Conference Committees Meet to Hash Out Tax, Spending Increases in Minnesota Budgets

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by Bethany Blankley

 

With 17 days to go before the end of session, legislative conference committees began meeting Friday to hash out differing proposals for three of the most contentious omnibus bills yet to be voted on by the full Legislature.

The Omnibus tax bill, Omnibus Health and Human Services (HHS), and Omnibus jobs and economic development, energy and climate, and telecommunications policy and finance bills are all expected to be revised through the weekend.

Omnibus bills include numerous items that might not be passed on their own and only require a single legislative vote. The House Omnibus HHS bill alone is 1,043 pages long.

Both Democratic Gov. Tim Walz’s budget proposal and the Democratic House spending plan raise taxes at a time when the state’s tax revenue is at a record high with an expected billion-dollar surplus. The House plan includes new payroll taxes, new licensing fees and government mandates, in addition to other measures, which the Department of Revenue states would hurt low-income Minnesotans the most.

The department’s report estimates that individuals earning less than $14,528 annually would pay an extra $2.37 for every $100 of income, more than double what the highest income earners would pay. On average, the state and local tax burden would increase by 76 cents per $100 of income, the department states.

The report included evaluating Walz’s proposed 20-cent gas tax increase and extension of the 2 percent health care provider tax.

Walz has said the tax increases are designed to help the lowest income earners but House Minority Leader Kurt Daudt, R-Crown, said, “With a $1 billion budget surplus, these astronomical tax hikes are unnecessary and will wreak havoc on Minnesota family budgets.”

Daudt also cautioned at the beginning of the budget process that “with hundreds of millions more in waste, fraud, and abuse, we have the money we need to fund our state’s priorities.”

“Raising taxes is easy for politicians, because it’s always somebody else paying the bill,” Americans for Prosperity Minnesota State Director Jason Flohrs said. The advocacy group has lobbied the Legislature to focus on reforms of wasteful agency spending, misappropriation of funds and against warrantless tax increases.

Walz’s budget would increase state spending by nearly 10 percent, Flohrs says, which excludes additional costs phased in after the biennium budget period ends.

“No economic measure – GDP, personal or family income, CPI, or state population – is growing at a rate that could justify that level of spending,” he says.

“The Minnesota state government’s revenues are at near record highs and a $1 billion budget surplus is forecast for the next biennium, yet both the House and the governor want to hike taxes on hard working Minnesotans,” John Phelan, economist at the Center of the American Experiment, told Watchdog.org.

Phelan points to data from the Bureau of Economic Analysis per capita tax revenues in Minnesota rose from $2,347 in 1974 to $4,295 in 2018. While population may have increased by 42.8 percent over this period, Phelan notes, total state tax collections surged by 161.4 percent.

According to the Tax Foundation, Minnesota already has one of the worst individual tax climates in the U.S., having the sixth-highest for state and local individual income tax collections per capita and the eighth-highest state and local tax burden.

Pointing to revenue and population data, Phelan adds that it’s “hard to see the pressing fiscal crisis which Minnesota’s policymakers claim necessitates a fresh, deep dive into its taxpayer’s pockets. It may be that the ‘need’ for the state government to spend money has increased even faster than these revenues. But, if this is the case, we ought to know why.”

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Bethany Blankley is a Contributor at Watchdog.org.
Photo “Tim Walz” by Tim Walz. Background Photo “Minnesota Legislature” by Minnesota House of Representatives. 

 

 

 

 

 

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