Dear Neighbor,
Before we get to legislative news, I want to congratulate area high school basketball teams for what was not only a successful regular season but for numerous schools in and near District 12B advancing to state championship games.
On the girls’ side, BBE plays Minneota 1 p.m. today for the Class A championship. Albany will follow with a 3 p.m. game against Providence Academy for the Class A title. Boys championship action will happen Saturday, with Hancock slated to take on Hayfield for the Class A crown at 1 p.m. Alexandria then plays Minnehaha Academy for the Class AAA championship at 6 p.m. All championship games will be played at Target Center. Congratulations to all these area teams for making it this far and good luck in your championship games!
As for notes from the House, the groundwork is being laid for budget negotiations to begin in earnest as we inch closer to the Legislature’s May 17 date for adjournment. The House and Senate majorities, and the governor, all have put out their respective budget plans and now the challenge will be to find common ground so an agreement can be reached on time.
The subject of taxes surely will be at the center of these discussions, especially since the House majority has now come out with a plan that would raise taxes and fees by more than $2.5 billion in just their tax bill ($1 billion) and transportation bill ($1.5 billion over four years) alone. These numbers would be jolting anytime, but even more so as Minnesota is enjoying a historic surplus of $1.6 billion, or a $4.2 billion surplus if you include federal relief dollars to the state.
The transportation tax increases came as something of a surprise since none of those provisions have received committee hearings this year. This includes House Democrats wanting to raise the gas tax. Here is a rundown of tax/fee increases the House majority proposes on transportation:
- A gas tax increase ($363 million over four years) by linking Minnesota’s gas tax to the Highway Construction Cost Index. This would result in an automatic annual inflationary gas tax increase.
- A sales tax increase to fund light rail and other transit ($916 million over four years). Democrats are proposing a half-percent increase in the metro sales tax.
- A Motor Vehicle Sales Tax (MVST) increase ($120 million over four years).
- Registration tax increase ($149 million over four years) through changes to vehicle depreciation schedules.
- Luxury vehicle registration tax increases ($10.7 million over four years).
In addition to the transportation tax increases, House Democrats also are looking to raise taxes by more than another $1 billion in their omnibus tax bill. This includes adding a new fifth-tier income tax of 11.15 percent – similar to the governor’s plan – which would give Minnesota the second-highest top income tax rate in the country. This would be detrimental for many businesses that have been hit hard during the pandemic and are looking to recover.
Disappointingly, the majority’s tax bill fails to fully protect businesses from state taxes being claimed on federally issued Paycheck Protection Program loans provided to help businesses survive in recent months. Minnesota remains the only state in the Upper Midwest which has not exempted these loans from state taxes and it appears this provision, unfortunately, is unjustly being held back by the majority as a bargaining chip during negotiations.
On a final note, I mentioned in a brief email earlier this week that I am co-hosting a virtual town hall meeting for District 12B residents at 8:30 a.m. this coming Tuesday, April 13. I hope you can join us to discuss a variety of issues as the Legislature makes its way through the final six weeks of the 2021 session. You can click here to register for the meeting.
Sincerely,
Paul