Dear Friends,
With a $9.3 billion budget surplus projected near the start of the 2022 legislative session, many lawmakers wondered if the legislature would find agreement on how to allocate this over-collected revenue.
With days remaining before session is required to end, and with House and Senate majority priorities appearing to be very different, finding that consensus could be elusive.
The Minnesota Senate has signaled it wants to provide permanent tax relief to Minnesota’s families, which is also the approach I support. It has approved a complete repeal of Minnesota’s tax on Social Security to give seniors on fixed incomes a break. It also passed an almost 3% permanent decrease to the first income tax tier that would help working families keep more of their hard-earned money in their own pockets.
Eliminating the tax on Social Security has long been a goal of mine. Minnesota is only one of 13 states that still taxes Social Security benefits. The starting point for this antiquated Minnesota tax is any senior who makes $25,000 of federal combined income. Why are we taxing our seniors who worked hard their entire lives and many of whom are now on fixed incomes? This tax must go away!
In contrast to the Senate proposal, the plan put out by the Minnesota House Democrat majority would grow government in both funding and added full time employees. It drastically increases state spending. An analysis of its proposals found that the House majority budget would spend more than $21 for every $1 it offers in tax reductions.
The House taxes plan was approved on a party-line only vote recently. My biggest disagreement with it was the lack of permanent tax relief. The bill does offer several tax credits, but it does not provide any Minnesotan with a tax rate cut.
Tax credits are common in Minnesota, such as the childcare tax credit. However, tax credits do not cut tax rates. They are technically considered “spending.” Tax revenue taken in by government gets redistributed through the credit to other people - some who pay taxes and some who don’t.
I am not arguing that tax credits are bad. On the contrary, their targeted use can be beneficial. However, in a highly taxed state like Minnesota – one of the highest in the nation - and in a time of extreme tax surplus, I believe we should be taking this opportunity to permanently lower tax rates in our state. My goodness, even our lowest 5.35% income tax rate in Minnesota is higher than the top tax rate in 24 other states!
To me, this is significant. Hardworking Minnesota families, including seniors, are seeing their budgets stretched very thin. Daily costs of significant inflation are forcing families and seniors to do more with less. Permanent tax relief would allow them to keep more of what they earn.
Eventually a taxes conference committee will meet and try to hammer out a plan that can be approved by both legislative bodies. With session ending on May 23, those lawmakers will have their work cut out for them, but I’m hopeful an agreement can be reached. The people of Minnesota deserve it.
The reason I remain hopeful for a good tax bill to come forward before session ends is that lawmakers have proven they can work together on issues important to Minnesotans.
Recently, both the House and Senate overwhelming approved legislation that commits to caring for our veterans.
A few weeks ago, the veterans and military affairs spending bill was thrown in with other funding bills for state government, pensions, and transportation. This hodge-podge omnibus bill passed in the House on a solely partisan vote and had no chance of moving forward.
The good news is cooler heads prevailed. The decision was made to craft a stand-alone veterans and military affairs bill. Because of this decision, it passed the House on a hugely bipartisan 121-1 vote.
That means more than $10 million will be allocated for construction cost increases for the three new veterans’ homes in Preston, Bemidji, and Montevideo. The funding for these three new veterans homes had been approved a few years ago, but construction costs have inflated so much it was putting their completion in peril.
Veterans and gold star families who served post-9/11 will also receive post-service bonus payments thanks to this legislation, and there are numerous other provisions that attempt to prioritize those who put their lives on hold in order to serve our nation.
I have always said we could get more things done at the legislature if we simply approved all areas where both sides agree and debate the controversial items separately. This bipartisan veterans’ funding bill is proof of this. I’m very pleased we have sent it to the governor’s office for his signature.
CAPITOL VISIT
It was so fun to meet with and talk to the 6th graders from NRHEG schools this week!
These young ladies and their classmates traveled up to the Capitol to learn more about our state and government. I love it when young people come to visit and learn. Great to see them!
Have a good weekend,
Peggy