Legislative Update: MN omnibus transportation bills continue to take center stage
By Amanda Bilek, senior public policy director for the Minnesota Corn Growers Association
Last weeks’ Legislative Update looked closely at the agriculture and environment omnibus bills. This week we pick up where we left off as the Minnesota House and Senate are still in the process of passing various omnibus bills off the House or Senate floor to establish their position for final end of session negotiations.
While that activity continues this week, we want to take a closer look at some of the provisions in the transportation bills, and give you an update on the Clean Water Fund appropriations and the status of the tax bill.
MN Omnibus Transportation Bill
Senator Scott Newman (R-Hutchinson) is Senate Transportation Committee chairman and chief author of the Senate MN omnibus transportation bill, SF 1159. In order to fund more road and bridge transportation projects, the Senate bill proposes to redirect a higher percentage of the existing auto parts sales tax. The Senate transportation bill includes nearly $2 billion for state road construction and maintenance and $2.3 billion in total local road funding. A few other provisions of note:
- Enables the purchase of a special agriculture license plate for automobiles, one-ton pickup trucks and motorcycles. Proceeds from the plates would go to the FFA Foundation and 4-H programming.
- Increases the Electric Vehicle Surcharge – currently set at $75 per year – to $229. Plug-in hybrids are proposed to pay a $114.50 surcharge and all-electric motorcycles would be a $46 surcharge.
Representative Frank Hornstein (DLF-Minneapolis) is House Transportation Committee chairman and chief author of the House MN omnibus transportation bill, HF 1684. The House bill also includes the provision for a special agriculture license plate with proceeds benefiting the FFA Foundation and 4-H programming. However, there are significant differences in funding mechanisms.
The House transportation bill is proposing to allow the Minnesota Transportation Commissioner to determine the gasoline tax each year by adding to the current year tax rate the percentage increase in the National Highway Construction Cost Index. This would apply to liquid and gaseous transportation fuels. It is estimated this would raise $350 million over the next four years in new revenue and is estimated to raise the state gas tax initially by five cents.
The House transportation bill also proposes increases on the sales tax on motor vehicle purchases from 6.5 percent to 6.875 percent and vehicle registration fees.
The House has passed their version of the MN omnibus transportation bill and awaits action by the Senate, which is likely to happen this week.
Taxes
Rep. Paul Marquart (DFL-Dillworth) is the chief author of the House omnibus tax bill, HF 991. The House of Representatives is scheduled to take action on their tax bill on Thursday, April 22. The current version of the bill includes several provisions that would conform to federal changes that were made in 2019 and 2020 and includes clarifying language around Section 179 for tax year 2020. The bill would allow the exclusion of loans forgiven through the Paycheck Protection Program from gross income up to $350,000. The bill also makes changes to the Beginning Farmer Tax Credit to allow the credit to apply for sales of agricultural assets to an immediate family member.
The Senate previously passed SF 263 carried by Senator Tom Bakk (I-Cook) that would retroactively incorporate all federal tax changes enacted between December 31, 2018 and December 31, 2020 including an exclusion from gross income for loans forgiven through the federal Paycheck Protection Program. Clarifying language on section 179 conformity that was passed in the fall of 2020 was included as well.
The Senate Tax committee chair Carla Nelson (R-Rochester) continues to meet regularly, hearing a myriad of bills. At time of publication no Senate omnibus tax bill has been put forward, but that could change later this week. The property tax subcommittee did put together a report, which could be incorporated into an omnibus Senate tax bill.
Clean Water Fund
Finally, separate from the general fund and not factored into the overall state budget are dedicated funds collected through a sales tax increase referred to as the Legacy fund. The Clean Water Fund (CWF) is one-third of the overall dedicated funds. Project recommendations are put forward by the Clean Water Council, but must be agreed to and passed by the legislature and signed into law by the Governor.
MCGA has been tracking these dedicated funds and advocated for more of these funds to be directed towards on-the-ground implementation to farmers and local groups to have the greatest impact on water quality.
Both the House and Senate CWF provisions appropriate $256 million over the two years. For several years, there has been a debate about how to fund the operations of Soil and Water Conservation Districts (SWCDs). The House bill appropriates $12 million for SWCDs in FY22 and proposes a fee increase on mortgage or deed change, which is carried in the omnibus environment bill to fund ongoing operations for SWCDs. The Senate CWF bill would fund SWCDs at $12 million in FY 22 and FY 23.
There are projects directed towards agriculture, including the Minnesota Ag Water Quality Certification Program, technical assistance at the Minnesota Department of Agriculture, a cover crop adoption program and drainage management grants. MCGA continues to advocate for more funding directed for local projects as well.
Be sure to follow the MCGA blog and its social channels (Facebook, Twitter) for updates. You can also follow me on Twitter (@AjBilek).
