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Yahoo
3 days ago
- Business
- Yahoo
Rank-and-file reject Minnesota legislative leaders' ‘skinny' tax bill
Dark clouds loom over the Minnesota Capitol on May 15, 2025. Photo by Michele Jokinen/House Public Information Services. Senate Taxes Chair Ann Rest, DFL-New Hope, didn't need much time to shoot down the 'skinny,' 12-page tax bill proposed by Minnesota legislative leaders as they rush to button-up a two-year budget deal, without which the state shuts down at the end of the month. 'I rejected it right off the bat,' Rest said in an interview Monday. 'As soon as I saw it, I told them I couldn't vote for that and neither could half a dozen other Senate Democrats.' The text of the bill was posted on Sunday, but Rest said it's been obsolete since Friday morning when she expressed her opposition and asked that they continue working toward a deal. Rest's rejection raises the prospect of a two-year budget agreement without a tax bill, which isn't necessary for ongoing government operations but would leave a bevy of lawmakers and interest groups fuming, their hopes for special tax treatments foiled. The 12-page document largely maintains the status quo with a couple notable exceptions agreed to weeks ago: increasing the sales tax on cannabis 50% and repealing the electricity tax exemption for power-hungry data centers. Those will still be in any final package, Rest said, but the 'skinny' bill leaves out noncontroversial but nevertheless important policies. For instance, more than a dozen cities are awaiting approval for local tax increment financing districts aimed at spurring development. The skinny bill also leaves out continuing tax credits for sustainable aviation fuel, which has bipartisan support but was was absent from the leadership agreement signed off by Gov. Tim Walz, Speaker Lisa Demuth, R-Cold Spring, Speaker Emerita Melissa Hortman, DFL-Brooklyn Park, and Senate Majority Leader Erin Murphy, DFL-St. Paul. Republican co-chair of the House Taxes Committee Greg Davids of Preston also unequivocally rejected the proposal in an interview with MPR News. 'We put five months of thought into something they put five minutes of thought into, and I know which one's going to be better,' Davids said. 'I'm just not sure why any Republican would even consider voting for this. I don't think it would pass (the) House or the Senate.' While the taxes working group was meeting in public, negotiations have moved behind closed doors and will likely remain so until a deal is reached, Rest said. Building trade unions and business groups are banking on lawmakers extending sales tax exemptions for data centers on equipment purchases even as they sunset exemptions on electricity. They hope by extending the equipment sales tax exemption into the next century, the state will entice Meta, Amazon and other tech giants to build data centers in Minnesota. The tax incentives are particularly important to the construction unions after lawmakers failed to reach an agreement on a public infrastructure package for the second year in a row. Building one large data center can cost upwards of $1 billion — more than an entire public infrastructure package — and create upwards of 1,800 construction jobs, according to a study of Wisconsin. Opponents argue that tech giants will build data centers in Minnesota regardless of the tax incentives leaving regular taxpayers to subsidize some of the richest companies in the world at the expense of investing in schools, nursing homes and infrastructure. The state expects to bring in an additional $56 million in tax revenue over the next two years by repealing the electricity exemption. The state will still exempt data centers from sales tax on equipment and software through 2042, which is expected to cost more than $200 million in forgone sales tax revenue over the next two years. Amazon recently announced that it's suspending plans for a large data center in Becker 'due to uncertainty' — one week after lawmakers announced they were eliminating the sales tax exemption on electricity. Lawmakers have also agreed to raise the tax on retail cannabis sales from 10% to 15%, pushing the total sales tax above 20% across the state when local and state sales taxes are added. The tax hike would land before the state has even issued any cannabis sales licenses, although it has been collecting taxes on THC beverages and low dose edibles. Just one dispensary would be subject to the tax increase: The White Earth Nation opened its first off-reservation store in Moorhead last month after negotiating a compact with state leaders through a process exclusive to tribes. State lawmakers voted to legalize cannabis in 2023 with a relatively low sales tax compared to other states, arguing that a higher tax would allow the black market to survive, and that cannabis sales should not generate funding for unrelated budget items. The 15% rate would push Minnesota toward the higher end of taxes compared to the 23 states with legal cannabis sales, according to the Tax Foundation. The bill would also repeal a law that sends a fifth of cannabis tax revenue to cities and counties to fund local enforcement costs.
