Busy First Month Ends at Minnesota Legislature

February 1, 2023 Last Edit: March 20, 2026

Busy First Month Ends at Minnesota Legislature

The turn to January means more than a month closer to seeing the grass again. It marks the end of one of the busiest starts for the Minnesota Legislature in state history. As of January 27, 968 bills had been introduced in the Minnesota House – three times more than the historical average through this point. On a positive note, the NFIB-backed Tax Conformity Bill was passed and signed into law earlier this month. Let’s take a look at what else is happening around the Capitol. GOV. WALZ BUDGET The biggest news of the past two weeks was Gov. Walz’s big budget release. The governor backs a number of proposals harmful to small business, but most of the attention went to the overall size and tax hikes. Total Proposed FY 24-25 Budget: .2 Billion. This is ~$14 billion more than the current two-year budget. For comparison, the two-year budget was $35.3 billion was ten years ago. It was $26.6 billion ten years before that. Most of Gov. Walz’s proposed increase would go to education and human services, with chunks going to expanded working family, earned income, and dependent care credits. Walz Tax Hikes: In addition to the $1 Billion Paid Leave Tax Hike and metro-area sales tax increases, the budget proposal includes a 1.5% surcharge on capital gains and dividends exceeding $500,000 and a 4% surcharge on gains exceeding $1 million. That proposal would raise about $660 million over two years. LEGISLATIVE UPDATE Your voice can make a difference at the Minnesota Legislature! State lawmakers need to hear from small business constituents. Right now, there are two opportunities to take action and make your voice heard: – Stop the $1 Billion Paid Leave Tax and Mandate – Don’t Put a Minneapolis Mandate on Every Small Business Do not underestimate the power of one email, one letter, or one phone call. Good lawmakers listen to the small business owners in their districts. Labor Mandates: The $1 Billion Paid Family and Medical Leave mandate continues moving through the legislative process. The proposal retains its worst features, including allowing all employee to take up to 24-weeks of paid leave per year. NFIB has been fighting this proposal at every stop and is running a statewide media campaign against the paid leave tax and mandate. The Duluth News Tribune recently published our op-ed explaining why the proposal is bad for small business and echoed our concerns in their own editorial that criticizes the radical agenda in St. Paul. Sen. Jordan Rasmusson (Fergus Falls) successfully amended the bill to cap the paid leave payroll tax, a significant improvement over the previously uncapped payroll tax that could’ve grown in perpetuity. Other amendments to reduce the 24 weeks of leave to 12 weeks and exempt small employers from paying the payroll tax were defeated on party line votes. Another harmful mandate, the Paid Sick Time proposal, is nearing a floor vote in the Minnesota House. This proposal requires all employers to give all employees 48 hours of paid sick leave in the first year of employment and up to 80 hours in future years. No exceptions for small employers, seasonal workers, or temporary workers. NFIB strongly opposes this mandate as well and are working to stop it from harming small businesses. Energy Mandates: The Minnesota House of Representatives passed a requirement that Minnesota’s largest utilities generate 100% of their electricity from carbon free sources by 2040. The bill contains no meaningful off-ramps to protect reliability and affordability. The 100% by 2040 mandate is impractical, expensive, and puts our safety at risk. We can’t afford California blackouts in Minnesota winters. The bill is opposed by NFIB. On February 1, the Minnesota House Climate and Energy Committee heard a bill to require all new commercial buildings to be “net zero” by 2036. This means they’d have to generate as much energy as they consume, an impractical standard with current technology in Minnesota winters. The bill also gives the Minnesota Department of Labor the ability to change the residential and commercial building code to “mitigate the impact of climate change.” We see this as a backdoor ban on natural gas, propane, gas stoves, heating oil and other liquid or gas fuels. NFIB authored a coalition letter to oppose this bill with other business groups. Keep an eye out for an action alert coming soon. Tax Hike Proposals: In addition to the Walz Taxes, House DFLers have proposed a new 5^th Tier individual income tax rate of 12.45% on income over $250,000 for individual filers and $500,000 for married filing jointly. This would move Minnesota from the 6^th highest top rate to the 2^nd highest, behind only California. We continue to testify, talk to legislators, and alert the media about the problems these proposals pose for small business. And many Capitol regulars remain hopeful the Senate will hold back tax hikes.

Topics:

Taxes

State:

Minnesota

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