Minnesota Legislature Past Halfway Point

Date: April 06, 2022

House and Senate Remain Far Apart on Key Issues

The Legislature hits the “third deadline” on Friday, April 8. This is when most committee work in the House and Senate stops. From here on out, most major bills are awaiting action by the full bodies and bills that are still stuck in committee encounter procedural hurdles to advance.

Up to this point, it’s been a brisk pace with hundreds of bill hearings across the House and Senate. The Legislature will break next week, then return for a final push toward the mandatory May 23 adjournment deadline.

Here’s a look at some proposals that could have a big impact on small businesses:

Healthcare: In a rare sign of bipartisan compromise, the Legislature agreed on a three-year extension for the highly successful reinsurance program. The deal was authored by Sen. Gary Dahms (R-Redwood Falls) and Rep. Zack Stephenson (D-Coon Rapids). If you or your employees buy insurance in the individual market, this program keeps premiums about 25-30% lower than what they would be without reinsurance.

NFIB has supported the reinsurance program since it was first created in 2017, and we worked with House and Senate this year to keep the program going. While premiums remain high – especially outside of the metro – the program stops the problem from getting worse. According to a 2021 federal report, it has also helped 66,000 people who are above the income limit for federal subsidies keep their insurance.

In the absence of reinsurance, the individual market would likely collapse. In this scenario, about 150,000 Minnesotans would lose private coverage and it would open the door to a single, government-run plan filling the void. The ripple effects on employer-based coverage would be significant, with a government-run plan shifting costs onto private plans (as Medicaid and MinnesotaCare do now).

Unemployment Insurance Taxes: It’s been six weeks since the Minnesota Senate passed a bill to fully repay the state’s unemployment insurance debt and eliminate all UI-related payroll tax hikes. Meanwhile, House DFLers continue to hold that bill hostage over unrelated payments to pandemic frontline workers.

The delay has created an absurd scenario where Minnesota sits on $10+ billion in state and federal surplus funds while continuing to borrow money from the federal government to pay UI claims. Since the Senate bill passed on February 14, our debt has increased by $160 million and we’ve racked up an additional $2.5 million in interest charges. All of that will fall on employers if the state doesn’t act.

NFIB continues to push lawmakers to get a deal done on UI relief. In a year where long-term tax relief will be hard to come by, this would lower small employer UI bills for the next decade.

Taxes: This week, the Senate Taxes Committee rolled out its major tax cut proposal. It reduces the state first tier individual tax rate from 5.35% to 2.8%. The bill also eliminates the state tax on social security income. In total, this amounts to $8.5 billion in tax relief over the next three years.

The Senate Property Taxes Committee will hear two bills on the State General Property Tax – one to reduce the amount by $100 million per year, and another to eliminate it entirely for commercial and industrial property. NFIB supports eliminating this harmful tax.

The Minnesota House Tax bill includes a fix to the recent ‘pass-through entity filing’ option created last year. This fix will allow many small businesses to count all income, not just resident income, and potentially increase their federal tax deduction. The House bill also includes an increase in the amount of agricultural property exempted from school bond levies, which will reduce property taxes for many small farms starting in 2024. NFIB supported these provisions.

Other than that, the House bill is light on long-term tax small business relief despite the $9.25 billion surplus. It focuses on individual credits, such as expanded children and child care tax credits, as well as one-time relief like exempting federal pandemic relief assistance from state taxes and $50 million for a county-based business pandemic relief program.

Energy: The Senate Energy Committee advanced an NFIB-backed proposal to prohibit local governments from adopting bans on the use of natural gas and propane. These fuel bans have become a trend in liberal coastal states, with New York proposing a near-total ban on natural gas in new construction starting in 2027. The committee also voted to lift the state’s 28-year old moratorium on the construction of new nuclear energy facilities.

Also moving through the Senate is a bill to block Governor Walz’s California Cars rules from taking effect, and prevent state agencies from adopting additional bans on gas-powered lawn mowers, generators and other small engine devices. NFIB supports this proposal, which is authored by Sen. Andrew Mathews (R-Princeton).

The House Energy Committee contain millions in subsidies for electric vehicles, which NFIB has opposed, as well as expensive new energy mandates on utilities, commercial building construction and other industries.

Small Business Mandates: The Minnesota House continues pushing expensive, inflexible mandates on small employers:

  • 48 Hour Sick Leave/Year Mandate: requires all employers to offer all employees a minimum of 6 paid sick days per year, adds red tape and increases bookkeeping penalties by 900%.
  • 24 Week/$1 Billion Paid Leave Program: allows any employee to take up to 24 weeks off per year for certain circumstances (pregnancy, bonding, family care, personal illness) and receive wage replacement through a state program. It is funded by a new $1 billion payroll tax.
  • Pay History Ban: prohibits employers from requiring an applicant to provide their current or former salary and makes it a human rights violation to consider pay history during the hiring process.

As a counter to paid leave mandates, NFIB has supported authorization of private family leave insurance policies. This insurance product would function similarly to short-term disability insurance and is being considered in many states. The paid leave insurance bill is authored by Sen. Julia Coleman (R-Waconia) and Rep. Jordan Rasmusson (R-Fergus Falls).

Thank you to all who responded to our action alert on the paid leave mandates! Your voice a strong message to the Senate to keep blocking these bad ideas. NFIB will continue working to make sure they don’t become law.

What’s Next: This week, the Senate is moving most of their larger bills to the Senate Floor.

The House Committees are a little behind – their bills will move out of committee this week and won’t move to the House Floor for a couple of weeks.  

The Legislature goes on Easter-Passover Break from April 9 through April 18. After that, they’ll have about five weeks to resolve differences in omnibus and other bills before the mandatory adjournment date of May 23.

NFIB will keep working until the end to support small businesses in Minnesota.

Politics: In Southern Minnesota, voters will decide on a replacement for late Rep. Jim Hagedorn in a special election on August 9. A special primary election to decide each party’s nominee will occur on May 24. So far, there is a broad field that includes multiple DFL and GOP candidates, as well as candidates for the Legal Marijuana Now and Grassroots-Legalize Cannabis parties.

In Minnesota, new court-drawn Congressional districts are unlikely to change, but elsewhere redistricting maps that could impact the balance of power in the U.S. House remain in flux.

In recent weeks, state courts threw out maps in all-Democratic run Maryland and New York, which were two of the more aggressive gerrymanders following the 2020 census. Ohio’s redistricting map remains in a protracted legal battle over allegations of a gerrymander. Florida’s Republican governor vetoed his state’s Republican-drawn map.

The outcome of these disputes will have significant effect on the number of U.S. House seats in play come November.

Related Content: Small Business News | Minnesota

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