Dear Neighbor,
I will be joining fellow District 13 legislators Sen. Jeff Howe and Rep. Tim O’Driscoll to host another virtual “Community Conversation” town hall meeting from 7:30-8:30 a.m. Friday, April 16 (one week from today). We will have much to talk about, especially with just five full weeks to pass a new state budget before the Legislature is set to adjourn May 17. I hope you can attend this meeting and invite you to click here to register.
In other news from the Capitol this week:
House majority’s massive transportation tax/fee increases
House Democrats this week released their omnibus transportation bill, which includes more than $1.5 billion in unexpected transportation tax and fee hikes over the next four years. None of the tax/fee proposals have received committee hearings this year, making their inclusion even more surprising.
Among tax increases, the House majority has brought back its widely unpopular gas and light rail tax hikes. These taxes will hit Minnesotans of all income levels at a time when many are still struggling, and will make Minnesota a more expensive place to live and drive. We do not need to raise taxes to take care of one of our most basic functions of government as long as we uphold it as the priority it is.
Here is an overview of the transportation-related taxes House Democrats propose:
- 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).
Tax increases of this magnitude would be concerning at any time, but especially when time Minnesota has a $1.6 billion surplus ($4.2 billion if you include federal dollars issued to the state) and overflowing reserve accounts.
More tax increases
House Democrats also released their tax bill this week. It raises taxes by more than $1 billion and fails to fully protect businesses from Paycheck Protection Program tax hikes on forgiven loans.
It is a highly concerning to see PPP tax relief be held back by the majority as some sort of bargaining chip in budget negotiations. By failing to fully exempt PPP funds from state taxes, the majority would be allowing government to profit off loans the federal government provided to help businesses stay afloat and keep workers on the payroll. Businesses had to spend these dollars specific ways and were not allowed to set some aside in case the state came to collect taxes on it.
I am hearing strong opinions from people in our district who are suffering significant consequences for the House majority’s inaction on this issue. I support their cause and am calling for a full exemption of state PPP taxes. As of now, Minnesota is the only state in the Upper Midwest that has failed to provide this relief.
House Democrats also are seeking to create a brand new fifth-tier income tax of 11.15 percent, similar to the governor’s plan. This would give Minnesota the second-highest top income tax rate in the country and directly impact many businesses who have been hit hard during the pandemic.
The good news is the House majority’s tax increases are so unrealistic they likely will be non-starters in final negotiations. Minnesota families and businesses have had a difficult year and it is time for the government to provide relief – and just get out of the way – instead of adding to their burden. Minnesota already is a high-tax state so let’s work on ways we can deliver better services to citizens of our state for the premium they already pay to live, work, go to school and raise a family here.
Until next time, have a good weekend and let me know if I can help.
Sincerely,
Lisa