We are already into the second half of the 2022 legislative session. Unfortunately there has not been a lot accomplished yet, despite the legislature setting a record for the number of bills introduced with more than 4,700 in the Senate and 4,300 in the House. It seems that legislators have a lot ideas, but have taken very little action. We have passed all the committee deadlines and the House and Senate have started to move on their omnibus bills: taxes, transportation, environment, etc. Not surprisingly, the House and Senate omnibus bills are vastly different on both policy and fiscal impact. Much work will have to be done to come together in conference committee or with leadership.
The Senate passed the first omnibus tax bill off the Senate floor in bipartisan fashion. Among other things, it permanently reduces the first tier individual income tax rate from 5.3% to 2.8% and eliminates income tax on social security income. The Senate Republicans touted this as the “largest tax cut ever,” totaling $3.38 billion this biennium and $5 billion in the FY 24/25 biennium.
The legislature is off and running full steam ahead! This the second year of the 2-year (biennial) legislative session. There are several themes that have been consuming the discussion early on: budget surplus, bonding, unemployment insurance trust fund, redistricting, and COVID closures. Here is a brief update on each area.
In 2021, the state passed a 2-year budget of $52 billion, a record level of spending. A key part of our budget is revenue, how much the state collects in taxes, fees, federal funds, etc. The state uses a forecasting model to try and make an educated guess of how much money will be collected (and spent) during the biennium. The state then updates their projections throughout the year with periodic “budget forecasts,” which update the revenue and expense projections. In November 2021, the state projected a budget surplus of $7.7 billion. As of Monday February 28th (the “February forecast”), that budget surplus jumped to $9.3 billion. The legislature does not technically need to do anything, they already passed a budget in 2021. However, ideas range from giving it back in the form of rebate checks, reducing taxes, or spending on new or existing programs. Governor Walz has proposed nearly tripling proposed rebate checks (“Walz Checks”) to $500 and $1,000 for qualifying individuals and couples. Senate Republicans have proposed permanently reducing the first tier individual income tax rate from 5.3% to 2.8% and eliminating income tax on social security income. House Speaker Melissa Hortman and DFL leaders have been cautious and suggested putting more in reserves while also providing unspecified support for families who continue to struggle through the pandemic.
The Greater Mankato Growth board of directors recently adopted the 2022 Policy Priorities. A key area of focus at Greater Mankato Growths is “Advocacy of the Marketplace”. As such, GMG adopts a set of policy priorities annually. These priorities represent important issues that we focus on throughout the year. We work with elected officials at all levels of government to ensure that policies are enacted that are pro-business and help our regional economy grow.
These priorities are the result of numerous points of input. We conducted a policy survey in October 2021, hosted the Minnesota Chamber of Commerce in Mankato for a small-group discussion, and our Public Affairs Steering Committee meets monthly with leaders from nearly all industry sectors represented.
In 2022, our policy priorities include the following focus areas:
Economic and Workforce Development
Support Partner Organization
To view the full details of our 2022 Policy Priorities, click the image below or visit our Advocacy webpage.
This morning the Occupational Safety and Health Administration (OSHA) filed a hotly-anticipated Emergency Temporary Standard (ETS) related to COVID-19 vaccines, testing, and face coverings in the workplace. This follows an announcement by President Biden on September 9, 2021, directing OSHA to develop a rule to combat the ongoing COVID-19 pandemic.
Details are posted on the OSHA website, but here are some of the key highlights:
ETS is effective immediately, as of 11/5/2021.
Employers must comply with all requirements, except testing, within 30 days. Testing compliance within 60 days.
ETS applies to employers with 100 or more employees. In Minnesota, along with other states with an OSHA approved State Plan, the ETS applies to public sector workers employed by state and local governments, including educators and school staff.
Employers must determine the vaccination status of each employee, obtain proof of vaccination status, and maintain records.
Require employees to notify the employer of a positive COVID test or diagnosis. Employers must then remove the employee from the workplace.
Employees who are not fully vaccinated must be tested at least weekly if the employee is in the workplace at least one day a week.
Employees who are not fully vaccinated must wear a face covering when indoors or in a vehicle with another person for work purposes.
ETS does not require employers to pay for testing or face coverings. Employers may assume costs if they so choose.
ETS does not apply to 100% remote employees or employees who work exclusively outdoors.
Requires employers to provide up to four hours of paid time to receive each vaccination dose, and reasonable time and paid sick leave to recover from side effects experiencing following each dose.
Greater Mankato Growth staff is continuing to monitor this announcement. We will provide additional details and resources as they become available.
Minnesota’s 92nd legislative session ended their 2021 regular session on May 17th without a budget. The Governor and Legislative leaders instead released a budget framework with a target of $52 billion for the next biennium. Lawmakers worked for four weeks on final details largely outside of the public eye until they convened a special session on June 14th. All spending bills were passed and signed into law by June 31st.
The need for a special session was largely due to a late infusion of funding from the American Rescue Plan Act (ARPA) that was signed into law by President Biden on March 11, 2021. Roughly $8.5 billion was allocated in the bill to the State of Minnesota for various programs.
A final budget of $52 billion was signed into law on June 31, 2021. This biennial budget is an increase of approximately $1.3 billion over the previous budget – much of that one-time funding from ARPA. Included in the bill are direct tax cuts of $644 million to people who lost jobs and employers who kept people working during the pandemic.
Paycheck Protection Program
The final tax bill included full conformity to federal tax law with regards to the Paycheck Protection Program at a cost of roughly $375 million in fiscal year 2022. Businesses and organizations that received PPP loans will not be subject to either federal or state income tax on the amount of the loan received.
