Senate Continues Work on Tax Legislation

April 25, 2022

The Senate is considering several more provisions that affect cities, including local sales tax bills and a new aid program for cities retiring power plants.

The Senate Property Tax Subcommittee and the full Senate Taxes Committee will continue to meet this week to consider sales and property tax bills to be included in a second omnibus tax bill.

The first omnibus tax bill, SF 3692 (Sen. Carla Nelson, R-Rochester), was approved on the Senate floor in early April but because tax bills must originate in the House, the bill was laid on the table until the Senate receives the House bill.

Local bills

The Property Tax Subcommittee heard eight local tax increment financing (TIF) bills and a general TIF clarification bill on April 20. It considered and laid over local sales tax bills on April 21 for the cities of Marshall, Henderson, Park Rapids, Blackduck, East Grand Forks and Rochester.

On April 26, the full Senate Taxes Committee will continue to hear local sales tax bills for the cities of Aitkin, Proctor, Grand Rapids, Edina, Bloomington, Brooklyn Center, Roseville, Golden Valley, and the counties of Winona and Rice.

In addition, the committee will hear bills to adjust local sales tax authorizations that were granted in 2021 for the cities of Fergus Falls and Warren. Those cities, as well as Oakdale, have had bills introduced to increase the total allowable sales tax collections to cover increased construction costs due largely to material and labor shortages.

Aid for cities that retire power plants

On April 27, the Senate Property Tax Subcommittee will hear SF 3641 (Sen. Karin Housley, R-Stillwater), which would establish an electric generation transition aid to assist communities with net tax capacity valuation reductions for power plants that are being retired.

In many of these communities, a power generating facility can represent a substantial percentage of the tax base. The aid would offset a portion of the tax shift to homes, apartments, and businesses.

Next steps

It appears the second Senate tax bill will be added to the first bill in the coming weeks after the Senate receives the House tax bill and amends its version into the House bill. Then a conference committee will negotiate the two versions of the bill.

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