Legislative Update – April 12, 2022

April 12, 2022

This week the legislature is on break and lawmakers are back in their home districts meeting with constituents, attending endorsing conventions, and preparing for the final sprint to the end of session. If you planned to connect with your representative on an issue that matters to you, this week is a good opportunity.

You can find who represents you and their contact information here.

When lawmakers return from recess, they begin the hard work of negotiating deals on bills that can pass both the Democratically-controlled House and Republican-controlled Senate. Debates on how to spend the state’s $9.25 billion budget surplus loom large though—unlike a budget session—no spending is required to keep the lights on in state government.

Legislative leadership has also made clear that deals need to be reached ahead of the end of session on Monday, May 23. Unlike budget years when a shutdown is on the line, officials do not plan to count on a short special session to wrap up budget bills—when the session is over, it’s over. This leaves just five weeks for legislators to reach a deal on healthcare affordability, replenishing the unemployment trust fund, education spending, tax relief, and of course a budget for agriculture.

As the election heats up ahead of the midterms this November, there is reason to think that bipartisan agreement could be difficult. That said, there are reasons to be hopeful. As just one example, on Thursday, April 7, the House and Senate acted quickly and nearly unanimously to expedite $1 million to respond to the High Path Avian Influenza (HPAI) outbreak across the state. The disease, which is spread from wild birds, is a threat to both large commercial operations and small backyard flocks. The state has been working hard to find the disease, depopulate infected barns, educate the public on biosecurity, and minimize the effects of the outbreak on trade.

You can learn more about the HPAI outbreak and how you can help at the Board of Animal Health (BAH).

“The 2015 HPAI outbreak in Minnesota and throughout the Midwest caused significant economic impact,” said MFU President Gary Wertish in a letter signed by a coalition of agriculture organizations representing poultry farmers, making the case for the funding. “Minnesota lost over 9 million birds and 108 farms were affected across 23 counties resulting in more than $647.2 million from lost turkey and egg production and processing . . . that experience now allows us to respond quickly with the appropriate resources.”

Unfortunately, action on drought relief was tabled until the legislature returns from recess. The House approved a package on March 10 and the Senate followed suite on March 31 and on Thursday, April 7 a conference committee was appointed to negotiate the differences between the packages. For agriculture, they are both generally in line with what the Governor first proposed in September: small grants and low-interest loans for livestock and specialty crop producers who can demonstrate that they were affected by last summer’s drought.

Members of the conference committee on the drought package are:

There is less agreement—at least as of yet—about what to include in a supplemental tax proposal. In the Senate, Chair Carla Nelson (R-Rochester) released the first version of her tax proposal which was approved by the full Senate last week. Despite this, Republican leadership has acknowledged that the final deal could look much different and some have suggested that a second tax bill will be released following the break.

The $8.4 billion Republican proposal would spend most of the state’s $9.25 billion budget surplus on ongoing tax relief. In the first year, the bill would cut taxes by $3.4 billion, achieving the total over the next three. The bill would lower the state’s first tax bracket from 5.35 to 2.8 percent and eliminate the tax on all social security benefits.

Despite a handful of DFLers voting for the package, members of the minority in the Senate expressed serious concerns about the proposal not helping over half a million taxpayers with lower incomes and not leaving room for investments in education, healthcare, or helping public safety. They also shared concerns about spending so much on permanent tax cuts given that the state might not be able to count on the surplus long-term.

In the House, Chair Paul Marquart (DFL-Dilworth) is advancing a $1.6 billion tax proposal that expands the child tax credit, eliminates the income tax on Social Security benefits up to $750,000, and expands the renters tax credit. The House bill also includes a number of priorities for MFU and leaves room for spending on other jurisdictions.

First, Marquart’s bill expands the Beginning Farmer Tax Credit (BFTC) by expanding the sale of agricultural assets to family members and proving the Rural Finance Authority (RFA) with funding to better administer the program and do outreach to emerging farmers.

Second, the House tax bill would repeal the sales tax on fencing equipment retroactive throughout the drought. Rep. Nathan Nelson (R-Hinkley) led this effort in the House, making the case with MFU that providing a retroactive reprieve from sales tax is one way the legislature can provide them with relief from the drought. Not only that, but long-term, this investment will help grazers reinvest in their operations, graze more intentionally, and remain resilient to future droughts. Much farm equipment is already exempt from sales tax, including most machinery, grain dryers, milking systems, and irrigation equipment.

Third, the bill would expand the Ag to School tax credit to from 70 to 85 percent, helping more communities benefit from this successful program. This credit provides property tax relief to farmers while also helping rural school districts make needed improvements to their facilities—a win-win for farmers and their communities.

And finally, the bill would fund Soil and Water Conservation Districts (SWCDs) through a new local government aid program that will provide them with the stable, long-term funding they need to best assist our family farmer members in meeting their on-farm conservation goals. Rep. Liz Reyer (DFL-Eagan) led this effort, making the case that the $22 million annual investment will help SWCDs better serve landowners, helping farmers adopt new practices that promote soil health and water quality. Importantly, this proposal will also free up money in the Clean Water Fund, which currently funds the Districts.