A property tax exemption for all machinery, tools, and patterns; a reduction of state general obligation and variable rate debt supported by general purpose revenue; and increasing the maximum deduction under the individual income tax sliding scale standard deduction. (FE)

Sliding scale standard deduction This bill increases the maximum individual income tax sliding scale standard deduction (SSSD) by 13.2 percent for each type of income tax filer, increases the income levels for beginning the deduction phaseout by 11.4 percent, and modifies each of the phaseout percentages so they are closer together. These changes first apply to taxable year 2020. The indexing provisions that apply to the current SSSD continue to apply to the new standard deduction amounts.

Debt reduction Under current law, the secretary of administration annually calculates the difference between the amount of tax revenues projected to be deposited in the general fund during the fiscal year and the amount of tax revenues actually deposited in the general fund during the fiscal year. If the projected amount is less than the amount of tax revenues actually deposited in the general fund during the fiscal year, i.e., there is a surplus, the secretary of administration is required to transfer from the general fund to the budget stabilization fund 50 percent of the surplus.

However, current law further provides that if the balance of the budget stabilization fund on June 30 of the fiscal year is at least equal to five percent of the estimated expenditures from the general fund during the fiscal year, the secretary may not make the transfer to the budget stabilization fund.

Under this bill, if the secretary of administration does not make a transfer to the budget stabilization fund because the balance of the budget stabilization fund on June 30 of the fiscal year is at least equal to five percent of the estimated expenditures from the general fund during the fiscal year, 50 percent of the surplus must be used to reduce the state's general obligation and variable rate debt supported by general purpose revenue.

The bill further requires that the state's general obligation and variable rate debt supported by general purpose revenue be reduced by $100,000,000 in the 2020-21 fiscal year.

Because this bill relates to an exemption from state or local taxes, it may be referred to the Joint Survey Committee on Tax Exemptions for a report to be printed as an appendix to the bill.