The results of the election in Minnesota were not what was widely expected. The conventional wisdom suggested Republicans would have a big night. In a midterm election with a lackluster Presidential approval rating, rising inflation, and prolonged economic uncertainty, it would seem that history would once again repeat itself. That didn’t happen. Instead, Democrats (DFL) carried voters focused on issues such as reproductive rights, election integrity/democracy, and public safety, especially in and around the Twin Cities suburbs. The graphic below shows this exactly (Graphic 1).
Polls showed a very tight race for Governor and Republican candidates for other statewide offices leading slightly. In the end, Governor Walz won by more than eight points, enough to “carry” the other statewide offices to victory for a clean Democratic sweep of all constitutional offices – Governor/Lieutenant Governor, Attorney General, Secretary of State, and State Auditor.
The 2022 legislative session could be characterized in one word: disappointing. There was so much opportunity to do good work and help Minnesotans. Very little of that opportunity was seized. This may not be entirely surprising, given Minnesota is one of only two states with divided control of the legislature (Republicans have the majority in the Senate, and the Democrats have the majority in the House). But Minnesota has a tradition of compromise and it is also something that is structurally required by our state’s constitution: the state must pass a balanced budget every two years, bonding bills (borrowing money) requires a super majority of both the House and the Senate, and, of course, all legislation must be signed by the Governor. There have been hiccups along the way, but Minnesotans expect elected officials to work together and get their work done, even if a little late.
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.
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.
In general, the order calls for the following measures:
Limits all social gatherings (indoor or outdoor) to 10 people and all social gatherings involving members of more than 3 households (regardless of the size of the gathering).
Bars, restaurants, food courts, cafes, coffeehouses, taverns, brewery taprooms, wineries, golf courses and clubs, dining clubs, tobacco shops, and other places of public accommodation offering food, beverages, tobacco products for on-premises consumption, are required to close by 10 p.m. every day, starting Friday, November 13. Delivery service, or curbside pick up options already in place for certain industries in this group is still allowed.
Venues that host celebrations, receptions, and gatherings will be capped at 50 people, effective November 27 at 10 p.m.
No bar seating service.
This figure is reduced to 25 people on December 11at 10 p.m.
The Governor also announced a proposal for $10 million in additional funding to businesses that have already applied for relief through the Small Business Relief Grant Program. This program provides $10,000 grants to impacted businesses.
Today Governor Walz announced a new EO-20-81-Final implementing a statewide requirement to wear facial coverings when inside indoor businesses and indoor public settings. This requirement will be effective beginning July 25. You can find general information and FAQs on the mask mandate here. In addition, below are FAQs provided by the MN Department of Employment and Economic Development relating specifically to business questions. Continue reading “Governor Walz Announces Statewide Indoor Mask Mandate”→
The Small Business Administration’s Economic Injury Disaster Loan Program (EIDL) is now reopened for all eligible business to apply for the $10,000 grant advance and loan. The program was previously closed for new applications for a period of time due to a funding lapse. Businesses can get more information and apply for this program here.