Deadlocked House halts proposal to automatically return surpluses to taxpayers

The House is fit to be tied about the issue of automatically returning future budget surpluses to taxpayers.

A House divided evenly between Republican and DFL members after the swearing-in of newly elected Rep. David Gottfried (DFL-Shoreview) reached its first 67-67 tie after a robust debate about HF4. Sponsored by Rep. Wayne Johnson (R-Cottage Grove), the bill proposes that a constitutional amendment appear on the ballot in 2026 asking if a portion of projected future budget surpluses should be returned to state taxpayers.

If it were to meet voter approval, the constitutional amendment would create a tax relief account using money from a projected surplus, equal to the amount by which projected revenues exceeded 105% of projected expenditures, as determined by the November budget forecast.

The Legislature would then be required to appropriate money from the proposed new account each biennium for income or property tax refunds or to offset income or property tax reductions. Refunds or tax reductions that reduce a taxpayer’s liability for tax below zero would not be allowed.

“When the state collects more than it needs, it should be returned to the hard-working men and women who earned it,” Johnson said. “Instead of growing government, we give it back to those who need it most. … Ultimately, this decision belongs to the people of Minnesota. We give them the power to decide.”

As amended with a stipulation that refunds would not go to taxpayers making more than $1 million a year, the bill was not able to surmount resistance from DFL members who felt that it would tie the hands of the Legislature at times of shifting economic realities.

Johnson proposed an amendment that would clarify what biennium would be used for the budget forecast cited in the bill. It failed on a tie vote.

Three amendments sponsored by DFL legislators didn’t receive enough votes to be adopted. They included efforts to convert the bill’s aims to expanding state tax credits to reduce child poverty; limit the refunds to rental housing tenants; and first transfer a portion of the money to a state health care access fund.

An amendment that would have earmarked most of the bill’s fund for an increase in funding for schools was declared out of order.

Rep. Nathan Coulter (DFL-Bloomington) said the bill would chiefly benefit the wealthy and property owners.

“Just to guarantee a $500 check to every income tax filer in Minnesota would require a surplus of over $4.5 billion,” he said. “And that ain’t happening anytime soon.

“Even if you think it’s a good idea to lock in spending like this into our Minnesota constitution, know that what you’d be locking in is a boost to big businesses and wealthy homeowners and a naïve dream that enough of the scraps will fall off the table to the rest of us. This bill is a gimmick at best, false hope at worst.”