Dear Friends and Neighbors, 

The Legislature is back from Easter/Passover Break and the Omnibus Bills are moving to the House and Senate Floors. There is an expectation that, owing to "The Trifecta" of Democrat control of the House, Senate and Governorship, that this phase of the process will go quickly as they are all on the same page. That remains to be seen.  Senate Republicans, like me are doing our part to shine a light on bad bills before they become bad laws. 

Yesterday, I took part in a press conference with other Senate Republicans that highlighted that despite the $17.5 billion surplus, six bills proposed by the House, Senate, and/or Governor Walz contain nearly $10 billion dollars of tax hikes.

The $9.69 billion in tax hikes are incredibly tone-deaf as Minnesotans struggle with $3/gallon gas, inflation costs on their grocery basics, and a tight labor market driving up the cost of everyday services.  Minnesotans should know the Democrats’ budget will lead to higher taxes now and even higher taxes in the future to support their explosive growth in state government.

Every Minnesotan will be hit by these tax increases, whether shopping in the metro, buying a new car, or updating their tabs. If the current form of Paid Family and Medical Leave passes, they will be hit with taxes just for collecting a paycheck.

While this year’s tax hikes are bad, what’s really going to shock Minnesotans is what will happen in the next budget when we don’t have a huge surplus to spend. Democrats are pushing through bills that spend $19 billion of the surplus, setting our budget up for a fiscal cliff and huge shortfalls. Since we can’t count on Democrats to hold back on tax increases when there’s a surplus, Katy bars the door when they’ve triggered enormous deficits.

Cities and Counties are required to hold their own Truth in Taxation hearings before setting their budgets and projecting tax increases on their constituents. Next year’s hearings might be very surprising as local government and school boards have testified that the mandates and policies being passed in St. Paul will have an impact on local government budgets across the state.

With the election putting Democrats in full control of the government without a check from Republicans, Democrats have drastically expanded the agenda they ran on last year. Despite promises to end the tax on Social Security and return the surplus, the session has seen very little tax relief and no effort to return the surplus with rebates or tax cuts. A full elimination of the Social Security tax seems to be stalled without the political will of four freshman Democrats who have yet to make good on their campaign promise.   

The six bills considered add up to $9.69 billion in higher taxes and fees. There are additional fees in other budget bills and policy provisions, meaning $13 billion is not the maximum that taxpayers could be on the hook for- it will likely be more.  

 

The six bills the Republicans used for their assessment are:

 

Transportation Budget Bill: $3.56 billion in tax and fee increases, including:  

• Motor Vehicle Registration Tax increase of $736 million over four years
• Motor Vehicle Sales Tax increase of $2214 million over four years
• Retail Delivery Fee (remains alive in the House) of $512 million from FY ‘25-27

Source: Dept of Revenue Analysis on H.F. 2887, April 4, 2023  

 

Housing Bill: $744 million from the Metro Sales Tax (remains alive in the House) 

Source: Dept of Revenue Analysis on H.F. 2335, April 3, 2023

 

Paid Family Medical Leave: $2.9 billion tax increase on every employee and business in the state.

 

Using the most recent non-partisan Senate Fiscal Note, the bill includes a .07% payroll tax to cover benefits beginning in 2025 and takes $1.7 billion from the surplus this year as starter cash.

 

Source: Non-partisan Senate Fiscal Analysis of H.F. 2, April 13, 2023

 

5th Tier Income Tax: $1 billion increase with new fifth tier tax; Gov. Dayton added the fourth tier tax level just 10 years ago.  

 

If enacted, this would have an impact on this year’s taxes due tomorrow for more than 24,000 returns with an average increase in tax of $9,231 per return

 

Source: Dept. of Revenue Analysis of H.F. 442, April 10, 2023

 

Corporate Franchise Tax: $1.169 billion increase on businesses simply for the “pleasure” of doing business in Minnesota. 

