The Minnesota Legislature has only been in session for two weeks, but they’ve set a blazing pace with bill hearings this year.
The game plan from the DFL majorities and in the state House and Senate seems to be to pack as many controversial issues into the early months as possible, before committees settle into expensive but mundane budget overviews and hearings.
Below is a non-exhaustive list of what NFIB Minnesota is tracking so far:
Bills We Support
SF 25/HF 31: Federal Tax Conformity. This NFIB-backed bill exempts several forms of pandemic-era federal financial assistance for small businesses from state taxes. The bill passed the state Senate and House unanimously and was signed by Governor Walz on January 12 – in time for the Minnesota Department of Revenue to update its tax filing system and avoid the need for additional amended or delayed returns. NFIB was able to block two proposed conformity items that would have cost pass-through entities tens of millions of dollars in future years.
Bills We Oppose
SF2/HF 2: 24-Week Paid Family and Medical Leave Mandate. This bill requires all small employers to allow all employees to take up to 24 weeks off per year as part of a new government-run leave program.
The leave and program administration will be funded by a new, $1 billion payroll tax on all employers. The payroll tax will grow every year to accommodate increased leave and program costs – Washington state’s payroll tax doubled in three years for a program that allowed only half the amount of leave.
The state will have to build a new IT system – hopefully they do a better job than MNsure or MNLARS – and hire 300-400 new employees.
SF 34/HF 19: 6-Day Paid Sick Leave Mandate: This proposal requires small employers to provide up to 48 hours of paid leave in the first year and up to 80 hours (including rollover of accrued time) in future years. This will impose a particular hardship on very small businesses and small employers that rely on part-time or seasonal employees, as many will be starting furthest from the bill’s requirements.
A small business could see significant annual increases in labor costs from this mandate. For example, a small employer with four employees that make the local average hourly wage (per the U.S. Bureau of Labor Statistics) may face the following additional cost:
– Twin Cities Suburbs (~$30/hour): additional annual cost of up to $5,760 in the first year and up to $9,600 in future years.
– Greater Moorhead (~$25.50/hour), additional annual costs of up to $4,896 in the first year and up to $8,160 in future years.
– Greater Mankato (~$24.60/hour): additional annual costs of up to $4,723 in the first year and up to $7,872 in future years.
In addition to increased labor costs, small businesses are subject to new record keeping requirements and a 900% penalty increase for employment law violations.
SF 4/HF 7: 100% Carbon-Free Electricity by 2040: This proposal requires the state’s largest utilities to procure all of its electricity from carbon-free generation sources by 2040. Carbon-free includes wind, solar, batteries, hydroelectric, existing nuclear (new nuclear remains banned), hydrogen, biomass, and certain waste to energy facilities.
The bill effectively requires Minnesota to replace 45% of its electric generation in 17 years, along with major investments in new transmission lines and other utility infrastructure. Ratepayers will pay for it in the form of significantly higher electric bills. The bill also accelerates concerns about electric reliability at a time when our region is struggling to meet peak electric demand.
Small businesses and other ratepayers will have to rely on investor-owned electric utilities and the Minnesota Public Utilities Commission to preserve affordability and reliability. From 2008 to 2020, Minnesota’s residential electric rates increased twice the national average and commercial/industrial rates increased more than fifteen times the national average, so neither utilities or the PUC seem like great guardians for affordability.
Investor-owned utilities have an enormous incentive to comply with the 2040 mandate instead of looking out for customers. Under Minnesota’s regulated monopoly utility system, which guarantees a rate of return and cost recovery for capital investments, the more these utilities build, the more their shareholders make.
Without clear, definite standards for affordability and reliability – just one of the bill’s many problems – it’s a bit like asking the fox to guard the henhouse.
Bills We’re Watching
HF 100/SF 73: Recreational Marijuana Legalization. This bill would legalize recreational marijuana for people 21 and over. As in other states that have legalized recreational marijuana, there could be residual impacts on the workforce and workplace management. NFIB MN is looking out for workplace liability issues, employer testing and discipline limitations, and other impacts on small business.
HF 6/SF 6: State of Emergency Pricing Restrictions. This bill aims to prevent price gouging during states of emergency declared by the governor. NFIB MN is watching to ensure the pricing restrictions apply only during declared emergencies – and not any time the government feels like intervening – and that the limitations are fair and clear for both sellers and buyers.
In a letter to the House Commerce Committee, NFIB MN emphasized the importance of not extending pricing restrictions beyond the end of the emergency, allowing for price increases required by contract, seasonality and other circumstances. We also urged the committee to adopt a penalty structure that allows businesses to cure any mistaken violations.