Dear Neighbor,
The Legislature is just five full weeks from its scheduled adjournment and our primary focus remains establishing a new two-year state budget.
The good news is tax increases are completely unnecessary because Minnesota enjoys a $1.6 billion surplus ($4.2 billion with federal funding included) and has fully stocked reserves.
The bad news is House Democrats propose raising our taxes despite the fact our state has a historic surplus. They came out with their tax plans this week and are looking to raise 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.
The tax/fee increases on transportation came to a surprise to many since none of those proposals have received committee hearings this year. Here is a look at some of the more notable tax increases on transportation the majority proposes and a rundown of their 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.
In addition to tax increases in their transportation bill, House Democrats released their tax bill this week and it raises taxes by more than another $1 billion. It fails to fully protect businesses from Paycheck Protection Program tax hikes on forgiven loans. This may simply be a bargaining chip played by the House majority despite the fact there is nearly universal support for eliminating the state tax on PPP loans.
It is bad enough that Minnesota remains the only state in the Upper Midwest to not already have exempted businesses from taxes on PPP loans and that our government may actually go so low as to profit off emergency loans the federal government sent businesses to help them stay afloat. For the majority to use this as a bargaining chip when there is vast, bipartisan support for eliminating this tax is just added insult to workers who already have suffered so much this year, including those who lost income due to excessive restrictions the same government that now stands to profit placed upon them.
The plan should be simple: Don’t raise taxes when the state has a massive surplus. Instead, let’s help our struggling families, schools and businesses and make sure that, once the governor releases us back into the wild, we are in good shape to get back to full employment and rebuild our robust economy so people can recover financially.
This is just the beginning of the session’s home stretch where budget negotiations will happen in earnest. The House Democrats’ tax increases are simply markers in the ground to identify their priorities (namely raising taxes at a time of massive state revenue surpluses) as discussions begin.
It is a long process, so we will see what shakes out. Watch for more news from the House as this things unfold over the next several weeks. I will be monitoring these issues closely and also continue keeping an eye on legislation I have personally authored in the hopes of getting provisions of interest to people in our district across the finish line.
Until next time, have a good weekend.
Sincerely,
Matt