Yahoo
20-05-2025
- Business
- Yahoo
Minnesota legislative session ends: no bang, barely a whimper
House Speaker Lisa Demuth, R-Cold Spring, gavels the body to order on May 19, the final day of the 2025 regular session. Photo by Andrew VonBank/House Public Information Services. A narrowly divided Legislature adjourned Monday without completing a state budget for the next two years, ending the session just as it began: with rancorous finger pointing. The session started with the Minnesota Supreme Court settling a dispute between Republicans and Democrats over control of the House, and now lawmakers are leaving with the biggest budget bills still outstanding, including health and human services, education and taxes. The Legislature only passed nine budget bills out of some 20 in process, and now they will need a special session to do the rest. Lawmakers are working to pass a $66 billion to $67 billion two-year budget that will fund everything from schools to parks to health care and services for people with disabilities. The state is grappling with a structural deficit that's arisen from the rapidly increasing costs of special education and caring for an aging population. Given the Republican refusal to agree to any new tax revenue, lawmakers are looking to trim spending. Most consequentially, Gov. Tim Walz and DFL leaders agreed — at Republicans' behest — to remove undocumented adults from MinnesotaCare, the state's subsidized health insurance for the working poor. Children will still be enrolled. The bill hasn't passed yet, and DFL Caucus leader Melissa Hortman, DFL-Brookyln Park, told reporters Monday night that Democrats would fight it until the end. 'Until the last gavel drops on the last minute of passing a budget for the state of Minnesota, Democrats are going to keep fighting to try to get Republicans to relent on that demand,' Hortman said. In between now and the special legislative session — date yet to be announced, though ideally before Memorial Day, they say — lawmakers will hammer out the bills in 'working groups.' Because the lawmakers won't be in session, these will be unofficial meetings that include House and Senate members of both parties. Legislative leaders have given the working groups until 5 p.m. on Wednesday to finalize their budget bills, after which Walz will likely call a special session, which leaders and Walz say should last just a single day. Lawmakers will be back at the Capitol Tuesday morning to start the working groups. 'We have to finish this. We don't have a choice,' House Speaker Lisa Demuth, R-Cold Spring said. 'That is what Minnesotans expect us to do. We will be able to get that work done in a bipartisan fashion.' Despite the Wednesday deadline, Hortman said the earliest a special session could occur is Friday, though next week is probable. If lawmakers can't reach a deal by Friday, they will have to work over Memorial Day weekend, Hortman said. Only Walz can call legislators back into session, but only lawmakers can adjourn once they are in special session. In the hours leading up to midnight, rank-and-file lawmakers had little work to do because legislative leaders were meeting behind closed doors and making last-minute decisions on what bills they could pass in the few remaining hours. Multiple members walked laps on the Capitol's second floor, while Senate Minority Leader Mark Johnson played catch on the Capitol lawn. Rep. Joe McDonald, R-Delano, was spotted using an electric scooter to 'have a little fun,' traveling from the bowels of the Capitol to the House members' offices in the Centennial Office Building. In a series of press conferences, lawmakers laid the blame on each other for failing to finish their work. House Democrats argued that Republicans were attempting to change the parameters of an agreement Walz and legislative leaders announced last week. 'Republicans keep moving the goal posts. None of the GOP demands are necessary to pass a state budget bill. All of them will make life harder and more expensive for Minnesota families,' said House DFL floor leader Jamie Long. House Speaker Lisa Demuth, R-Cold Spring, said Democrats' 23-day boycott at the outset of the session derailed lawmakers from finishing on time. 'Waiting 23 days of a stall out was not helpful,' Demuth said. Walz on Monday afternoon told reporters he's confident the larger budget bills will get done and said Minnesotans shouldn't be concerned about the lack of progress. 'Against the backdrop of the dysfunction in D.C., this is a pretty remarkable thing to see — the most closely divided Legislature in Minnesota history working together in a fiscally responsible way,' Walz said. Walz noted that June 1 acts as a perfunctory deadline: The state will be obligated to send lay off notices to state employees if there is no budget by then, and leaders want to avoid that. The session kicked off in January with House Democrats refusing to appear at the Capitol, seeking to to prevent Republicans from using a 1-seat, temporary advantage to take control of the House and potentially block a Democrat from being seated in a hotly contested election. The Minnesota Supreme Court was forced to intervene before the two sides agreed on a power-sharing agreement.
