The Minnesota Legislature will reconvene on Monday with an ambitious agenda and a limited timeframe, as the constitutional adjournment date of May 19 approaches. The assembly must address key issues, including budget, tax, and employment mandate debates. Several omnibus bills have been introduced in both the House and Senate, yet significant differences remain unresolved. Legislators will work to pass these bills from the floor and negotiate final terms among the House, Senate, and the Governor.
The National Federation of Independent Business (NFIB) is closely observing the legislative developments, particularly those affecting small businesses. The organization opposes measures that may hinder business operations and growth.
In the House of Representatives, a recent special election resulted in a tied composition between Republicans and Democrats, prompting a power-sharing agreement. Under this arrangement, while Republicans hold the Speakership for the next two years, committees are co-chaired by both parties. Except for the GOP-controlled committee on Fraud Prevention and State Agency Oversight, all committees require bipartisan support to advance bills.
Significant attention is on the proposed tax changes. In the Senate Taxes Committee, SF 2290 introduces a 5th-tier income tax bracket and increases the corporate franchise tax to 12.45%. The NFIB warns these measures will financially burden small businesses, many of which operate as pass-through entities. According to the Tax Foundation, the 12.45% income tax rate would place Minnesota among the highest tax states nationwide. Similarly, raising the corporate franchise tax could deter job creation, with Census data showing that most Minnesota corporations have fewer than 100 employees.
The Senate also deliberated on Governor Walz’s proposal to adjust the state sales tax. While the proposal involves a slight reduction in the general sales tax rate, it expands the tax to cover services like legal and accounting, which the NFIB and other trade groups have opposed due to the additional financial impact on consumers and local businesses.
Another debated issue is HF 107, which would allow striking workers to receive unemployment insurance benefits. The NFIB opposes this, citing potential negative repercussions on the financial stability of the Unemployment Insurance Trust Funds, drawing parallels with similar rejected proposals in other states like California.
Additionally, new employment mandate bills propose various requirements for employers, such as higher pay rates on holidays, mandatory break times, job misclassification prohibitions, and more detailed job posting requirements concerning health plan disclosures.
Lastly, the reintroduced Internet Tax Bill, HF 974/SF 2045, proposes allowing cities to negotiate franchise agreements with broadband providers and impose taxes on internet services, to which the NFIB remains opposed.
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