1.1 A bill for an act
1.2 relating to taxation; modifying certain requirements for the Tax Expenditure Review
1.3 Commission; repealing legislative requirements for new or renewed tax
1.4 expenditures; amending Minnesota Statutes 2024, sections 3.8855, subdivisions
1.5 2, 3, 4, 5, 7, 8; 270C.11, subdivision 4; repealing Minnesota Statutes 2024, section
1.6 3.192.
1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.8 Section 1. Minnesota Statutes 2024, section 3.8855, subdivision 2, is amended to read:
1.9 Subd. 2.Definitions.For the purposes of this section,:
1.10 (1) "commissioner" means the commissioner of revenue; and
1.11 (2) "significant tax expenditure," "tax," and "tax expenditure" have the meanings given
1.12in section 270C.11, subdivision 6.
1.13 EFFECTIVE DATE.This section is effective the day following final enactment.
1.14 Sec. 2. Minnesota Statutes 2024, section 3.8855, subdivision 3, is amended to read:
1.15 Subd. 3.Membership.(a) The commission consists of:
1.16 (1) two senators appointed by the senate majority leader;
1.17 (2) two senators appointed by the senate minority leader;
1.18 (3) two representatives appointed by the speaker of the house;
1.19 (4) two representatives appointed by the minority leader of the house of representatives;
1.20and
1.21 (5) the commissioner of revenue or the commissioner's designee.
1Sec. 2.
REVISOR EAP/EH 25-0071411/25/24
State of Minnesota
This Document can be made available
in alternative formats upon request
HOUSE OF REPRESENTATIVES
H. F. No. 1106
NINETY-FOURTH SESSION
Authored by Agbaje and Gomez02/19/2025
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
2.2legislative session in the odd-numbered year.
2.3 (c) If the chair of the house or senate committee with primary jurisdiction over taxes is
2.4not an appointed member, the chair is an ex officio, nonvoting member of the commission.
2.5 (d) The commissioner may designate another individual to represent the commissioner
2.6or the commissioner's designee at any meeting of the commission.
2.7 EFFECTIVE DATE.This section is effective the day following final enactment.
2.8 Sec. 3. Minnesota Statutes 2024, section 3.8855, subdivision 4, is amended to read:
2.9 Subd. 4.Duties.(a) For not more than three years after the commission is established,
2.10the commission must complete an initial review of the state's tax expenditures. The initial
2.11review must identify the purpose objective of each of the state's tax expenditures, if none
2.12was identified in the enacting legislation in accordance with section 3.192. The commission
2.13may also identify metrics for evaluating the effectiveness of an expenditure.
2.14 (b) The commission must review and evaluate Minnesota's tax expenditures on a regular,
2.15rotating basis. The commission must establish a review schedule that ensures each tax
2.16expenditure will be reviewed by the commission at least once every ten years. The
2.17commission may review expenditures affecting similar constituencies or policy areas in the
2.18same year, but the commission must review a subset of the tax expenditures within each
2.19tax type each year. To the extent possible, the commission must review a similar number
2.20of tax expenditures within each tax type each year. The commission may decide not to
2.21review a tax expenditure that is adopted by reference to federal law.
2.22 (c) Before December February 1 of the year a tax expenditure is included in a commission
2.23report, the commission must hold a public hearing on the expenditure, including but not
2.24limited to a presentation of the review components in subdivision 5.
2.25 EFFECTIVE DATE.This section is effective the day following final enactment.
2.26 Sec. 4. Minnesota Statutes 2024, section 3.8855, subdivision 5, is amended to read:
2.27 Subd. 5.Components of review.(a) When reviewing a tax expenditure, the commission
2.28must at a minimum:
2.29 (1) provide an estimate of the annual revenue lost as a result of the expenditure;
2.30 (2) identify the purpose objective of the tax expenditure if none was identified in the
2.31enacting legislation in accordance with section 3.192;
2Sec. 4.
REVISOR EAP/EH 25-0071411/25/24 3.1 (3) estimate the measurable impacts and efficiency of the tax expenditure in
3.2accomplishing the purpose objective of the expenditure;
3.3 (4) compare the effectiveness of the tax expenditure and a direct expenditure with the
3.4same purpose objective;
3.5 (5) identify potential modifications to the tax expenditure to increase its efficiency or
3.6effectiveness;
3.7 (6) estimate the amount by which the tax rate for the relevant tax could be reduced if
3.8the revenue lost due to the tax expenditure were applied to a rate reduction;
3.9 (7) if the tax expenditure is a significant tax expenditure, estimate the incidence of the
3.10tax expenditure and the effect of the expenditure on the incidence of the state's tax system;
3.11 (8) consider the cumulative fiscal impacts of other state and federal taxes providing
3.12benefits to taxpayers for similar activities; and
3.13 (9) recommend whether the expenditure be continued, repealed, or modified.