Yahoo
20-03-2025
- Business
- Yahoo
Minnesota budget outlook isn't great. What now?
Minnesota Capitol. Photo courtesy of House Public Information Services. For those of us who support Minnesota's efforts to fund robust public services, it's been a rough few months. The February forecast dimmed what was already a fairly bleak state budget outlook, as rapid growth in costs are projected to outpace revenues for the foreseeable future. Add to that the looming threat of federal cuts and it feels a little like shoveling sand against a tsunami. But Minnesota has a substantial role to play in both combatting President Donald Trump's anti-public agenda and correcting our own fiscal trajectory. Here are 5 reflections for Minnesotans thinking about the future of public funding. The political rhetoric about the state budget is bad right now. We had a lot of money a few years ago and now we have less. We also have higher tax rates than most other states, which has intensified conservative accusations that the Legislature overspent in 2023. Listen to this story long enough and the world can start to feel constricting. But that narrow narrative is an intentional strategy aimed at the GOP endgame: tax breaks for the rich, and harmful cuts to essential programs like Medicaid. We live in one of the lowest-taxed and lowest-spending nations on earth, and we have cut taxes time and again over the past 45 years. The United States raises and spends about one-third less on public goods and services than the average developed nation, and about half as much when weighted by total national consumption, as shown in the chart below. Relative to their wealth, other developed countries choose to spend much more of their collective resources to ensure that everyone has a home and the care and opportunities they need to get ahead. Minnesota does more than most states to guarantee access to basic human needs, and we get results. That's a good thing. And our marginally higher taxes on the rich scarcely offset decades of top-heavy tax cuts at the federal level. With the country's most progressive state tax code, the idea that Minnesotans are suffering from high taxes as opposed to lacking services is emblematic of a dangerous race to the bottom that is keeping us all down. Basic needs like affordable child care, accessible health care, and true community safety can only come from a society that is adequately funded and thoughtfully administered. That work is not done. The latest budget projections emphasize the difficulty of maintaining important investments in general welfare; they may open up questions about delivering a high quality of service. But they should not shake our commitment to funding a caring and inclusive society through robust public investment. As I wrote in the Star Tribune in December, the GOP is leaning heavily on a false claim that the state's swing from surplus to deficit was the result of decisions made by the DFL-controlled Legislature in 2023. The largest single contributor to our looming budget shortfall comes from long-term care programs, which are driven by a changing population and bipartisan policy decisions made over decades. Neither of which can be blamed on single party decisions. Increased enrollment in long-term care programs is a demographic issue beyond the Legislature's control, while the growth in costs per person are rooted in the Disability Waiver Rate System — a complex set of equations used to calculate payment rates that was designed under bipartisan negotiations between 2007 and 2013. We are getting older as a society, and doctors are making more diagnoses of higher acuity conditions and disorders. The state has raised wages for domestic care workers more recently, but that also received bipartisan support. Republicans, for their part, have lobbied hard for nursing home funding, which has risen substantially. The 2023 Legislature could be more directly linked to rising special education costs — another deficit driver — but enrollment is rising there too. Perhaps a GOP Legislature wouldn't have raised wages for hourly school workers or offered more state aid to help cover special ed costs for school districts. But that's hardly frivolous spending. And, of course, the great irony here is the GOP blaming the DFL for deficits that would have been twice as large if we'd enacted their ideas: Republicans proposed $12.7 billion of tax cuts out of a $17 billion surplus with over $4 billion of that ongoing. That would have put the state more than $10 billion in the hole by the end of the 2028-29 biennium. This is not to say one side is right or wrong, but just to push back on the counterproductive narrative that looming deficits could have been easily avoided. Budgetary pressure is growing due to a state population whose age and rates of disability are climbing. That's a long-term dynamic that will shape public policy tradeoffs for decades to come. Ultimately, we need to retain and attract more young families, which has a lot to do with affordability and the cost of housing. Minnesota is making progress there but it will take time and effort. Anyone putting forward a simple cause or solution is either misled or misleading. Dovetailing with our budget challenge is another hot legislative topic: Fraud. Much like Republicans in