The 2014 short session started with a bang last week when
the House moved their bill to repeal the new business-to-business sales tax
extensions and other federal conformity tax provisions quickly through the tax
committee on just the third day of the session.
It’s unlikely a tax bill has ever passed the tax committee during the
first week of a legislative session, and it sends a positive signal that at
least the House of Representatives wants to take quick action on erasing these
negative sales tax measures from last year.
Legislative leaders are trying to have a short session but
time will tell. At least they started
late; that is a positive first step to trying to contain the session. Below is an update on key small business
issues and also a look at our tentative legislative agenda for 2014.
Party Senators Fold on Large Minimum Wage Hike
Rep. Ryan Winkler (Golden Valley), SF3 Sen. Chris Eaton (Brooklyn Center)
Unfortunately, on the night of March 4, majority party
senators on the minimum wage conference committee agreed to a $9.50 per hour
minimum wage increase phased in over three years that the House passed last
year for most employers. Surprisingly,
the House negotiators rejected it, at least temporarily.
The actions of the Senate negotiators are very disappointing
since the Senate enacted a very modest hike last year to just $7.75 per
hour. The $9.50 per hour wage would be
one of the highest in the country. NFIB
responded quickly and sent out an emergency alert into the districts of
majority party senators in opposition to this action. We also testified for a third time on this
issue in the conference committee.
Acts Quickly on Tax Bill to Repeal New Business-to-Business Sales Taxes!
Rep. Lenczewski (Bloomington)
As mentioned, the House acted quite quickly on a measure to
repeal the unneeded and damaging business-to-business sales tax extensions that
were enacted last session and also to comply with several federal conformity
provisions to aid tax payers. The bill
repeals the new sales tax on the repair of business equipment, farm equipment,
warehousing services and purchases of capital equipment by telephone and cable
television providers. The House held a
long hearing on the bill on the first day of the session, voted the legislation
out of committee at the next hearing and will likely pass it this week and send
it over to the Senate.
NFIB strongly supported the measure and testified in support
of repealing these new sales tax extensions on business and farmers. In total, the bill spends $500 million and is
clearly affordable, with the large projected budget surplus we have. The Senate also held hearings on this issue,
but it is moving slower and is unlikely to act quickly on any tax bill this
session. Governor Dayton does support
the repeal of all these new sales taxes and they are likely to be repealed.
State Budget Surplus Increases to $1.23
The state of Minnesota got some good news last week when the
latest budget forecast projected a $1.23 billion surplus for the remainder of
the 2014-15 biannuam. The new forecast
shows an increase in revenues of $408 million since the last forecast that was
done in November of 2013 and is good news, for a change, at the Capitol. This
is the forecast that the legislature will base any tax cuts and budget
decisions on during the 2014 session and it certainly paves the way for the new
sales taxes to be repealed.
Tax/Estate Tax Revision
Sen. Rest (New Hope)
Many Senators were not happy with the new gift tax that was
created in last year’s controversial tax bill and the Senate tax bill did not
contain this damaging provision. In
response to last year’s newly-created gift tax, Senator Ann Rest from New Hope
has proposed a dramatic revision of our current estate tax and gift tax
including a dramatic increase in the exemption from $1 million to $5 million
per person and comes just short of conforming to the current federal exemption
of $5.34 million per person.
Our current law allows up to a $5 million exemption for
assets held in a small business or farm, but under Senator Rest’s bill it would
cover all assets including cash, bank accounts, and investments and would not
be restricted in any way.
Her bill also makes some other improvements in our current
estate tax law and is a very positive surprise, coming from the majority
party. Unfortunately, it does lock in
our gift tax, despite the large $5 million exemption. Governor Dayton recently told business people
that he favors repealing this new gift tax that he just signed into law last
May. A remedy will have to be sorted
out, but with the large projected surplus, it really paves the way to enact a
large exemption from this new tax or to repeal it. NFIB Minnesota strongly supports repealing
this new gift tax, which would be quite harmful to the future of our state.
Fee Improvement Bill
Sen. Carlson (Eagen) Rep. Erhardt (Edina)
NFIB will again strongly oppose this legislation, which
essentially enacts a second new property tax system. We are quite concerned that commercial
property will be overburdened through this new fee. Last session the bill passed the House, but
stalled in the Senate.
SF1223 Sen. Scott Dibble (Minneapolis) HF642 Rep. John
Lesch (St. Paul)
NFIB will again oppose this dramatic change to the state’s
consumer fraud law, which will significantly increase the number of lawsuits
filed against Minnesota businesses when a customer alleges fraud or deceptive
acts occurred. Last year the bill passed
the house and stalled in the Senate.