Minnesota 2025-2026 Regular Session

Minnesota House Bill HF1106 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	1.1 A bill for an act
2	2	1.2 relating to taxation; modifying certain requirements for the Tax Expenditure Review
3	3	1.3 Commission; repealing legislative requirements for new or renewed tax
4	4	1.4 expenditures; amending Minnesota Statutes 2024, sections 3.8855, subdivisions
5	5	1.5 2, 3, 4, 5, 7, 8; 270C.11, subdivision 4; repealing Minnesota Statutes 2024, section
6	6	1.6 3.192.
7	7	1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
8	8	1.8 Section 1. Minnesota Statutes 2024, section 3.8855, subdivision 2, is amended to read:
9	9	1.9 Subd. 2.Definitions.For the purposes of this section,:
10	10	1.10 (1) "commissioner" means the commissioner of revenue; and
11	11	1.11 (2) "significant tax expenditure," "tax," and "tax expenditure" have the meanings given
12	12	1.12in section 270C.11, subdivision 6.
13	13	1.13 EFFECTIVE DATE.This section is effective the day following final enactment.
14	14	1.14 Sec. 2. Minnesota Statutes 2024, section 3.8855, subdivision 3, is amended to read:
15	15	1.15 Subd. 3.Membership.(a) The commission consists of:
16	16	1.16 (1) two senators appointed by the senate majority leader;
17	17	1.17 (2) two senators appointed by the senate minority leader;
18	18	1.18 (3) two representatives appointed by the speaker of the house;
19	19	1.19 (4) two representatives appointed by the minority leader of the house of representatives;
20	20	1.20and
21	21	1.21 (5) the commissioner of revenue or the commissioner's designee.
22	22	1Sec. 2.
23	23	REVISOR EAP/EH 25-0071411/25/24
24	24	State of Minnesota
25	25	This Document can be made available
26	26	in alternative formats upon request
27	27	HOUSE OF REPRESENTATIVES
28	28	H. F. No. 1106
29	29	NINETY-FOURTH SESSION
30	30	Authored by Agbaje and Gomez02/19/2025
31	31	The bill was read for the first time and referred to the Committee on Taxes 2.1 (b) Each appointing authority must make appointments by January 31 of the regular
32	32	2.2legislative session in the odd-numbered year.
33	33	2.3 (c) If the chair of the house or senate committee with primary jurisdiction over taxes is
34	34	2.4not an appointed member, the chair is an ex officio, nonvoting member of the commission.
35	35	2.5 (d) The commissioner may designate another individual to represent the commissioner
36	36	2.6or the commissioner's designee at any meeting of the commission.
37	37	2.7 EFFECTIVE DATE.This section is effective the day following final enactment.
38	38	2.8 Sec. 3. Minnesota Statutes 2024, section 3.8855, subdivision 4, is amended to read:
39	39	2.9 Subd. 4.Duties.(a) For not more than three years after the commission is established,
40	40	2.10the commission must complete an initial review of the state's tax expenditures. The initial
41	41	2.11review must identify the purpose objective of each of the state's tax expenditures, if none
42	42	2.12was identified in the enacting legislation in accordance with section 3.192. The commission
43	43	2.13may also identify metrics for evaluating the effectiveness of an expenditure.
44	44	2.14 (b) The commission must review and evaluate Minnesota's tax expenditures on a regular,
45	45	2.15rotating basis. The commission must establish a review schedule that ensures each tax
46	46	2.16expenditure will be reviewed by the commission at least once every ten years. The
47	47	2.17commission may review expenditures affecting similar constituencies or policy areas in the
48	48	2.18same year, but the commission must review a subset of the tax expenditures within each
49	49	2.19tax type each year. To the extent possible, the commission must review a similar number
50	50	2.20of tax expenditures within each tax type each year. The commission may decide not to
51	51	2.21review a tax expenditure that is adopted by reference to federal law.
52	52	2.22 (c) Before December February 1 of the year a tax expenditure is included in a commission
53	53	2.23report, the commission must hold a public hearing on the expenditure, including but not
54	54	2.24limited to a presentation of the review components in subdivision 5.
55	55	2.25 EFFECTIVE DATE.This section is effective the day following final enactment.
56	56	2.26 Sec. 4. Minnesota Statutes 2024, section 3.8855, subdivision 5, is amended to read:
57	57	2.27 Subd. 5.Components of review.(a) When reviewing a tax expenditure, the commission
58	58	2.28must at a minimum:
59	59	2.29 (1) provide an estimate of the annual revenue lost as a result of the expenditure;
60	60	2.30 (2) identify the purpose objective of the tax expenditure if none was identified in the
61	61	2.31enacting legislation in accordance with section 3.192;
62	62	2Sec. 4.
63	63	REVISOR EAP/EH 25-0071411/25/24 3.1 (3) estimate the measurable impacts and efficiency of the tax expenditure in
64	64	3.2accomplishing the purpose objective of the expenditure;
65	65	3.3 (4) compare the effectiveness of the tax expenditure and a direct expenditure with the
66	66	3.4same purpose objective;
67	67	3.5 (5) identify potential modifications to the tax expenditure to increase its efficiency or
68	68	3.6effectiveness;
69	69	3.7 (6) estimate the amount by which the tax rate for the relevant tax could be reduced if
70	70	3.8the revenue lost due to the tax expenditure were applied to a rate reduction;
71	71	3.9 (7) if the tax expenditure is a significant tax expenditure, estimate the incidence of the
72	72	3.10tax expenditure and the effect of the expenditure on the incidence of the state's tax system;
73	73	3.11 (8) consider the cumulative fiscal impacts of other state and federal taxes providing
74	74	3.12benefits to taxpayers for similar activities; and
75	75	3.13 (9) recommend whether the expenditure be continued, repealed, or modified.