the federal government, the state GOP is using recent cases of fraud to imply that the state could resolve its budget issues by simply apprehending all the thieves of public money and ending obvious inefficiencies. Ensuring the best use of public funds is, of course, essential to maintaining a strong and stable state budget, but fraud investigation will not close this gap. Used to explain our budget shortfall, fraud becomes an intentional sleight of hand, aimed at eroding popular support for public investment and pushing more of the anti-tax, anti-public worldview that has dominated policymaking since the 1980s at least. Republicans insisted on creating a new committee on fraud and oversight, but the reality of those hearings is vastly underwhelming compared to the scale and scope of their rhetoric. After several weeks of agency staff answering questions about basic procedure and organizational structure, Republicans called in the far-right Center for the American Experiment. The conclusion of that hearing was not what you might expect. After sharing some dubious statistics about the cost of fraud in Minnesota, Policy Fellow Bill Glahn talked about the inflated compensation of executives at nonprofits paid to perform public services. He argued, to my surprise given the typical conservative push for privatization, that delivering services directly through state or local employees would be a more fair and effective way to administer programs than by outsourcing the task to private nonprofits. This is a criticism I wholeheartedly agree with and have written about before. But the inefficiencies of current service delivery are not the same as fraud. Moreover, this broken public-private system of government results directly from those same anti-tax, anti-government neoliberal politics that Republicans and Democrats have pushed for decades. If committee Republicans are sincere in their desire to root out fraud and enhance efficiency, then we might be on to something. A more consolidated system of direct public service provision could improve services and possibly even reduce expenditures. But that sort of outcome could only result from years of dedicated legislative efforts, not cheap sloganeering. While waste and fraud aren't the primary cause of our big picture budget challenges, state lawmakers do need to think seriously about how to get the highest return for our tax dollars, and right now we are not driving a very hard bargain. How, for example, did we agree to build and pay maintenance on a stadium that generates hundreds of millions in annual revenue and billions in accrued wealth for one family dynasty? Just this week, the Star Tribune reported about new requests for state money to fund a renovation of the Xcel Energy Center in St. Paul. This sort of corporate giveaway is, unfortunately, something the Legislature has grown increasingly accustomed to. This session alone, lawmakers are considering spending $500 million on 'reinsurance' for health insurance companies in hopes (but with no legal guarantee) that the money will prevent premium increases. The Legislature is also weighing further expansion of a $230 million tax break for data centers owned by Amazon, Meta and other major tech firms, as well as a $14 million increase in public subsidies for questionable experiments in sustainable jet fuel. Minnesota needs to get out of the habit of handing public dollars over to for-profit entities with vague hopes of a positive outcome and no expectation of a public return. A better approach would be to invest in direct public sector capacity and assets that produce residual returns on our investments. Social housing is one idea floating around the Legislature that could be expanded to great effect. The concept is simple: Rather than using tax revenue to prop up a nonprofit affordable housing market, have local governments own and rent market rate housing, and use the income generated to subsidize affordable units. In Montgomery County, Maryland the housing authority has self-funded the construction of thousands of housing units with minimal public expenditure. As interesting as this specific idea is, the broader insight — that the state can use its wealth to cultivate productive investment directly — is even more powerful. North Dakota and Alaska have both created sovereign wealth funds that kick off substantial revenue each year, which can be used to fund rebates to state residents, subsidize general fund spending, or both. As our population grows older and our needs become more expensive, the state will need more tools to support the public programs and economic investments necessary to sustain a prosperous society. This definitely isn't the time for easy giveaways to those with the most. Underlying all of this is an important opportunity. The state must now deliver a system that works better and more efficiently. We must figure out how to balance a growing demand for care with the need for renewed public leadership in areas like childcare, housing, and environmental justice. That challenge will force more earnest discussion of government structure and strategy than we've had in many years. We can't kick the can much farther down the road. And for anyone frustrated with the quality and quantity of public services, that is good news.
