of what the Senate itself passed in Senate Bill 2156 with only five dissenting votes.
In essence, the Senate has said “on second thought, we don’t want to cut taxes as much as we wanted to cut them two months ago because we’d rather spend the money somewhere else.”
The House now has two options – either amend Senate Bill 2156 to be closer to what the House sent the Senate in HB 1250 and fight it out in conference committee – or pass Senate Bill 2156 EXACTLY the way the Senate sent it to them.
For the taxpayers sake, it would probably be better for the House to pass SB 2156 just as the Senate passed it rather than roll the dice with the Senate in conference committee.
It’s too bad Senate Republicans are spending more time fighting with House Republicans and coming up with ways to free up more cash to spend than they are figuring out how to maximize how much the taxpayers save from the prosperity the state is seeing.
There has been a “let’s spend it while we got it” attitude in Bismarck for the past 4 legislative sessions now – and with 9 days left, the taxpayers could very well get left behind – again.