Dispute over taxes complicates state COVID-19 response

Legislators meet at the Capitol.
Social distancing and substitute meeting areas for lawmakers was in effect in the Minnesota House as legislators met on April 7, 2020, in St. Paul to pass a bill to assure that first responders and medical workers will qualify for workers compensation if they get sick with COVID-19 and won't have to prove they contracted the disease on the job.
Jim Mone | AP Photo file

House and Senate leaders were largely in lockstep during the early stages of the coronavirus pandemic crisis. They quickly passed a series of bills that shaped the state's initial response.

Now, they are on different paths.

Senate Republicans say the key to economic recovery is a package of tax breaks and payment delays that they passed this week to help small businesses. 

“We looked at the tax bill to be COVID-19-related,” said Senate Majority Leader Paul Gazelka, R-East Gull Lake. “COVID-19-related in the sense of — ‘how do we get the economy back up and running once we get through this?’”

House Democrats are working instead on ways to address specific needs.

Speaker Melissa Hortman, of Brooklyn Park, prefers that approach to across the board tax breaks.

“We know that Minnesotans want a good life for themselves, but we know they also want this for their neighbors,” she said. “Right now, what that means for families is a focus on their economic security.”

DFL House Majority Leader Ryan Winkler, of Golden Valley, said the plan is a way to fight for vulnerable Minnesotans.

“That hasn’t changed during the pandemic,” Winkler said. “In fact, COVID-19 has underlined just how insecure many Minnesotans are, and how much work we have to do to ensure the health and economic well being of Minnesotans.”

The House DFL economic relief package would boost emergency housing assistance, small business loans and rural broadband. Hourly school employees, low-income families and personal care assistants would also benefit.

The plan, which totals about $200 million, would rely in part on the state’s share of recent federal funding related to COVID-19. 

The tax bill passed by the Senate Thursday has an estimated cost of $327 million. The bill would delay statewide business property tax payments by 60 days. Other business tax payments, including accelerated sales tax, would also be delayed.

The bill also provides some tax benefits for families with school-age children, farmers, people who make charitable donations and low property wealth school districts.

Taxes committee chair Sen. Roger Chamberlain, R-Lino Lakes, said helping business is the key.

“Without employers we don’t have employees and we don’t have a functioning budget in this state,” Chamberlain said. “This modest, focused approach is going to keep us in the game. It will reduce the hardship and the pain and the suffering for the people of Minnesota.”

Democrats criticized the bill. They argued the loss of revenue would add to the state’s financial problem. The state is likely facing a big budget deficit due to business closures and high unemployment.

Lawmakers will get a better picture of the looming budget challenges next week, when Minnesota Management and Budget releases some updated projections on state revenue.

One House Republican is questioning both the House and Senate approaches. Republican Rep. Pat Garofalo of Farmington said that the Legislature should not be talking about new spending or tax cuts that will be difficult to pay for.

“There is a pre-COVID-19 mindset and a post-COVID-19 mindset,” he said. “And it’s very important that all of us, while we fulfill our roles and responsibilities, that we understand that we’re in a different world right now.”

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