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Legislative News and Views - Rep. Lisa Demuth (R)

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Legislative update

Friday, March 5, 2021

Dear Neighbor,

Congrats to the Kimball Vex IQ Robotics team, which last month made school history, hosting the first in-person competition state-wide during the IQ Rise Above 2020-2021 season, and earning their first two team awards. Click here for more. 

In House news this week:

Fix needed for undue biz tax

As we build toward overall budget agreement in late May, more immediate action is needed to spare more than 102,000 businesses throughout Minnesota from owing state taxes on forgivable emergency loans recently issued by the federal government. 

According to the Tax Foundation, Minnesota is the only state in the Upper Midwest that has yet to exempt forgiven Paycheck Protection Plan loan income from state income taxes. It is unconscionable for the state to skim tax dollars off federal PPP loans, offered as lifelines for businesses to keep employees on the payroll as COVID-19 and related state restrictions stifled their operations. 

House Republicans are on board with making this change, the DFL chairman on taxes, has expressed support, the governor said he is open to the idea and Senate Republicans conducted a hearing to discuss the issue. It’s time to get this done and spare our workers from this added headache. 

Budget work

The budget-setting process will be a lengthy one and I look forward to the work in these atypical times. Information will continue to be received to help shape our decisions. For example, as our children return to school, I look forward to learning whether – and/or to what degree – students have experienced setbacks in learning during the last year so we can respond accordingly. 

Formal budget work is just beginning now that we have received the February economic forecast for our state. That report from Minnesota Management & Budget (which I touched on last week) projects a $1.6 billion surplus for the 2022-23 biennium, a rather pronounced departure from the $1.3 billion shortfall projected in December for the same period – representing nearly a $3 billion reversal.

The one consistent message I have received from constituents in response to this budget news is: “Good. Don’t raise our taxes.” 

That said, the governor started the budget-negotiating process earlier this year by proposing a $1.7 billion tax increase and $52.4 billion in state spending. His plan would give Minnesota the nation’s second-highest business tax and third-highest income tax rates.  

The governor now is expected to produce a revised budget plan, accounting for the new economic data we received. I hope he rethinks his position on raising the taxes of Minnesota workers at a time we are seeking economic recovery. This is especially unnecessary considering the state’s $1.6 billion surplus. 

In the meantime, the House and Senate majorities soon will be coming out with their own respective budget proposals. Our focus should be on providing taxpayers with relief and security as we work toward safely re-opening our state and revitalizing our post-pandemic economy. 

Let’s help businesses and families that have been impacted during the pandemic get back on their feet from the financial hardships they’ve experienced. Tax increases are unnecessary, would be detrimental to regrowing our economy and should be set aside during negotiations. 

I welcome thoughts and ideas from constituents as we continue working to achieve agreement on a budget before the end of May.



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