Last Friday Governor Dayton announced he would no longer push a plan to expand the state’s sales tax to business services which raised $2 billion for his budget plan. The proposal that came to be known as “B2B” or the business-to-business sales tax faced found little to no support in the House of Representatives.
The Senate remained more silent on the subject, but House DFL leaders never embraced this portion of the Governor’s budget plan and some were even hostile to it. Governor Dayton said Friday that dropping B2B also means dropping plans to give every homeowner a $500 rebate when they file their income taxes. That proposal came at a cost of $1.5 billion.
The net effect of the Governor’s announced changes means a $500 million drop in available revenues in his plan. However, this corresponds to the roughly $500 million drop in the projected deficit that was announced in the February budget forecast. Dayton will announce a revised budget plan on Tuesday. He’s already hinted at putting more money into the renter’s credit.