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Session Week 3: Dayton Releases Budget
For weeks Governor Dayton spoke of a bold plan to fundamentally change Minnesota's tax system. Last week he made good on that promise by releasing a budget proposal to raise over $3 billion in new revenue while offering $1.5 billion in property tax relief. Highlights from the budget plan:
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It creates a new fourth tier for individual income tax. The fourth tier rate increases from 7.85% to 9.85 % or about a 22.5% increase and becomes the fourth highest in the nation.
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The sales tax is lowered and broadened. The sales tax is extended to a long list of services including several in the homebuilding and remodeling industry. This is paired with a reduction in the sales tax rate from 6.875% to 5.5%.
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A cut in the tax rate on "C" corporations from 9.8 to 8.4%, which is paired with repeals of foreign operating company profits, which is an important issue for many large companies in the state.
Proposed MN Revenue Under the Dayton Plan
Individual Income Tax ............ $ 1.129 billion
Sales Tax .............................. $ 2.083
Corporate Income Tax ........... $ 0.004
Property Tax Relief ................ $ (1.464)
Cigarette & Tobacco Taxes .... $ 0.370
Other ..................................... $ 0.017
TOTAL .................................. $ 2.139 billion
Of particular interest to our industry is the host of services that are subject to the proposed expansion of the sales tax. More analysis needs to be done to determine the bottom-line effect of the overall reduction of the current rate coupled with the emergence of the sales tax on services.
Services Examples include:
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Interior Design
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Household Goods Repair and Maintenance
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Architectural and Engineering Services
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Environmental Consulting
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Legal & Accounting Services
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Management Consulting Services
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Business Support Services
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Public Relations and Marketing Consulting
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Surveys Home Inspections Well
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Inspections
This is a major proposal that will be subjected to the legislative process and several attempts to amend or eliminate portions of it. BATC will monitor closely and will communicate with the membership as the budget process moves forward.
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Recap: What Happened at IBS
What happens in Vegas, doesn't always stay in Vegas -- especially when it comes to sharing good news about the housing industry. Read the IBS recap by David Siegel, Executive Director, BATC:
David Crowe, chief economist of NAHB, provided an optimistic look at the housing market. He had projected 707,000 housing starts for 2012, and the number was actually larger at 780,000. He also lauded the increase in home prices across the country, as consumer confidence rose. Housing is presently 3% of GDP and should comprise 6-7%. Household formation is rising, but has some distance to travel to achieve what experts believe is normal. Crowe projects slow growth for the first half of 2013, with more rapid activity the second half of the year, barring an unforeseen crisis such as a war or Europe’s financial situation declining.
These comments echoed those provided by Washington, DC-based economist Elliott Eisenberg, who spoke at our January Dinner Meeting. Eisenberg said from his perspective, even Europe can’t derail the housing recovery. However, he cautioned that inability by Congress to address the debt ceiling could delay recovery substantially.
According to Crowe, builders report the following as their most significant challenges in 2013:
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Material prices
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Washington uncertainty
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Labor shortage
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Inaccurate appraisals
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Government regulations
Several BATC Members were Honored at IBS:
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NAHB Senior Life Director - Frank Kottschade, North American Realty, Inc.
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NAHB Life Director - Shawn Nelson, New Spaces
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50 Hours of Professional Development - David Siegel, BATC
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Executive Officers Council Board Member - David Siegel, BATC
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NAHB Student Chapters Competition - Dunwoody College, 4th place
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From 26 to 145, MN Green Path Expands its Reach
During the spring Parade of HomesSM 141 homes (out of 374) are participating in the new MN Green Path Energy Efficient Home Tour because MN Green Path has added an Energy Tested level. Every tested home will get a MN Green Path Home Perfeformance Report (HPR).
Energy Efficiency Pays Off for Builders Who Know How to Sell It
Eco Building Pulse - "Creating energy-efficient homes can benefit a builder’s bottom line if the builder knows how to communicate the value of the efficiency measures to buyers—but many builders are having the wrong conversation" [keep reading].
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YP's Team up with MAAR's Yo-Pro Group
Realtors and Builders are invited to join forces in a discussion about the current markeplace and what's to come. A brief presentation from both BATC and MAAR will illustrate where the numbers are heading.
James Vagle, Public Policy Director at BATC, is among the panel of experts who will present on the "Best Practices" to focus on in 2013. Get more details online.
Tuesday, March 5th | 4:00 - 6:00 PM | At Mingle, 12955 Highway 55 in Plymouth | $10 per person
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Join the After Party on February 21st
It's not a Hollywood Styled Affair without an A-list after party. Once the Builders & Remodelers Show closes its show floor, stay for networking, food and fun as select exhibitors host special after-party suites from 7:00 - 9:00 PM.
All builders, remodelers, architects and designers are invited, and up to two people from each exhibiting company can also attend the after-party. Sponsoring companies, contact Nicole Coon for more details.
BRS Schedule of Events:
Get more information at WWW.BATCBRS.COM
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More Good News
Housing to Drive the Economy
CNN Money - "Just over half of economists surveyed by CNNMoney identified a housing recovery as the primary driver of economic growth this year" [keep reading].
Design Services in Demand
Steady growth is expected in 2013 for architect and design services, according to The American Institute of Architects. Read the story.
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