17 Days to Go With Low Expectations

The 2022 legislative session has just over two weeks to go and few at the Capitol are optimistic that Senate Republicans and the DFLers in the House and Governor’s Office will reach agreement on any major pending issues.   The two bodies are about $15 billion apart between what the House wants to spend and tax cuts that the Senate wants.   The only “must do” bill – reinsurance – was passed in April. Because the 2021 session passed a two-year budget and tax bill, there is literally nothing else that needs to be done this session. The Legislature could adjourn sine die today and state government would continue functioning at a fully-funded level until June 30, 2023. Republicans would be fine with that. They’d rather conserve the $9.25 billion budget surplus until 2023 when they hope to control the Senate AND House, enabling them to pass permanent large tax cuts to what they hope will be a Republican governor.

House Passes Tax Bill

The House on Wednesday passed a tax bill on a 69-62 party-line vote. The bill provides $1.65 billion in tax cuts and credits in FY22-22 and $1.6 billion in FY23-24. HF3669, as amended, (Marquart, DFL-Dilworth) includes some property tax cuts and child care and renter’s tax credits, but leaves the current income tax tiers as they are. The bill does eliminate income taxes on Social Security benefits for middle class couples earning less than $75,000. Republicans have called for eliminating income taxes on Social Security benefits and permanent reductions in tax rates. The bill now goes to conference with the Senate, whose bill permanently cuts the first-tier income tax rate from 5.35% to 2.80%. Tax Committee observers have low expectations for the conferees finding much common ground.