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Legislative Update (4-9-21)

Friday, April 9, 2021


We knew full well House Democrats would want to raise taxes despite the fact Minnesota has a historic surplus of $1.6 billion ($4.2 billion including federal dollars issued to the state) and fully stocked reserves.

The only question has been how high they would go and now we are learning at least some of the details. I say “at least some of the details” because there is a fair amount of scheming in their tax increases where House Democrats are less than transparent about exactly how much they want to take from Minnesotans. 

For instance, House Democrats just this week dusted off their unpopular idea of raising the gas tax. But, instead of saying they want to raise the gas tax by 10 or 20 cents per gallon, for example, they want to put our state’s gas tax on autopilot by linking it to the Highway Construction Cost Index. This open-ended approach makes it much more difficult for citizens to understand just how this would cost them and could come as a surprise to many. 

There also are $1 million in new hidden taxes on utilities the majority has included in that climate/energy omnibus bill. In addition, that bill includes new mandates on electric and natural gas utilities under the guise of “clean energy.” These mandates will cause energy prices to increase and will threaten system reliability in the future.

Overall, the Democrats’ omnibus transportation bill alone includes more than $1.5 billion in unexpected tax and fee hikes over the next four years. None of the tax/fee proposals have received committee hearings this year, making their inclusion even more surprising. Here is a look at some of the more notable tax increases on transportation the Democrats propose and a breakdown of their costs:

  • 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).

Overall, these transportation taxes would be yet another setback for Minnesotans of all income levels at a time when many are just trying to get their finances back on track after a difficult year in which the governor compounded problems by causing people to suffer reduced income.

But that’s not all. In addition to tax increases in their transportation bill, House Democrats released their tax bill this week and it also raises taxes by more than $1 billion. In addition, it fails to fully protect businesses from Paycheck Protection Program tax hikes on forgiven loans. It would be a shame for Minnesota to be the only state government in the Upper Midwest that skims profits off emergency loans the federal government sent businesses to help them stay afloat.

We now have only five full weeks remaining in the 2021 session and we are going to start seeing things coming at us that nobody knew anything about, other than House Democrats who have planning behind closed doors. They have slow-rolled most of their objectionable provisions to shorten the window of public scrutiny and now are unleashing them in bulk under the camouflage of massive omnibus bills, bypassing the full legislative process as stand-alone bills.

I oppose these tax increases and continue working with Senate Republican colleagues to protect Minnesota taxpayers from House Democrats raising our taxes at a time the state is flush with cash.


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