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Dear Neighbor,
It is time to get down to business in setting a new two-year state budget now that respective budget proposals from the governor and the House and Senate majorities all having been issued.
House Democrats were the last to make their complete budget plan public when they brought forward their tax components this week. In short, the House Democrat proposal would raise taxes by billions of dollars at a time the state has a historic surplus, an approach I do not support. Our focus instead should be on helping people recover financially after the hard hand so many have been dealt by the pandemic and the state’s response to it this year.
Overall, House Democrats propose raising taxes and fees by more than $2.5 billion in just their tax bill ($1 billion) and transportation bill ($1.5 billion over four years) alone. A number of the transportation tax hikes came as a surprise to many since none of those provisions have received committee hearings this year. Here is a look at some of the majority’s proposed increases and their estimated costs:
- A gas tax increase ($363 million over four years) by linking Minnesota’s gas tax to the Highway Construction Cost Index. This would result in an automatic annual inflationary gas tax increase.
- A sales tax increase to fund light rail and other transit ($916 million over four years). Democrats are proposing a half-percent increase in the metro sales tax.
- A Motor Vehicle Sales Tax (MVST) increase ($120 million over four years).
- Registration tax increase ($149 million over four years) through changes to vehicle depreciation schedules.
- Luxury vehicle registration tax increases ($10.7 million over four years).
House Democrats also this week released their tax bill this week and it raises taxes by more than another $1 billion. Disappointingly, the bill fails to fully protect businesses from state taxes being claimed on federally issued Paycheck Protection Program loans provided to help businesses survive in recent months. Minnesota remains the only state in the Upper Midwest which has not exempted these loans from state taxes and it appears this provision, unfortunately, is unjustly being held back by the majority as a bargaining chip during negotiations.
There is a long way to go in assembling a state budget before the Legislature is set to adjourn May 17. I am confident the finished product will better serve Minnesota taxpayers than the House majority’s plan to raise taxes by billions of dollars when the state has a vast surplus. Our economy was in great shape prior to the pandemic and, again, our best plan would be to provide Minnesota workers and families with some breathing room so they can make up for lost ground instead of adding to their already heavy burden.
I will remain closely involved in the budget process, especially as it pertains to a potential capital investment bill to maintain our state’s infrastructure. I also continue working on other issues of local and personal interest, such as restoring civics as a priority in our schools. Look for more on these and other subjects as we make our way through the session’s home stretch.
Sincerely,
Dean
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