Lawmakers Will Likely Come Back in June to Discuss Coronavirus Legislation.
2020 LEGISLATIVE SESSION TO BE CONTINUED
May 20, 2020
The COVID-19 dominated legislative session will likely be continued with a special session expected on June 12th. Governor Walz is required to call legislators back for an open-ended special session if he extends his emergency order again. It is anticipated he will. It should be noted the legislature does not have approval authority over the many executive orders the governor has issued under his peacetime emergency authority, they only have the power to nullify. Two of the major issues that were left unresolved in the regular session were a bonding bill where the House and Senate are far apart and efforts to pass a positive tax bill to help the many businesses that have been harmed by this crisis. Below is an update on small business priorities going into the special session:
Tax Bill SF3843- Senator Roger Chamberlin (Lino Lakes, HF3389), Representative Paul Marquardt (Dilworth)
Hopes of trying to pass some significant tax relief took a turn for the worst when an emergency state budget forecast predicted a $2.4 billion deficit with likely a lot more to come in the regular November forecast. Despite that, the Senate passed a positive tax bill that finally enacts a long time NFIB priority, full federal conformity of section 179 expensing. The bill also delays the payment of the state portion of business property taxes to July 15th and gives the Commissioner of Revenue the authority to waive interest and penalties on late tax payments. The bill also clarifies that businesses that have received federal emergency loans would not be taxed on that assistance.
Surprisingly, the House did not vote their modest tax bill out of committee and clearly House leadership is using it as a bargaining chip with the Senate for a larger bonding bill or other priorities. The bill did not contain section 179 conformity which is disappointing. It does include a provision to resolve the problems some taxpayers have encountered with like-kind exchanges on equipment trade-ins. It also enacts a new tax filing option by allowing flow-through companies to file as C-Corporations and receive unlimited business deductions on federal taxes that far exceed the $10,000 SALT cap. The problem with the House provision is it comes at a very high price; those choosing this option would be taxed at a 9.85% flat rate which is much higher than most small businesses currently pay. Small business owners who file jointly making less than $154,020 are currently taxed at a little less than 6.8% on state income taxes. The proposal could help high income business taxpayers who have significant deductions.
Additional Small Business Grants and Loans, SF4481- Senator Paul Anderson (Plymouth); HF1507- Representative Zach Stephenson (Coon Rapids)
Legislation to provide Minnesota small business an additional $60 million in emergency grants bogged down at the end of the regular session but hopefully will be enacted in the special session. Earlier in March the legislature quickly passed $50 million in new state-backed low interest small business emergency loans. NFIB supported this legislation.
The Senate Bill would provide $60 million of grants of up to $10,000 per business to an estimated 5,700 businesses. To be eligible, a business would need to demonstrate a hardship as a result of the COVID-19 crisis and have 50 or less employees. The business would also need to be a Minnesota domiciled company and have a permanent physical location. The bill passed the Senate with overwhelming bipartisan support. The House bill provided $50 million in mostly forgivable loans for small businesses but also included funding for other priorities, including grants for broadband access to schools for distant learning and also grants for telemedicine equipment. Hopefully, lawmakers can reach an agreement on this badly needed additional assistance for small businesses in the special session. NFIB will continue to push for this.
COVID-19 Liability Protection Bill, SF4606- Sen. Warren Limmer (Maple Grove); HF4664- Rep. Peggy Scott (Andover)
Our good friend and Senate Judiciary Chair, Senator Warren Limmer, has proposed a critical bill to provide necessary liability protection to businesses due to concern over lawsuits related to COVID-19. The bill, strongly supported by NFIB, would provide protection to manufacturers that step-up production beyond normal pace and to companies that retool and start producing personal protective equipment or cleaning and disinfecting products. The bill would also shield retailers that could be subjected to lawsuits from shoppers. The bill only allows those who contract COVID-19 and become seriously ill or require hospitalization to file a lawsuit against a manufacturer, a shop owner or other businesses that interact with the public. Those that only experience flu-like symptoms would be barred from bringing a claim. NFIB and others are pushing senators to include this on their special session agenda although it will be a tough sell in the House.