Most House and Senate committees met for the first time this past week. Hearings were spent receiving introductory briefings and listening to caucus staff, experts and agencies review the issues each committee is expected to address during session. The House and Senate also took action on proposals dealing with federal tax conformity, reducing spiking MNsure premiums and Real ID.
Federal Tax Conformity
The Senate acted on SF2, passed in the House last week, which is designed to bring Minnesota’s individual income and corporate taxes into conformity with most changes made at the federal level, the exceptions being Section 179 and bonus depreciation. All the conformity provisions contained in the 2016 Omnibus Tax Bill vetoed by Governor Mark Dayton last year are contained in SF2. In addition, SF2 contains the following four items: exempting Olympians and Paralympians medals or prize money from state income tax, The 21st Century Cures Act, The Don’t Tax Our Fallen Public Safety Heroes Act and modifications to Working Family Tax Credit. These provisions retroactively conform for 2015.
The Senate Tax Committee passed SF2 on Wednesday and it passed off the Senate floor on Thursday. In committee, the Department of Revenue testified that quick passage of SF2 would ensure no adverse impact for early filing taxpayers.
On the Senate floor, the DFL attempted to amend the entire 2016 Omnibus Tax bill (as vetoed by Governor Dayton) on to SF2, arguing it would provide relief to farmers, students and homeowners, and that it passed with strong bipartisan majorities last year. Senate Republicans opposed the amendment, arguing for a “tight” and emphasizing that the House and Governor were in agreement on this bill. The amendment failed on a party line vote, SF2 unanimously passed the Senate and was signed by Governor Dayton on Friday.
The Senate and House moved quickly to reduce spiking MNsure premiums and other market reforms to the individual marketplace. Senate Republicans have introduced legislation, SF1, providing targeted premium relief through a premium credit that individuals can apply for starting in 2018. In contrast, the Governor and DFL legislators are advocating a plan that offers premium relief to all individuals in the individual marketplace immediately.
SF 1 passed out of the Finance Committee on Wednesday and off the Senate floor on Thursday. The House’s companion legislation, HF1, passed out of the House Ways and Means Committee on Wednesday and had its second reading on the House floor on Thursday. HF1 and SF1 will likely head into conference committee early next week.
Governor Dayton has indicated that he will not sign HF1/SF1.
The House Civil Law and Data Practices Committee passed SF3, implementing the Real ID Act 7-6, and referred it to the House Transportation and Regional Governance Committee. HF3 brings Minnesota in compliance with the federal Real ID Act of 2005. Minnesota is one of a handful of states that has yet to comply. Supporters testified to the urgent need to be compliant with federal regulations or risk consequences, including barriers to air travel, as Minnesota Driver’s Licenses will no longer meet TSA requirements. Opponents believe that the federal government’s deadlines are artificial and have been extended in the past.
Currently, HF3 does not permit illegal immigrants who possess a driver’s license to be compliant nor would it include tribal identification cards as compliant. The Department of Public Safety testified opposing this bill, stressing transition costs given the time sensitivity. This bill will be heard next week in House Transportation and Regional Governance Committee.
Upcoming Legislative Notes
The following issues will be discussed next week in the House and Senate:
- The House Tax Committee will be taking up HF 210 and HF 182 which addresses the factors the Department of Revenue can consider when determining residency for state income tax purposes.
- The House Environment and Natural Resources Policy and Finance Committee will get an overview on MPCA rulemaking and hear the Section 404 Assumption Feasibility Study. In 2015, the Legislature required the Board of Water and Soil Resources and the Department of Natural Resources to study the feasibility of the state assuming the federal Clean Water Act Section 404 permitting program. Chair Dan Fabian (R, 01A) has stated his interest in rulemaking and ensuring agencies are not operating outside of their jurisdiction. The full study is available online.
- The Senate will hold a joint meeting of the Committee on E-12 Finance and the Committee on Human Services Reform Finance and Policy to focus on the issue of children five and under. Sen. Jim Abeler (R-35) is assembling a working group within his committee in regards to this topic.
- Governor Dayton will give his State of the State on Monday, January 23. The following day, he will release his biennial budget recommendations.
New Campaign Finance Board Website
The Minnesota Campaign Finance and Public Disclosure Board announced the public preview release of its new website this week. This website is intended to make it easier for users to locate information and provide more comprehensive data than was previously available on line. The website can be found at http://www.cfb.mn.gov/. The Board welcomes questions, comments or feedback.
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