76	76	3.14 (b) The commission may omit a component in paragraph (a) if the commission determines
77	77	3.15it is not feasible due to the lack of available data, third-party research, staff resources, or
78	78	3.16lack of a majority support for a recommendation.
79	79	3.17 EFFECTIVE DATE.This section is effective the day following final enactment.
80	80	3.18 Sec. 5. Minnesota Statutes 2024, section 3.8855, subdivision 7, is amended to read:
81	81	3.19 Subd. 7.Report to legislature.(a) By December February 15 of each year, the
82	82	3.20commission must submit a written report to the legislative committees with jurisdiction
83	83	3.21over tax policy. The report must detail the results of the commission's review of tax
84	84	3.22expenditures for the year, including the review components detailed in subdivision 5.
85	85	3.23 (b) Notwithstanding paragraph (a), during the period of initial review under subdivision
86	86	3.244, the report may be limited to the purpose objective statements and metrics for evaluating
87	87	3.25the effectiveness of expenditures, as identified by the commission. The report may also
88	88	3.26include relevant publicly available data on an expenditure.
89	89	3.27 (c) The report may include any additional information the commission deems relevant
90	90	3.28to the review of an expenditure.
91	91	3.29 (d) The legislative committees with jurisdiction over tax policy must hold a public
92	92	3.30hearing on the report during the regular legislative session in the year following the year in
93	93	3.31which the report was submitted.
94	94	3Sec. 5.
95	95	REVISOR EAP/EH 25-0071411/25/24 4.1 EFFECTIVE DATE.This section is effective the day following final enactment.
96	96	4.2 Sec. 6. Minnesota Statutes 2024, section 3.8855, subdivision 8, is amended to read:
97	97	4.3 Subd. 8.Terms; vacancies; meetings.(a) Members of the commission serve a term
98	98	4.4beginning upon appointment and ending at the beginning of the regular legislative session
99	99	4.5in the next odd-numbered year. The appropriate appointing authority must fill a vacancy
100	100	4.6for a seat of a current legislator for the remainder of the unexpired term. Members may be
101	101	4.7removed or replaced at the pleasure of the appointing authority.
102	102	4.8 (b) If a commission member ceases to be a member of the legislative body from which
103	103	4.9the member was appointed, the member vacates membership on the commission.
104	104	4.10 (c) The commissioner of revenue must convene the first meeting of each year required
105	105	4.11under subdivision 4, paragraph (c).
106	106	4.12 EFFECTIVE DATE.This section is effective the day following final enactment.
107	107	4.13 Sec. 7. Minnesota Statutes 2024, section 270C.11, subdivision 4, is amended to read:
108	108	4.14 Subd. 4.Contents.(a) The report shall detail for each tax expenditure item:
109	109	4.15 (1) the amount of tax revenue forgone;
110	110	4.16 (2) a citation of the statutory or other legal authority for the expenditure;
111	111	4.17 (3) the year in which it was enacted or the tax year in which it became effective;
112	112	4.18 (4) the purpose objective of the expenditure, as identified in the enacting legislation in
113	113	4.19accordance with section 3.192 or by the Tax Expenditure Review Commission;
114	114	4.20 (5) the incidence of the expenditure, if it is a significant sales or income tax expenditure;
115	115	4.21and
116	116	4.22 (6) the revenue-neutral amount by which the relevant tax rate could be reduced if the
117	117	4.23expenditure were repealed.
118	118	4.24 (b) The report may contain additional information which the commissioner considers
119	119	4.25relevant to the legislature's consideration and review of individual tax expenditure items.
120	120	4.26This may include but is not limited to analysis of whether the expenditure is achieving that
121	121	4.27objective and the effect of the expenditure on the administration of the tax system.
122	122	4.28 EFFECTIVE DATE.This section is effective the day following final enactment.
123	123	4Sec. 7.
124	124	REVISOR EAP/EH 25-0071411/25/24 5.1 Sec. 8. REPEALER.
125	125	5.2 Minnesota Statutes 2024, section 3.192, is repealed.
126	126	5.3 EFFECTIVE DATE.This section is effective the day following final enactment.
127	127	5Sec. 8.
128	128	REVISOR EAP/EH 25-0071411/25/24 3.192 REQUIREMENTS FOR NEW OR RENEWED TAX EXPENDITURES.
129	129	(a) Any bill that creates, renews, or continues a tax expenditure must include a statement of
130	130	intent that clearly provides the purpose of the tax expenditure and a standard or goal against which
131	131	its effectiveness may be measured.
132	132	(b) For purposes of this section, "tax expenditure" has the meaning given in section 270C.11,
133	133	subdivision 6.
134	134	(c) Any bill that creates a new tax expenditure or continues an expiring tax expenditure must
135	135	include an expiration date for the tax expenditure that is no more than eight years from the day the
136	136	provision takes effect.
137	137	1R
138	138	APPENDIX
139	139	Repealed Minnesota Statutes: 25-00714