Yahoo
10-03-2025
- Politics
- Yahoo
Minnesota House passes bill expanding whistleblower protections for state workers reporting fraud
Minnesota Capitol. Photo courtesy of House Public Information Services. The Minnesota House on Monday passed a bill that expands whistleblower protections for state employees who report fraud, waste or abuse of public dollars in hopes that workers will be more willing to come forward to report malfeasance. The bill (HF23), which passed Monday 133-0, is part of Republicans' anti-fraud package — a series of bills to address the theft of public dollars that has beset a number of Minnesota safety net programs in recent years. Rep. Kristin Robbins, R-Maple Grove and chair of the House's new fraud committee, said state workers have been fearful of retaliation if they report suspicions of fraud in their agency. 'The people who work in state government are working really hard, and they see these problems and they want to fix it. They want to be partners in solving some of the waste, fraud and abuse that's out there,' Robbins said Monday. Minnesota already had extensive whistleblower protections, but the bill creates new definitions for fraud and expands the law to all state workers. Current law provides protections for unclassified workers, but the bill passed Monday expands it to all state employees, which includes managers. The bill will need Senate approval and the signature of Gov. Tim Walz to become law. The House on Monday also took up another anti-fraud bill (HF3) requiring the Office of the Legislative Auditor to update lawmakers on which of their recommendations to the executive branch have been implemented. The OLA frequently recommends a state agency adopt various practices to prevent fraudulent activity or other issues identified in an audit. The bill would require that lawmakers be made aware which of these OLA recommendations an agency has and has not adopted. All House Democrats voted against the bill, arguing that it was unnecessary and a waste of taxpayer dollars. The bill would have allocated about $497,000 to the OLA and the state budget office for implementation. The bill failed to win the 68 votes needed for passage.
Yahoo
10-03-2025
- Business
- Yahoo
Minnesota House expected to vote down bill delaying paid leave program by one year
A full Minnesota House Chamber is pictured Feb. 6, 2025. Photo by Michele Jokinen/House Public Information Services. The Democratic-Farmer-Labor members of the Minnesota House are expected Monday to vote down a Republican bill that would delay the state's new paid leave program by one year. Minnesota's paid leave program will launch in 2026, guaranteeing Minnesota workers 12 weeks of paid family leave and 12 weeks of paid medical leave per year, capped at 20 weeks total in a single year. Republicans, who are currently in control of the lower chamber 67-66, are taking up a bill (HF 11) on the House floor that would delay Minnesota's paid leave program by one year. Needing 68 votes to pass, the bill is expected to fail absent any DFL votes. Republicans, like the chief author of the delay bill Rep. Dave Baker of Willmar, say postponement is needed to allow businesses more time to comply with the law, and some school districts have also expressed reservations about it. Democrats said the delay proposal is merely a ploy to cancel the entire program. 'Minnesotans have waited long enough. There's no reason to delay paid family medical leave. Republicans are just making it clear that they don't want a delay, they want a full repeal,' House DFL leader Melissa Hortman, DFL-Brooklyn Park, said last week at a press conference in favor of paid leave. Last month, House Republicans introduced a bill to fully repeal the paid leave program, but it has yet to receive a hearing. Minnesota's Department of Employment and Economic Development says the delay isn't needed, and it's ready to administer benefits when the program becomes active in 2026. Paid leave will launch with a 0.88% payroll tax in January 2026, which is 25% higher than what was originally proposed two years ago when the Legislature passed the law. DEED will do rate adjustments each year after receiving an annual actuarial analysis to determine the solvency of the program. Employees will pay at maximum half of the payroll tax — 0.44% of their taxable wages in the first year — but an employer can choose to assume some of their employees' cost.
