Dear neighbor,
Friday, April 9th marks the deadline for budget finance bills to complete the committee hearing process in both the House and Senate. We now have several state agency budget bills to pass totaling about $51-52 billion in state revenues and spending. Those bills will become the state’s next two-year budget.
Each chamber now will bring those bills to the floor for debate and final passage. The results are sent to the other chamber for consideration. The other body may be pass the bill and send it to the governor, or may amend the bill and sent it back for reconsideration.
In most cases there are enough differences that the bills will ultimately be referred to conference committees. There, the differences will be reconciled, and the product sent back to both the House and Senate for a final up or down vote, with no amendments allowed.
During this past week, the majority in the House has added a significant amount of new tax increases to the revenue side of these bills. While current data indicates a $1.6 billion surplus going forward and several billion dollars of new funds coming to the state from the federal government, nevertheless, unlike the Senate finance bills, the House bills contain billions in new state tax increases
The House majority’s tax bill and transportation bills alone add up to about $2.5 billion in tax hikes over the next four years. Examples include:
- A gas tax increase ($363 million over four years) by linking Minnesota's gas tax to the Highway Construction Cost Index, resulting in an automatic annual inflationary gas tax increase.
- A half-percent Metro sales tax increase to fund light rail and other transit ($916 million over four years).
- A Motor Vehicle Sales Tax increase ($120 million over four years). Vehicle registration tax increase ($149 million over four years).
- Luxury vehicle registration tax increases ($10.7 million over four years).
The tax bill adds a brand-new 5th tier income tax of 11.15%, giving Minnesota the 2nd highest top income tax rate in the country. That raises state income taxes by more than $1 billion, but fails to fully protect businesses from Paycheck Protection Program (PPP) tax hikes on forgiven federal loans.
Working with the Senate, I believe these unwarranted tax increases will not go forward. We need to allow our economy to fully recover and get this pandemic behind us.
Sincerely,
Dale