Dear Neighbor,
It’s not a budget year by name but, with a $10 billion state surplus, finance bills are going to be a major focus of the 2022 session’s final month.
House Democrats are expected to start bringing a series of omnibus finance bills to the floor for votes next week and the common theme among them is they all spend a lot of money and double down on increasing power for state agencies.
In short, House Democrats propose $21 in new government spending for every $1 in tax cuts. Their plan spends more on programs, with total tax reductions in the House Democrat tax bill amounting to less than $600 million over the next three years. This pales in comparison with more than $12.2 billion they propose in new government spending, representing a 14 percent state spending increase.
On the other hand, the Senate recently passed the largest tax cut in state history, at more than $8 billion. This accounts for most of the budget surplus and includes eliminating the state’s Social Security income tax and reducing income taxes. The average tax relief per filer would be $759, with a family making $100,000 per year receiving a tax break of $1,066 every year.
I can’t emphasize enough how I hope the Senate’s position prevails in negotiations. I may not agree with each and every measure they propose, but their approach to using the state surplus to provide tax relief is much preferred to the path House Democrats are taking by using excess tax collections to expand government.
Something to remember: This is not a budget year, so there is no threat of a state shutdown if no agreement is reached on appropriating the surplus dollars. And, if the choice is between growing government and nothing happening, it’s hard not to side with the latter.
One important thing to note that is not included in the House Democrat budget bills is funding to repay the deficit in Minnesota’s unemployment insurance trust fund to reverse the recent tax hikes that hit Minnesota employers. With a surplus of around $10 billion, Minnesota can more than afford to fill its Unemployment Trust Fund to solvency, repeal the tax increases on employers, and stop Minnesota from having to borrow $50,000 a day from the federal government.
It is a shame House Democrats caused our employers to suffer a tax increase at a time the state has a record surplus. There is broad, bipartisan support for taking care of this issue, yet House Democrats continue to stand in the way.
The Minnesota Senate passed a bill to refill the UI trust fund Feb. 14 on a broadly bipartisan 55-11 vote. Gov. Walz, House Republicans, Senate Republicans, and Senate Democrats all have expressed support for replenishing the UI trust fund, but inaction by the House Democrat majority has caused legislation to stall. It’s been more than two months since a UI bill has received a House committee hearing and Democrats have blocked efforts to bring the subject to the floor for a vote.
The Democrat House Speaker downplayed the original March 15 deadline prescribed by state officials, insisting that lawmakers had until April 30, when tax bills are due, to act. But now that date is approaching and, again Democrats have excluded UI repayment funding from their proposed budget for this session. If the trust fund is not repaid, it would result in 10 years of higher taxes on employers.
Stay tuned because I’m sure I’ll have a lot more to say over the last month of the session and, as always, your input is welcome.
-Steve