A weekly message from your Senator
Dear Constituents and Friends,
Committees are now in full swing and bills have also been taken up on the Senate floor for final passage. Next week we look forward to the February forecast scheduled to be announced by Minnesota Management and Budget on Tuesday, Feb. 28. This is an important day for legislators, as it will help guide budget-making for the next two-year biennium.
Please consider joining us at the SD49 Day at the Capitol next Friday, February 24th.
Senator Melisa Franzen
Committee considers statewide business property tax reductions
The Senate Tax Committee considered five similar bills on Thursday aimed at the same goal: reducing the statewide business property tax charged to commercial-industrial and seasonal recreation (cabin) property in Minnesota. Also known as the General Levy, it is the only property tax levied by the state – all others are imposed by local governments and school districts. It was created in 2001 as part of a property tax reform package that also reduced aspects of business and cabin property taxes, but the tax rate and structure hasn’t been significantly revised since its inception.
The 2016 tax bill included a bipartisan plan to reduce this tax, exempting the first $100,000 in market value from taxation. That cost about $115 million in 2018-2019 and was a major financial piece of the tax bill, which was vetoed for other reasons. There is bipartisan support for changes this year as well, but some of the plans can end up costing upwards of $1 billion. According to the nonpartisan 2015 Minnesota Tax Incidence Study, 53% of the statewide business property tax is paid by non-resident corporations. In other words: for every $1 spent to completely eliminate the statewide business property tax, Minnesota-based businesses would only see 47 cents of that tax relief. The bills were laid over for possible inclusion in the Omnibus Tax Bill.
Bill aims to support local car-sharing options
As the number of Minnesotans who do not own vehicles – either for financial reasons or by choice – increases, the popularity of car-sharing services providing short-term car rental options increases. Some lawmakers believe Minnesota’s laws have not kept pace with the growing demand for such services. A bill heard in the Senate Tax Committee this week would exempt these transit alternatives from the higher tax rates charged on more traditional vehicle rentals that are more typically used by out-of-state visitors.
In Minnesota, most short-term vehicle rentals are subject to the state’s general sales tax, a 9.2% rental tax and a 5% fee, in addition to any local sales taxes in effect within the area the car is rented. From 2013 until December 2016, there were about 600 cars available for sharing in the Twin Cities metropolitan area, but that number is down to about 175 since one major company left the market last year, citing these high fees. The proposal heard this week would exempt such vehicles from the 9.2% rental tax and 5% fee in an effort to support existing companies and attract new ones that can provide Minnesotans with other economical, environmentally friendly transportation alternatives. The bill was passed to the Transportation Committee. (SF 133)
Preemption bill moves closer to passage
Opponents of a bill that will strip away the power of local governments to pass progressive labor benefit policies filled the Minnesota Senate Building again this week. Testifiers talked about the hope that these policies in Minneapolis and St. Paul have given to residents, and the unfairness of retroactively removing the policies before they are set to go into effect this summer. From small business owners to faith leaders, the opponents were united in their opposition to the bill. Despite the compelling testimony, the Local Government Committee passed the bill to the floor where it awaits a vote by the full Senate body.
This proposal is backed by business groups in reaction to ordinances that were established in Minneapolis and St. Paul that required qualifying workers to have access to paid leave benefits. Proponents of this proposal worry that individual cities across the state will establish their own benefit policies which will result in differences across the state. Labor, social justice, and local government organizations are in opposition to the proposal, arguing that local elected officials are capable of determining what is best for their residents. Beyond the local government argument, some of the opponents argue that there is moral obligation to families who do not have access to leave benefits. For many families in these cities and across the state, it is a choice between putting food on the table or taking their child or parent to the hospital. (SF 580)
REAL ID update
REAL ID was heard in the State Government Finance and Policy and Elections Committee. The next stop will be the Senate Finance Committee. The committee considered and adopted amendments related to the rulemaking provisions in the REAL ID bill. The amendments made the rulemaking authority granted more permissive so the commissioner has more flexibility with adopting rules needed for implementation and sunsets the expedited rulemaking granted on Oct. 31, 2018, at the latest.
The REAL ID implementation bill would grant the Department of Public Safety (DPS) the authority to get Minnesota driver’s licenses and IDs compliant with the federal standards. The bill creates a two-tier system with a REAL ID-compliant ID and driver’s license and a noncompliant instate ID and driver’s license. This allows those who have privacy concerns and those who will not be traveling by airplane to maintain their current driver’s license and ID, while also allowing the traveling public to get a REAL ID-compliant ID or driver’s license. DPS would have to begin issuing compliant IDs and driver’s licenses by Oct. 1, 2018. (SF 166)