Senate Republicans are proposing property tax caps, no tax on tips and overtime, and lowering license tab fees as part of a “tax relief” package introduced earlier this week at the state Capitol.
A revenue forecast on Friday showed improvements and more leeway for the state to potentially eat some costs from changes in taxes, with a $3.7 billion budget surplus to work with in 2026-2027, and a $377 million surplus for 2028-2029 that was once a $6 billion budget shortfall.
“We heard last week in the budget forecast that the surplus is now $3.7 billion — that tells us taxes are too high and we have room to make these changes without hurting the state’s finances,” Sen. Julia Coleman, R-Waconia, said Monday.
Sen. Julia Coleman, R-Chanhassen. (Courtesy of the candidate)
Only one proposal is in bill form — a measure from Sen. John Jasinski, R-Faribault, which would put license tab fees back to their pre-2023 values.
Another, from Sen. Michael Kreun, R- Blaine, caps property taxes at the rate of inflation, plus 50% of population growth for cities and counties over 2,500 residents. Rates could be increased over the cap but only if they are approved at the ballot box.
Speaker of the House Lisa Demuth, R-Cold Spring, said Friday that she wanted to look at federal tax conformity, which is what the no tax on tips and overtime bills from Sen. Karin Housley, R-Stillwater, at least partially accomplishes. Housley’s bill would set a maximum deduction on tips of $25,000 and of $12,500 for overtime. Both deductions phase out once income hits $150,000 for single-filers, and $300,000 for married-joint filers, Housley said.
Demuth said Friday that the no tax on tips and overtime proposal would cost the state $391 in its first fiscal year. When asked where the state could make up such a large chunk with only a $377 million surplus on the horizon, Housley said, “We have the next 10 weeks to work out where that money would be coming from.”
Senate Minority Leader Mark Johnson, R-East Grand Forks, also said the state should cut spending in other areas or find savings by cracking down on fraud.
Minnesota Senate Republican Minority Leader Mark Johnson, R-East Grand Forks. (AP Photo/Steve Karnowski).
The budget forecast Friday showed that claims are down 4% for 14 high-risk state Medicaid programs, following a recently implemented pre-payment review process for the programs, lowering spending by $75 million in the current biennium and $99 million in the next biennium.
“Fraud is going to be a pile of money there,” Johnson said. “You saw once we start holding those programs accountable … all of a sudden, the utilization rate starts to drop. So there’s savings there as well.”
It’s not clear yet whether the proposals will have bipartisan support.
On Friday, House Leader Zack Stephenson, DFL-Coon Rapids, said he will take a “very strong look” at federal tax conformity.
“We’re going to be assessing who are the winners and losers in that federal bill [HR 1], and then we’re going to think about, what should we do with our limited resources? Should we make those winners even better off, or should we help the losers in that bill? Because we do have limited resources, maybe even more limited by the actions of the federal government,” he said.
Related Articles
Letters: I have 2 handguns, 3 shotguns, 2 rifles, and I support a ban on some weaponry
Sweeney’s Saloon offers free meal to legislators if DFLers and Republicans sit together
MN revenue forecast: $3.7B surplus for 2026-2027, a $377M surplus in 2028-2029
Gov. Tim Walz introduces anti-fraud package, calls federal Medicaid pause ‘illegal and unprecedented’
MN legislators hear bill that would allow lawsuits against federal agents
Leave a Reply