Gov. Tim Walz signed all of this year’s omnibus budget bills into law before a new fiscal year began at midnight Wednesday. At that point, the House was still discussing how to pay for them.
Finally, at 1:15 a.m., the House approved the omnibus tax bill, as amended, and sent it to the Senate. Then its special session promptly ended, as the members voted to adjourn sine die and plan to meet up again in January 2022, barring any other special sessions.
By a 69-55 vote, the House passed SSHF9*/SSSF26, a bill sponsored by Rep. Paul Marquart (DFL-Dilworth) and Sen. Carla Nelson (R-Rochester). The bill would produce $49.1 billion in revenue in the 2022-23 biennium that started Thursday and provide $4.2 billion in refunds, aids and credits, including $761 million in new tax cuts and credits.
The biggest portion of that $761 million would come from pulling state tax law into conformity with the federal government on tax exempt status for forgiven Paycheck Protection Program loans and unemployment benefits up to $10,200. The Revenue Department is expected to provide guidance to taxpayers on amending their 2020 tax returns.
The Senate was scheduled to take up the bill shortly before 3 a.m. Thursday. If passed without further amendments, it would then travel to the governor for his signature.
“This isn’t my tax bill, this is Minnesota’s tax bill,” Marquart said. “All of us in this room and in the Senate has had input on this bill. Eighty percent of the bill is COVID-19 recovery and relief, as it should be. That really was the main goal – besides doing a budget – was addressing the hardships that individuals, businesses and families were going through over the last 15, 16 months with COVID-19.
“There is about $644 million of direct tax cuts to people who lost their jobs and businesses who kept on employees during COVID-19. … The unemployment benefits subtraction up to $10,200 per individual would benefit about 500,000 people who lost their jobs, with an average of about a $500 tax cut. … You also have full conformity, every dollar of every loan, on the Paycheck Protection Program. These are businesses that, during this hardship, kept workers on to make sure that we could keep the economy going as best we could.”
Marquart touted the bipartisan nature of the bill, citing provisions from bills sponsored by members from both sides of the aisle. Among those he mentioned were:
An amendment was attached to the bill in the House Ways and Means Committee on Saturday that had the potential to complicate debate in the Senate, but was accepted by the Senate Taxes Committee late Tuesday. It added outlays from the General Fund of:
Also new to the bill since it left the conference committee are some changes in policy that came via the amendment approved in the House Ways and Means Committee. The bill now contains provisions that would:
As Wednesday became Thursday, one particularly controversial amendment was added that would, retroactive to Tuesday, authorize the commissioners of health or human services to declare public health disasters and lay out parameters for that scenario. SomeRepublicans characterized it as returning the governor’s emergency powers to him a night after removing them. The amendment was adopted, as was another that would prohibit lobbying activities by sitting members of the Legislature.
Four other amendments were approved on the House Floor that would:
Among the proposed amendments that weren’t adopted, an anti-Hollywood tone emerged. Despite legislators’ multiple references to the Minnesota-shot “Grumpy Old Men,” the film production credit was a favorite target, as several amendments would have eliminated or reduced the credit to shift more aid to restaurants, retailers and the homeless, and increase the K-12 education tax credit and the Social Security subtraction.
Another unsuccessful amendment would have shifted funding for the Rondo land bridge to local government aid appropriations.
“This is a boondoggle of unimagined magnitude,” said Rep. Jerry Hertaus (R-Greenfield), speaking of the land bridge proposal.
While the legislation contains many tax cuts and credits, the state’s budget reserve is projected to grow to $2.4 billion under the bill.