3.14 (b) The commission may omit a component in paragraph (a) if the commission determines
3.15it is not feasible due to the lack of available data, third-party research, staff resources, or
3.16lack of a majority support for a recommendation.
3.17 EFFECTIVE DATE.This section is effective the day following final enactment.
3.18 Sec. 5. Minnesota Statutes 2024, section 3.8855, subdivision 7, is amended to read:
3.19 Subd. 7.Report to legislature.(a) By December February 15 of each year, the
3.20commission must submit a written report to the legislative committees with jurisdiction
3.21over tax policy. The report must detail the results of the commission's review of tax
3.22expenditures for the year, including the review components detailed in subdivision 5.
3.23 (b) Notwithstanding paragraph (a), during the period of initial review under subdivision
3.244, the report may be limited to the purpose objective statements and metrics for evaluating
3.25the effectiveness of expenditures, as identified by the commission. The report may also
3.26include relevant publicly available data on an expenditure.
3.27 (c) The report may include any additional information the commission deems relevant
3.28to the review of an expenditure.
3.29 (d) The legislative committees with jurisdiction over tax policy must hold a public
3.30hearing on the report during the regular legislative session in the year following the year in
3.31which the report was submitted.
3Sec. 5.
REVISOR EAP/EH 25-0071411/25/24 4.1 EFFECTIVE DATE.This section is effective the day following final enactment.
4.2 Sec. 6. Minnesota Statutes 2024, section 3.8855, subdivision 8, is amended to read:
4.3 Subd. 8.Terms; vacancies; meetings.(a) Members of the commission serve a term
4.4beginning upon appointment and ending at the beginning of the regular legislative session
4.5in the next odd-numbered year. The appropriate appointing authority must fill a vacancy
4.6for a seat of a current legislator for the remainder of the unexpired term. Members may be
4.7removed or replaced at the pleasure of the appointing authority.
4.8 (b) If a commission member ceases to be a member of the legislative body from which
4.9the member was appointed, the member vacates membership on the commission.
4.10 (c) The commissioner of revenue must convene the first meeting of each year required
4.11under subdivision 4, paragraph (c).
4.12 EFFECTIVE DATE.This section is effective the day following final enactment.
4.13 Sec. 7. Minnesota Statutes 2024, section 270C.11, subdivision 4, is amended to read:
4.14 Subd. 4.Contents.(a) The report shall detail for each tax expenditure item:
4.15 (1) the amount of tax revenue forgone;
4.16 (2) a citation of the statutory or other legal authority for the expenditure;
4.17 (3) the year in which it was enacted or the tax year in which it became effective;
4.18 (4) the purpose objective of the expenditure, as identified in the enacting legislation in
4.19accordance with section 3.192 or by the Tax Expenditure Review Commission;
4.20 (5) the incidence of the expenditure, if it is a significant sales or income tax expenditure;
4.21and
4.22 (6) the revenue-neutral amount by which the relevant tax rate could be reduced if the
4.23expenditure were repealed.
4.24 (b) The report may contain additional information which the commissioner considers
4.25relevant to the legislature's consideration and review of individual tax expenditure items.
4.26This may include but is not limited to analysis of whether the expenditure is achieving that
4.27objective and the effect of the expenditure on the administration of the tax system.
4.28 EFFECTIVE DATE.This section is effective the day following final enactment.
4Sec. 7.
REVISOR EAP/EH 25-0071411/25/24 5.1 Sec. 8. REPEALER.
5.2 Minnesota Statutes 2024, section 3.192, is repealed.
5.3 EFFECTIVE DATE.This section is effective the day following final enactment.
5Sec. 8.
REVISOR EAP/EH 25-0071411/25/24 3.192 REQUIREMENTS FOR NEW OR RENEWED TAX EXPENDITURES.
(a) Any bill that creates, renews, or continues a tax expenditure must include a statement of
intent that clearly provides the purpose of the tax expenditure and a standard or goal against which
its effectiveness may be measured.
(b) For purposes of this section, "tax expenditure" has the meaning given in section 270C.11,
subdivision 6.
(c) Any bill that creates a new tax expenditure or continues an expiring tax expenditure must
include an expiration date for the tax expenditure that is no more than eight years from the day the
provision takes effect.
1R
APPENDIX
Repealed Minnesota Statutes: 25-00714