The tax conference committee reached a deal last evening that ended up accommodating most everyone’s spending, relief, and redistributional wishes in at least some manner, all paid for by Minnesota businesses and high-income households. Entering the negotiations, both the House and the Senate sought to raise $640 million in their respective omnibus bills for the forthcoming FY 24-25 biennium. They exited agreeing to raise $1.034 billion -- a 61% increase.
The revenue raisers:
There is no 5th tier, increase in corporate minimum fee, capital gains surcharge, or elimination of data centers’ sales tax exemption.
As would be expected, the deal also includes some last minute surprises. For example, the modified student loan credit which both sides had concurred on vanished from the final bill. On the other hand the sales tax exemption for suite licenses and amenities included with athletic event admissions, which was dropped in negotiations, was resurrected. There are also several brand new items. Most notably, the push to provide teachers with an earlier retirement with full benefits found a home in the tax bill, although the provision’s $97.5 million cost is in FY26-27 suggesting it won’t be effective until a couple years from now. For a closer look at this issue as well as the last remaining big unknown shaping the biennial budget – state labor contracts -- see our March/April Issue of Fiscal Focus now (finally) available as a pdf under the Fiscal Focus drop down on our website.
Much more on everything in the coming days and weeks including a look at the sustainability of the 2023 budget actions.