Omnibus Budget Bills
The House was in session Monday-Thursday last week as we continued to debate the various omnibus budget bills. There were provisions I support in every bill, but there were also many items of concern. I can’t possibly articulate every item I support or have concerns about in this summary, so I’m just picking a few things that I think might be of greatest interest to most people. If you have particular items you want to find out about, please send me an email!
Higher Education: The bill freezes tuition at Minnesota State schools, but not student fees, so the net costs will likely still go up for students.This bill included a great new initiative for Aspiring Teachers of Color. The bill passed 74-59.
Education: This bill gave schools a 2% increase on the general education formula each year and gave additional money to address the special education “cross-subsidy” mandate. I am very disappointed the bill had no provisions to return kids to full-time in-person learning nor are there any proposals to make up for the lost academic progress after a year of distance learning. The bill passed 73-60.
Commerce, Climate and Energy: Minnesota's current energy policies have made our state's energy prices go from some of the cheapest, to among the most expensive in the country. I supported the Conservation Improvement Provisions (CIP) that would have given electric cooperatives greater flexibility. Other provisions, however would raise energy prices for Minnesota families by using tax dollars to subsidize some forms of renewable energy and imposing new mandates that could jeopardize reliability during extreme weather.
The bill adds language that would make current e-pull tabs illegal and would cause serious loss of revenue to the bars/restaurants that operate the games and the charities that use the proceeds to do good work in our communities. I spoke in support of an amendment by Rep. Keith Frankie to delete this language here.
The bill also does not update outdated liquor laws that make it hard for craft brewers to compete. I planned to support Rep. Jim Nash’s amendments to “free the Growler” and allow them to sell directly to consumers at their breweries, but the amendment was ruled out of order.
The bill did have good changes to insurance provisions that are needed for federal compliance and I hope they remain in the Conference Committee version. The bill passed 70-64.
Public Safety and Judiciary: One-size-fits-all policies that are opposed by Minnesota's largest law enforcement organizations were plentiful in this bill. Instead of working with law enforcement to ensure Minnesotans of all backgrounds feel respected and protected by law enforcement, policies championed by those who wish to defund or significantly restrict police were included. It also significantly reduces sentences and diverts criminal offenders from prison.
The bill did have some good provisions on data and some limits on civil asset forfeiture. It also closed a loophole by defining in statute that those who are voluntarily intoxicated are considered “mentally impaired” and not able to give consent in sexual assault cases. The bill passed 70-63.
Jobs & Economic Development Finance Bill: This bill also had several provisions I support but it does not address repayment of the debt in the Unemployment Trust Fund. As you may recall, I introduced a bill to require that $2 billion of the $8 billion the state is receiving from the federal American Rescue Plan be used to repay the UI Trust Fund debt so small businesses do not have their unemployment taxes raised to cover the debt, as required by current law. In addition, the bill uses all of the Workforce Development taxes employers pay to retrain dislocated workers for training grants administered by non-profits. This is an inefficient use of the money. Employers know best what sort of training their employees need. I spoke in support of an amendment by Rep. Barb Haley which would have allowed employers to get a tax credit for 50% of the money they pay into the Workforce Development Fund if they provide training to their own employees. You can listen to the speech here.
Taxes: Despite a $4 billion surplus, the bill would raise taxes and does not provide full federal conformity to give PPP and Unemployment tax relief for businesses and workers. The tax bill created a brand-new 5th tier income tax rate of 11.15%, starting at $1 million of income. It gave Minnesota the 2nd highest income tax rate in the country, directly impacting many businesses who have been hit hard during the pandemic. The bill increased the corporate income tax, making our state an outlier for business competitiveness. These tax increases hit not only large corporations, but also small businesses that either pay their business taxes as pass-through on the income taxes or pay the corporate rate. The tax bill will hurt, not help, our economic recovery.
Most egregiously, the bill failed to fully exempt PPP by capping relief at $350,000. This means that many businesses will still be taxed on a portion of the PPP loans that were used to pay employees and keep their doors open during a difficult year.
I spoke against this bill on the House floor which you can watch here. The bill narrowly passed 68-66.
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