Dear Neighbor,
The Legislature is set to adjourn in less than one month and there is a sizable gap to bridge in budget packages proposed by the House and Senate majorities.
Let’s set the scene: The February economic forecast projected a $1.6 billion state surplus. We just received word that figure has grown by an estimated $563 million, pushing the surplus past $2 billion. If you account for federal dollars issued to our state, the surplus is closer to $5 billion. On top of that, Minnesota has billions more in reserve accounts.
Whether this is a positive economic trend in our state, a house of cards built on an unsustainable wave of federal dollars, or something in between remains to be seen. What we do know is the state’s historic level of excess revenue comes at a time many families and businesses have suffered reduced income over the last year amid restrictions that were placed on many workers.
With that in mind, the House majority has spent the past week bringing its omnibus finance bills to the floor for preliminary approval. There are several of these bills, each encompassing various aspects of the state budget for the next two-year cycle. Most, if not all of them, include significant increases in taxes and fees, or have provisions that would increase the cost of living in Minnesota other ways.
For instance, the transportation bill which the House majority recently approved includes $1.6 billion in tax increases over the next four years. This includes raising the gas tax by an estimated 5 cents per gallon, adding a half-cent increase to the metro sales tax to fund light rail, and increasing taxes and fees for vehicle registration/tabs and motor vehicle sales.
The House majority’s tax bill itself features another $1 billion in tax increases while creating added expenses for some businesses in our state by not fully exempting federally forgiven Paycheck Protection Program loans from state taxes. Minnesota remains the only state in the Upper Midwest that has not taken action on PPP loans. Furthermore, a lack of conformity with federal tax language means Minnesotans who have been out of work over the last year are being hit with unexpected state tax bills.
Other House omnibus bills raise the price of living in Minnesota via policy. A package with commerce and climate/energy provisions would make health care and energy bills more expensive for Minnesota families by not extending Minnesota’s nation-leading, bipartisan reinsurance program.
That bill also restricts the use of natural gas for home heating to reach a goal of reducing greenhouse gas emissions by 50 percent in the next 15 years. This could cause home heating prices to spike and threaten energy reliability when it is needed most. Also, mandating carbon-free electricity by 2040 may increase costs and make our electric grid more vulnerable to blackouts.
One more climate/energy provision has local implications. It rescinds a bipartisan deal to build a much-needed replacement power plant in Becker. I authored an amendment to restore this project. People in our area realize how important this project is and understand the need for a balanced approach to our baseload power generation.
There are several more House finance bills, but you get the point.
Meanwhile, the Senate’s budget proposal takes a different approach and does not raise taxes and fees on Minnesotans by billions of dollars at a time the state already has an overabundance of cash. That is a position I support and one I hope prevails during end-of-session budget negotiations before we adjourn May 17.
Sincerely,
Shane