Today, Greater Mankato Growth sent a letter to Governor Tim Walz providing statistics to create awareness of talent challenges facing our region.
The Department of Employment and Economic Development has taken great strides to ensure that individuals receiving unemployment insurance are aware of the job opportunities that exist across the state.
We asked that the State implement measures to supplement the work that is being done surrounding awareness of job availability by creating enforcement measures, while offering flexibility for those still impacted by COVID-19 considerations. You can read the full letter here.
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Governor Walz announced a three-step process that will lead to an end of COVID-19 restrictions in the May 6 address. Restrictions will be loosened at noon on May 7, 2021, all capacity restrictions will end by May 28, and the masking requirement will be removed when 70% of Minnesotans ages 16+ are vaccinated or by July 1, whichever comes first. Full text of Executive Order 21-21 can be found here.
The changes announced in the May 6 address are as follows:
STEP ONE: Noon on Friday, May 7
Outdoor occupancy restrictions for restaurants, bars, and other places of public accommodation offering food, beverages, or tobacco products will be completely removed.
Indoor capacity limit per table will increase from six to ten individuals per table.
The closing curfew of 11:00 pm will be completely removed.
Food and beverage businesses with sufficient indoor space to exceed the 250 person capacity restriction will be able to exceed that as long as they remain within 75% capacity and can follow Stay Safe Minnesota Guidance.
Indoor public pool capacity will be set at 50%, not to exceed 250 people; however, spaces with sufficient capacity can exceed 250 people if they can follow Stay Safe Minnesota Guidance and stay within 50% capacity guidelines. All restrictions on outdoor pool areas will be removed.
For fitness, recreation, indoor sports facilities, and other similar facilities, the 50% capacity guidelines will continue, but only for indoor spaces within the facility. Maximum indoor capacity of 1500 for spaces capable of following Stay Safe Minnesota guidelines will be removed. Mask restrictions for these facilities will only be required indoors.
Indoor social gatherings will increase from 15 to 50 people.
Total indoor capacity for entertainment venues will be removed if they can safely exceed 250 people while remaining under 50% capacity and follow Stay Safe Minnesota guidelines. All outdoor capacity for these spaces will be removed.
Greater Mankato Growth participated in the U.S. Small Business Administration webinar on April 28th to learn more about the Restaurant Revitalization Fund and its application process. In short, the Restaurant Revitalization Fund will allow restaurants, bars, and other similar entities (a full list of eligible entities can be found here) to receive a grant that covers all lost revenue in 2020 compared to 2019. Please note special rules apply to entities that opened after January 1, 2019 or that still haven’t opened. This blog post will first share how to apply and will then share additional details on the specifics regarding the program.
The SBA will open up the opportunity to create an account at restaurants.sba.gov this Friday at 8 a.m. Central Time by choosing “Register to start your application.” Applicants are strongly encouraged by the SBA to create their accounts on Friday and not to wait until Monday. The opportunity to submit an application will open on Monday, May 3, at 11 a.m. Central Time. The SBA holds that the website is designed to support expected traffic with all restaurants submitting applications at that time. Applicants are strongly encouraged by the SBA to submit their application at the first possible minute. Additionally, applicants are encouraged to review all documentation at the SBA’s webpage on the fund. Please note that a recording of the SBA webinar can be viewed at the end of the “How to Apply” section of this blog.
The first step applicants should take is registering (creating a login account) at restaurants.sba.gov on Friday at 8 a.m. Applicants that plan to submit their application via the point of sale (POS) providers Square or Toast do not need to register. Entities utilizing Clover or Aloha should still register. The only requirement when registering on Friday is that applicants must have a mobile phone as a text will be utilized to verify the login.
It’s key for applicants to to begin preparations ahead of the when the application process opens Monday May 3, at 11 a.m. Applicants can prepare by following instructions below, reading the program guide, having all documentation prepared in labeled PDFs, and completing the sample application. Applicants that have conducted this pre-work are expected to complete the application in roughly 25 minutes. The SBA encourages that restaurants that seek to apply should be prepared to submit their application in the first possible minute after the portal opens. The website currently handles more traffic than is expected on Monday and is not expected to crash.
This week, President Biden signed the $1.9 Trillion American Rescue Plan. This is the third major stimulus package passed by the Federal Government in response to the COVID-19 pandemic. While there has been much discussion about relief to individuals including a new round of $1400 stimulus checks & unemployment benefit extensions as well as increased funding for vaccine purchase & distribution, this blog post will focus on the relief programs impacting businesses including the creation of the Restaurant Revitalization Fund, expansions and changes to the PPP & EIDL loan programs, and expansions and changes to the Employee Retention Tax Credit Program. The full text of the law can be found here.
Restaurant Revitalization Fund
Edit: An updated post specific to the Restaurant Revitalization Fund & how to prepare for an application can be found here.
Restaurants, bars, & other elligible entities will be elligible to apply for a grant equal to 2019 revenue minus 2020 revenue minus PPP loans already received.
Businesses that opened in 2019 will determine their amount of grant eligibility by multiplying their average monthly gross revenue in 2019 by 12.
Businesses that opened in 2020 that experienced operating losses will be elligible for a grant under a similar formula that covers losses incurred.
Businesses that have not yet opened but that have already incurred payroll costs will be elligible for a grant that covers those expenses.
*Note: Formulas for determining grant eligibility for all three above categories may be modified via SBA guidance.