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Minnesota Update
Committee Work Continues Ahead of First Deadline
The legislature continues a flurry of work leading up to the first committee deadline this Friday, March 10th. The committee deadline is the date by which a legislative proposal must be heard and passed out of all policy committees in one legislative body. Legislators will have long days ahead of them, spending time hearing and advancing a variety of legislative proposals through the committee process.
Committees also continue to hear the governor’s budget recommendations as budget bills introduced by members which reflect the governor’s budget priorities. Minnesota Management and Budget (MMB) released an updated budget forecast that will be used to further guide the governor and legislature in putting together the FY 24-25 biennial budget, which must be passed prior to the end of the legislative session in May. MMB noted that the economic outlook was stable, with a $17.5 billion balance projected for the FY 24-25 biennium. For the first time in 20 years, inflation is accounted for in the budget. Individual income and corporate franchise tax forecast is up but is offset by inflation. MMB is projecting that revenues will exceed spending through FY2027.
House of Representatives Passes Price Gouging Bill
The House of Representatives took up and passed H.F. 6 (Stephenson) last week on a bi-partisan vote of 72-58. Carried by Rep. Zack Stephenson (DFL-Coon Rapids), H.F. 6 seeks to combat price gouging by retailers during natural or man-made emergencies. The bill would penalize retailers who charge an “unconscionably excessive price” for essential goods and services during emergency situations. Examples of emergency situations provided during committee hearings were the recent power outages in Texas and the aftermath of Hurricane Ian. “Unconscionably excessive price” is defined as more than 25 percent above the seller’s average price during the 60-day period before an executive order declares an emergency. Under the bill, retailers could be fined up to $1,000 per transaction, up to $25,000 per day if violations occur. The Senate version of the bill, S.F. 6, has passed all necessary committees and is ready to be voted on by the Senate.
Governor Walz's Tax Proposal Heard in House Tax Committee
Introduced by Rep. Alisha Gomez (DFL-Minneapolis), H.F. 1938 reflects Gov. Tim Walz’s omnibus tax proposal. As discussed in committee, the proposal will likely serve as the starting point for the legislature’s omnibus tax bill. A few significant pieces of the proposal include:
- A $2,000 tax credit for married filing jointly with gross income up to $150,000, and $1,000 for single filers with gross income up to $75,000. An addition $200 is available for each dependent, up to $600;
- A child tax credit of $1,000 per child, with a maximum credit of $3,000, with phase out;
- An increase to the maximum subtraction to $10,000 for married filers and $5,000 for individuals;
- Sales tax exemption for construction materials purchased by contractors for government and nonprofit organizations;
- Reinstatement of the rehabilitation tax credit and extension of the angel investment tax credit through 2030; and,
- Changes to the state’s tax code would increase the taxes of some Minnesotans. Individuals, trusts, and estates would see a 1.5 percent increase on taxes and capital gains and dividend income between $500,000 and $1 million, with an additional 4 percent tax on income over $1 million.
GOP Senate and House of Representatives Introduce Tax Plan
The Senate Republican Caucus and House Republican Caucus rolled out a joint tax proposal last week called the “Give It Back” plan. As unveiled, the proposal includes $13 billion in permanent tax cuts and one-time rebates over the next two years. Some notable provisions include:
- One-time rebate checks for all Minnesotans, which are estimated to be $2,500 for joint filers and $1,250 for single filers;
- $1,800 per child tax credit;
- The elimination of the state income tax on Social Security benefits;
- A reduction of first and second tier tax rates by 1 percent each; and,
- An adjustment of the homestead market value exclusion.
Legislative Deadlines
The following are a series of committee deadlines that will guide the Minnesota Legislature’s process as they move through the session:
- March 10, 2023: 1st Committee Deadline - committees must act favorably on bills in the House of origin.
- March 24, 2023: 2nd Committee Deadline - committees must act favorably on bills, or companions of bills, that met the first deadline in the other House.
- April 4, 2023, at 5:00 pm: 3rd Committee Deadline - committees must act favorably on major appropriation and finance bills.
- April 4, 2023, at 5:00 pm - April 10, 2023: Legislative Recess
- May 22, 2023: Deadline to adjourn legislative session
Federal Update
This week, the release of President Biden's budget is only partly expected, House Republicans explore the COVID-19 lab leak theory, and the February Ohio train derailment is the subject of a hearing.
Partial Delay for the President's Budget
The Biden administration is no longer expected to release all of its budget request documents Thursday. Instead, the main summary volume will go to Capitol Hill that day, with the remaining explanatory documents submitted Monday, March 13. The annual summary volume typically lays out the president's main budget message, top priorities, brief details on each agency's request, and summary tables. The March 13 release would involve a lengthy appendix with detailed appropriations language, "analytical perspectives" with further explanatory material, and more.
At the committee level, Cabinet members will likely soon flood the zone on the Hill to talk about their agency requests. This week, the House Legislative Branch Appropriations Subcommittee has hearings for legislative agency requests. Those include the Office of Congressional Workplace Rights, the Congressional Budget, and the Government Publishing Office.
House Votes on a Bill and Holds Hearing on COVID-19 Origins
The House Select Subcommittee on the Coronavirus Pandemic continues its investigation into the origins of the COVID-19 virus with a hearing Wednesday where former Centers for Disease Control and Prevention Director Robert Redfield is slated to testify. Top Republicans are increasingly convinced that the virus leaked from the Wuhan Institute of Virology in China. The hearing comes after a recent Wall Street Journal report that the Department of Energy found with “low confidence” that evidence favors the theory that the virus escaped from the Wuhan lab. Other federal agencies remain split on the origin question.
Last week, subcommittee Chairman Brad Wenstrup (R-Ohio) partnered with full Oversight Committee Chairman James R. Comer (R-KY) to send letters, including to the FBI, requesting information related to the origins of the pandemic, the Wuhan lab, and more. This week, the House is also expected to take up a Senate-passed bill (S 619) by Josh Hawley (R-MO) that would require the director of national intelligence to declassify information relating to potential links between the Wuhan Institute of Virology and the virus's origin.
Committees in Full Swing
It is quite a busy week for committee events on the Hill. Here are some highlights:
- Worldwide threats. Senate Intelligence has a hearing Wednesday on worldwide threats, featuring CIA Director William J. Burns, FBI Director Christopher A. Wray, Director of National Intelligence Avril Haines, and others. They could be asked about the Chinese surveillance balloon that flew over the United States last month before being shot down. Senators may also ask about a push to reauthorize Section 702 of the Foreign Intelligence Surveillance Act.
- Train derailment. Senate Environment and Public Works hear Thursday from Alan Shaw, CEO of Norfolk Southern Corp., and Ohio's senators on the Feb. 3 derailment in East Palestine, Ohio. A second Norfolk Southern train, with no hazardous cargo reportedly aboard, partly derailed Saturday. The senators — Republican J.D. Vance and Democrat Sherrod Brown — have introduced legislation (S 576) that would establish new safety requirements for trains carrying hazardous materials. Democrats have largely blamed the Trump administration’s deregulation and industry policies, while Republicans have criticized the pace of the Biden administration's response.
- Waters of the United States. House Small Business has a hearing Wednesday on the Biden administration's Waters of the United States rule. It comes the same week the House is expected to vote on a disapproval resolution of the rule (H J Res 27).
- Starbucks subpoena. Senate Health, Education, Labor, and Pensions could vote Wednesday to authorize a subpoena of Starbucks CEO Howard Schultz for testimony related to federal labor law. Chairman Bernie Sanders (I-VT.) had previously invited Schultz to testify.
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