Legislative Update: E15 Standard, State Budget and Taxes
By Amanda Bilek, senior public policy director for the Minnesota Corn Growers Association
There are about eight weeks remaining before the constitutionally required legislative adjournment date. The last two weeks have been filled with committee activity to move policy bills through the House and Senate to meet policy deadlines. These deadlines aim to narrow the list of topics for consideration in the final weeks of session. In this update we review the current status of Minnesota Corn Growers Association (MCGA) policy priorities – such as the E15 Standard – and other key items that are important for corn farmers to be aware of.
E15 Standard
Increasing Minnesota’s biofuel standard from 10 to 15 percent is a top legislative priority for MCGA. In late February, HF 1433 was introduced in the Minnesota House of Representatives by Rep. Luke Frederick (DFL-Mankato). HF 1433, as introduced, contained several of the policy recommendations from the Governor’s Council on Biofuels and was a bill put forward by the Walz administration. Originally the bill included a 15 percent biofuel standard, with a long-term move to a 25 percent standard in 2031. Additionally, the original bill also created a biofuels promotion and education marketing program and advisory council at the Minnesota Department of Agriculture and a minimum compatibility standard of 25 percent for new equipment to storage and dispense higher blends of ethanol.
During the bills’ first hearing in the Agriculture committee, HF 1433 was amended by members of the DFL majority to remove the biofuels promotion and education marketing and advisory council and the long-term move to a 25 percent biofuel standard. The 15 percent standard (E15 Standard) was maintained by adding a phase in for those distributors with compatible equipment by July 1, 2023 and for all other distributors no later than July 1, 2026. The bill was unanimously approved and re-referred to the House Commerce committee.
On March 10, the House Commerce committee considered HF 1433. You can watch video from the hearing on March 10 here. It’s worth the watch to hear how out-of-state oil interests continue to work against the expansion of ethanol in Minnesota. The bill was laid over for further consideration and ultimately was voted out of the committee on March 17 along a party line vote. The bill was then re-referred to the House Environment and Natural Resources committee where it awaits further action.
Over in the Senate, SF 1178 (Westrom-Elbow Lake) was heard on March 10. It was amended to replace the language from the Governor’s biofuel policy bill with the original E15 standard language from Senator Westrom’s SF 944, which was heard earlier in session. In an attempt to offer some accommodation to the Petroleum Marketers Associations and the Service Station Association, who have opposed the bill, Senator Westrom amended his bill to add an off-ramp to retailers who do not have E15 certified equipment from complying with the increased biofuel standard. The increased standard would apply to all retailers who do have E15 certified equipment. The bill did pass and was re-referred to the Senate Commerce & Consumer Protection committee where it awaits further action.
Although there have been a number of obstacles to work through in the House and Senate on the 15 percent biofuel standard, Senator Westrom, Representative Frederick and Governor Walz along with co-authors and other supporters are committed to continue working on the issue. MCGA will be conducting some increased communications and grassroots opportunities for action in the coming weeks to coincide with the Easter legislative break.
State Budget
As I have written about before, the major work of this legislative session is to pass a new two-year state budget for fiscal years 2022 and 2023. An updated forecast in late February changed the budget outlook for the state from a projected deficit to a projected surplus of $1.6 billion. Since the revised forecast, Governor Walz has issued a supplementary budget proposal and the House and Senate leadership have set budget targets for different committees of jurisdiction as they assemble their omnibus appropriation bills over the next couple of weeks.
The Governor has proposed an overall two-year budget of $52.27 billion, the House DFL majority $52.52 billion and the Senate Republican majority $51.87 billion. The overall budget stage has been set, but there are many details to work out over the next eight weeks.
For agriculture, the Governor has proposed a two-year budget of $140 million, the House DFL majority $138 million and the Senate Republican majority $128 million. Budget priorities for MCGA include funding for biofuels infrastructure, maintaining funding for the AGREETT program, and other key investments that assist farmers and communities with trade expansion, farm safety, noxious weeds and best management practices.
The next legislative update will take a deeper dive into the House and Senate agriculture budget bills. It is not expected there will committee action on those bills until the week of April 5th.
Taxes
There won’t be much action on omnibus tax bills until after the legislature returns from the Easter break the week of April 5th.
During the week of March 8th the Senate passed 55-12 SF 263. This bill would update the state income tax code to retroactively incorporate all federal tax changes enacted between December 31, 2019 and December 31, 2020 including an exclusion from gross income for loans forgiven through the federal Paycheck Protection Program (PPP). Several MCGA members utilized PPP forgivable loans during the pandemic to keep operations going and employees on the payroll. SF 263 also had clarifying language on Section 179 conformity, which was passed during the fall of 2020 as the Department of Revenue needed to tighten up language in order for the conformity provision to operate as intended by the legislature.
Although a PPP state tax measure was heard by the House Tax committee, full action by the House has not yet been taken. However, House tax chair Paul Marquart has indicated it is likely to be included in an omnibus tax bill during the first part of April.
Be sure to follow the MCGA blog and its social channels (Facebook, Twitter) for updates. You can also follow me on Twitter (@AjBilek).
