Dear Neighbor,
We are wrapping up another busy week at the Capitol and the House majority has finished bringing this session’s omnibus bills to the floor for initial votes. This sets the stage for two weeks of work to find agreement and gain final passage before the Legislature adjourns May 23.
There are huge differences between what House Democrats and Senate Republicans in their respective majorities propose in their supplemental finance packages. Senate Republicans want to use most of our historic state surplus for tax relief, while the House Democrat budget spends $21 on government programs for every $1 in cuts.
I may provide a closer look at what’s on the table for negotiations in an upcoming letter. For now, here’s a glimpse at the House tax bill and more:
House tax bill
Permanent, meaningful tax relief should be our top priority this session for appropriating the state’s massive surplus. The omnibus tax bill House Democrats approved this week misses the mark in that regard.
Overall, it spends $1.645 billion in 2022-23 and another $1.6 billion in 2024-25 but focuses more on credits instead of permanent reductions and does not fully exempt the state tax on Social Security. Less than 10 percent of the funding would be dedicated to business tax relief and COVID grants, and most of those are one-time dollars
Property taxes are on the rise as well across the state, but this bill does not include any permanent tax reductions and includes an increase in permanent spending. The bill would shift $18.7 million in rising property tax burdens back onto middle-class families. This comes as Minnesotans struggle with inflation, higher gas prices and food shortages in the Biden/Walz economy. This will only keep Minnesota at a competitive disadvantage compared with our neighboring states in terms of tax burdens.
One silver lining is legislation I have authored is in the House’s omnibus tax bill, providing a general sales tax exemption on construction materials used by local governments and nonprofits. This includes school districts, local governments, hospitals, nursing homes, regional library systems, and nonprofits. The exemption is effective for sales and purchases made after June 30, 2021 and before Jan. 1, 2023.
UI bill passes
Legislation to repay Minnesota’s unemployment insurance trust fund deficit and reverse tax hikes employers in the state faced despite a $10 billion surplus has been enacted into law with wide, bipartisan support.
I am pleased the House approved this bill (S.F. 2677) providing $2.7 billion to fully repay the trust fund which was depleted with more people out of work during the pandemic. This bill should have been passed months ago and the serious delays House Democrats caused by treating our employers like bargaining chips was politics at its worst.
Senate Republicans approved a clean bill to rectify this issue in February, with broad, bipartisan support. House Democrats delayed action until late April, when they added more than $1 billion in other funding to the bill. This change complicated matters and delayed final approval, costing state taxpayers $50,000 in interest for every day the legislation languished.
Final language in the package includes $500 million in payments to frontline workers – approximately $750 per person – and $190 million is provided to Minnesota Management & Budget for continued COVID-19 expenses. Another measure allows just one legislative body to reject an expenditure instead of the current requirement for both bodies to object.
Click here for details on the changes in unemployment insurance law, and you also can visit www.frontlinepay.mn.gov for information on frontline worker pay eligibility and more.
It is good we stopped a tax increase from damaging our employers, but now it is time to get serious about providing real relief. There is still time to make it happen this session.
Until next time, have a good weekend and, as always, your feedback is welcome.
Sincerely,
Chris