No Budget Deal, No PPP or UI Fix in Sight
Monday is the final day of the regular session and, unfortunately, all the important issues are still left undone. Setting the state’s next two-year budget is truly the only thing we must do all legislative session – and it remains unfinished.
As of today, the Governor's office and House and Senate leaders have not reached an agreement on the budget targets. This week we received guidance on the parameters for the federal monies coming from the American Rescue Plan - and due to the Governor’s Emergency Powers there is also no alignment on who – the administration or the legislature – will have control over how those monies get disbursed. However, it is important to note that our constitution states that all expenditures must originate in the House.
Sadly, while the budget is what must be done, these musts get attached to a list of political policy wants. At this point, a special session looks inevitable. It may be necessary to have all policy language that isn’t agreed upon removed and leadership solidify targets so we can resume the work to complete the budget.
Unfortunately small businesses and those who received unemployment during the pandemic are also caught in the middle of this negotiation stalemate. Hundreds of thousands of Minnesota businesses and workers may have unexpected tax bills due to federal assistance during the pandemic. We were told for months by the House Majority that PPP and UI relief weren't urgent because of the tax extension. Well, the tax deadline is Monday and these important issues won’t be fixed in time.
According to the Minnesota Department of Revenue, 65% of Minnesotans on UI — more than 500,000 filers — will be forced to pay state taxes on boosted federal unemployment benefits without action by the legislature. Additionally, Minnesota businesses continue to wait on the legislature to act to eliminate taxes on forgiven PPP loans. The business tax filing deadline passed on March 15. Minnesota remains the only state in the upper midwest that imposes taxes on forgiven PPP loans.
The Senate passed bipartisan PPP/UI relief on a veto-proof 55-12 vote but the bill has not yet come to the House floor.
The tax filing deadline was extended by the federal government to May 17.
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