Dear Neighbor,
Before we get into today’s legislative news, I want to congratulate area athletes on successful winter seasons and good luck to those still competing in postseason tournaments.
As for the latest notes from the House, this week we received an updated economic forecast for the state and it calls for a $17.5 billion surplus for the new biennium. The bottom-line surplus figure remains in line with the last full forecast, issued in early December.
We should note revenue actually grew by almost $1.5 billion since the last forecast but that additional revenue was offset because this report factored for inflation for the first time in decades. That said, with many economic indicators showing a general slowdown of the economy, we need to proceed with caution regarding adding ongoing spending that becomes part of the base budget.
This forecast also underscores the fact that we need meaningful tax relief. Eliminating the state tax on Social Security benefits and a lowering of the individual tax rates are just a couple of proposals that warrant serious consideration this session. Let’s also keep in mind long-term impacts of legislation approved by the majority this year could prove costly for our businesses, so anything we could do to mitigate their damage would be helpful to our workforce.
Just hours after receiving the updated economic forecast, House Republicans on Monday sought to fast-track legislation fully eliminating the state tax on Social Security. House Democrats blocked that move on a floor vote.
House and Senate Republicans conducted a press conference this week to unveil our “Give It Back” tax plan, which provides $13 billion over two years in permanent tax cuts and one-time rebates.
The package features tax relief benefiting Minnesotans both now and in the long-term, including:
- Lower first and second tier rates
- Full elimination of Social Security tax
- $1,800 tax credit per child
- Property tax relief
- $5 billion in rebates
I am pleased the Republican proposal includes an adjustment of the homestead market value exclusion to provide $35 million a year in relief. Rising property valuations and a tight housing market mean people need relief wherever they can get it. This change would allow them to keep more of their home’s value in their bank account each year.
Here is the big question: If we can’t give tax relief to Minnesotans now, at a time the state has a $17.5 billion surplus and continues over-collecting taxes, when can we?
On a final note, legislation known as Right to Repair was heard in a House committee this week. The bill affected everything from fixing cell phones to repairing expensive tractors and combines. It also contained a provision that farm equipment dealers would have to sell parts at cost to those who repair their own machinery. An amendment was added during the hearing that exempted “off-road equipment” from the provisions of the bill. I think that was the right thing to do, as this legislation was too far-reaching. To date, only one other state has passed similar legislation. That was the state of New York and they also chose to exempt farm machinery and other off-road equipment.
Until next time, have a good weekend and please stay in touch.
Sincerely,
Paul