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Growing fractures around tax and budget plans will test the Democratic Farmer Labor Party’s so-far unified march through the legislative session where they control the agenda and the fate of a massive budget surplus.

DFL leaders are set to unveil details of their tax plans this week. And they’ve begun passing chunks of a roughly $72 billion budget framework through the Legislature.

Along the way, Democrats have pitched tax and fee increases aimed at repairing roads, building affordable housing and boosting natural resource programs.

Supporters say the state needs to bring in ongoing funds for those designated purposes and others but with a $17.5 billion budget surplus some DFLers have broken with their colleagues on the best path forward. 

Because much of that surplus is one-time money, they’ve called for increasing revenues through new taxes and fees to fund ongoing needs like road maintenance, schools and child care in the future.

“We have tremendous needs that we have to meet as a state, whether it's transportation or housing, or the other pieces of our budget that we are needing to fund. And we don't want to set up a situation where we're just fixing the problem for two years,” said House Majority Leader Jamie Long, DFL-Minneapolis. 

“So that will require some additional revenue,” he continued. “And a lot of it will be dedicated so that people know what they're getting.”

Lawmakers have weighed billions of dollars in tax and fee increases so far as part of various omnibus budget bills. And specifics around additional tax hikes or changes are expected to come to light this week as tax committees unveil their bills.

The proposals released so far hit an almost immediate wall with Republicans, who’ve said they’re unnecessary in a moment when the state is sitting on a surplus. And in private and public comments, DFLers have indicated that not all proposed increases will make it through the Capitol this year.

Senate Transportation Chair Scott Dibble, DFL-Minneapolis, this week said he would pull a provision from his omnibus bill that would set new fees for package and food deliveries, as well as Uber and Lyft rides. The funds were set to be earmarked for road repairs.

“I would say that would be a very tall order to get this part through the Senate for the delivery fee at this point,” he said, noting he supports additional ongoing funding for transportation. 

Dibble’s counterpart in the House, Rep. Frank Hornstein, DFL-Minneapolis, said he would continue pressing for the additional fees. He, and others, said the needs on Minnesota’s roadways are too great to avoid. Bills from both chambers also propose to raise the sales tax in the metro area to raise additional funds for transportation.

Gov. Tim Walz last week also expressed opposition to the fees and said the state should pursue other tax increases, including a payroll tax to fund a paid family and medical leave program and a capital gains tax.

At least one DFLer in the narrowly split Senate has also said that proposed fee hikes for fishing licenses and state park fees will also be a no-go in that chamber. 

Sen. Grant Hauschild, of Hermantown, has publicly voiced his opposition to the increases. The House is set to vote on an environment omnibus bill Monday that contains some of those hikes designated for parks, trails and other Department of Natural Resources programs.

“I'm always open to discussing those fees in the future. But right now, we can fund the fish hatcheries, the boat landings, the trails, the parks, all the great things that we have in my district without having to raise fees,” Hauschild said.

Dozens of local tax increases are also up for consideration at the Capitol as local governments aim to raise money to meet their needs. Answers about which of those are set to advance, as well as answers about how lawmakers could deliver tax rebates, credits or cuts, are also expected this week.

Tax increases for top income earners and those who benefit from selling stocks are also on the table.

Republican leaders at the Capitol said more of the state’s historic surplus should go back to taxpayers before they discuss any increases.

“We have over a $17 billion surplus that we came to this session with. We haven't gotten that back to Minnesotans in any way,” House Minority Leader Lisa Demuth, R-Cold Spring, said. “I think the message that it sends to Minnesota is that the government hasn't had enough, they still want to grow and they don’t seem to care where families are at.”

Demuth and other GOP lawmakers said they called on Minnesotans to voice their opposition to new fees and taxes.

“We'll see if I can turn around a $4 billion increase in fees and taxes,” Rep. Marion O’Neill, R-Maple Lake, said. “I certainly am going to keep talking about it. And you know who really does have the power? The people. So they need to let the leadership of the House and Senate know that.”

Long, the House majority leader, said that without the additional funding, the road and housing issues would worsen and cost more to solve down the line. And that would likely become the burden of local governments to resolve through higher property taxes, he said.

“So if we're able to do this at the state level, we can do it in a more progressive way, we can try to keep local property taxes down,” Long said. “I think once Minnesotans understand those pieces, then that's something that they will support.”

Lawmakers have a May 22 deadline to adjourn.

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2023 Minnesota legislative session

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Fee increases for food and package deliveries and fishing licenses have already split DFLers at the Capitol.

Growing fractures around tax and budget plans will test the Democratic Farmer Labor Party’s so-far unified march through the legislative session where they control the agenda and the fate of a massive budget surplus. MPR News reporter Dana Ferguson shares how fee increases for food and package deliveries and fishing licenses have already split DFLers at the Capitol.

Tax, fee hikes ruffle feathers as lawmakers piece together Minnesota’s budget

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