Hello from the State Capitol,
I hope you had a wonderful Easter holiday! I spent time with family and friends over the past several days and hope you were able to do the same. Lawmakers are now back in St. Paul as we’re headed to the home stretch of the 2022 legislative session.
HOUSE MAJORITY UNVIELS NEW BUDGET TARGETS
One of session’s biggest question marks centers on what to do with Minnesota’s projected $9.3 billion budget surplus.
An answer came from the House majority earlier this week, as it unveiled budget targets that would spend $7.4 billion of our projected windfall. This despite the fact that this is not a budget year, and that all state agencies are fully funded for this legislative biennium.
The spending increase amounts to an additional 14% on government programs, meaning during this current two-year budget cycle the state’s budget would total $59 billion if their plan was signed into law. So, government would get a huge INCREASE all while Minnesota families are seeing a tremendous DECREASE in their own family budgets due to the daily costs of significant inflation!
By comparison, the Minnesota Senate would use the majority of the surplus for tax relief. The Senate has already passed a complete repeal of Minnesota’s tax on Social Security to give seniors on fixed incomes a break. They also passed an almost 3% permanent decrease to the first income tax tier that would help working families keep more of their hard-earned money in their own pockets. Both of these bills are awaiting tax action by the House DFL majority before they would have an opportunity to become reality.
With a month left in session, there will be a showdown as to how this surplus will be allocated. And it’s also worth remembering the surplus does not have to be addressed this session, but would need to be addressed in 2023, which is another budget setting year.
NO PROGRESS ON LOCAL EMPLOYER TAX INCREASE
Last month, local employers learned they would be paying 15% or more in tax increases in order to begin to replenish Minnesota’s Unemployment Insurance (UI) trust fund. At that time, House Speaker Melissa Hortman stated that lawmakers actually had until April 30 – the date the actual payments were due – to act.
That day is almost here, and there are no signs of any movement on this topic in the Minnesota House.
This is problematic for a number of reasons. Minnesota literally wastes $50,000 a day just in interest costs due to this inaction. If the trust fund is not repaid using available state surplus or federal COVID revenue, it will ultimately result in ten years of higher taxes on every Minnesota employer.
Senate Democrats and Republicans have already passed legislation that would solve the problem and eliminate this unneeded tax increase. The measure is also supported by Governor Walz and his administration, as well as House Republicans. It’s time for the House Speaker and her caucus to act in the best interests of Minnesota’s job providers and bring forward legislation that addresses this problem.
Next week, the House majority will begin bringing their numerous supplemental budget bills that have previously moved through committees to the House floor for a vote. We are also anticipating that the House DFL will unveil a capital investment bill very soon. As always, I continue to advocate for the final phase of the Fountain Lake dredging project to be included in that bill as well as at least part of the Albert Lea wastewater treatment plant. There will still be a lot of negotiating ahead before a final bill surfaces. I will be sure to let you know when I hear about the fate of these projects.
Have a good weekend,