 

Source: Dept. of Revenue Analysis HF 2883, April 10, 2023

 

Cannabis: $269 million in fees and taxes on legal cannabis 

 

Source: Dept. of Revenue Analysis of HF 100/SF 73, March 31, 2023

On Friday, I voted no on a Public Safety budget bill crafted by Senate Democrats that makes thousands of criminals eligible for early release, reduces sentences for violent offenders, and funnels millions of dollars to untested and unproven non-profits while ignoring the needs of law enforcement officers across the state and failing to hold judges and prosecutors accountable for light sentences.

 In brief it:

1. Allows 92% of the prison population eligible for early release through Minnesota Rehabilitation and Reinvestment Act (MRRA)
2. Funds controversial gun control measures like red flag laws and extended background checks.(The policy provisions are being carried in another bill.)
3. Reduces the maximum penalty for juveniles tried as an adult from 25 years to as little as 15 years $91 million dollars to untested and unproven non-profit organizations.

 

Convicted criminals typically spend two-thirds of their sentence in incarceration and the rest on supervised release; the new law reduces incarceration time to one-half of the sentence. This will be applied retroactively and could impact about 7,400 of the approximately 8,000 prisoners in the state. The MRRA only excludes prisoners with a life sentence but does not specifically exclude specific crimes like manslaughter, rape, kidnapping, assault, or domestic assault. This means those charged by law enforcement, tried by a judge or jury, and convicted of those crimes could be released significantly earlier than their victims were promised. The MRRA does not require victims to have absolute notification of their perpetrator's early release, just a passive attempt, meaning they may not know their perpetrator is free before it’s too late.  

 

Retirements and the “Defund” movement have made it harder to find qualified law enforcement for open positions. With police departments struggling to fill open positions and colleges struggling to fill classrooms for criminal justice programs, this bill is woefully inadequate to recruit, train, and retain a qualified, professional police force.

The agriculture bill  which also passed last week has a few crumbs that benefit Minnesotans, such as funding for expanding broadband in needed areas and grants for meat processing, dairy premiums, biofuels, and weed prevention. And it’s good news that some controversial items were left out, like proposed bans on treated seeds and slow-release fertilizers. 

One bad provision that got through was the so-called "grain indemnity program." This is nothing more than an agricultural commodity storage tax, which will force farmers to pay into a fund that will reimburse other farmers in the event an elevator goes bankrupt. This provision is a deal-breaker.

It is harmful to our farmers who will be forced to pay into this fund whether they can afford it or not. It creates a new government bureaucracy that will take away farmers' ability to make their own decisions about their exposure to these problems. Grain elevators already offer insurance to farmers who want it, so why do we need another mandatory, one-size-fits-all program that only serves to infringe on business decisions of Minnesota farmers and add to their overhead?

On Monday, there were hearings on 2 bills relating to highway projects in our district.  The Transportation committee heard SF 1673, that would resurface 11 miles of  Highway 74 and SF 3084 which would do a major realignment of Highway 60 in Wabasha, to address pedestrian safety and better serve area traffic patterns.  Testifying for the Winona was County Engineer David Kramer and for Wabasha, Mayor Emily Durand.

This week I had a visit from a group from the Elder Network, which serves southeastern Minnesota with services for the elderly and their caregivers in our communities. They shared their concerns about the Board of Aging's new proposed reimbursement rates which are set by formula on a geographic basis.  We will be talking to the agency about making sure that the funding is regionally balanced and treats southeastern Minnesota fairly, in terms of allocating resources. 

Please contact me to share any issues, concerns, or feedback you have to assist me in best representing you.  The best way to reach me is by email at [email protected] or by phone at 651-296-5612. My legislative assistant is Margaret Martin, and her number is 651-296-4264.  

Sincerely,

Steve Drazkowski

Minnesota Senate, District 20, Wabasha, Goodhue, Winona, Olmsted, and Dakota Counties.

2411 Minnesota Senate Building

95 University Avenue W.
Minnesota Senate Bldg.
St. Paul, MN 55155