1.1 	A bill for an act
1.2 	relating to taxation; modifying certain requirements for the Tax Expenditure Review 
1.3 	Commission; repealing legislative requirements for new or renewed tax 
1.4 	expenditures;amending Minnesota Statutes 2022, sections 3.8855, subdivisions 
1.5 	5, 8; 270C.11, subdivision 4; Minnesota Statutes 2023 Supplement, section 3.8855, 
1.6 	subdivisions 4, 7; repealing Minnesota Statutes 2022, section 3.192.
1.7 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.8 	Section 1. Minnesota Statutes 2023 Supplement, section 3.8855, subdivision 4, is amended 
1.9 	to read:
1.10 		Subd. 4.Duties. (a) For not more than three years after the commission is established, 
1.11 	the commission must complete an initial review of the state's tax expenditures. The initial 
1.12 	review must identify the purpose of each of the state's tax expenditures, if none was identified 
1.13 	in the enacting legislation in accordance with section 3.192. The commission may also 
1.14 	identify metrics for evaluating the effectiveness of an expenditure.
1.15 	(b) The commission must review and evaluate Minnesota's tax expenditures on a regular, 
1.16 	rotating basis. The commission must establish a review schedule that ensures each tax 
1.17 	expenditure will be reviewed by the commission at least once every ten years. The 
1.18 	commission may review expenditures affecting similar constituencies or policy areas in the 
1.19 	same year, but the commission must review a subset of the tax expenditures within each 
1.20 	tax type each year. To the extent possible, the commission must review a similar number 
1.21 	of tax expenditures within each tax type each year. The commission may decide not to 
1.22 	review a tax expenditure that is adopted by reference to federal law.
2.1 	(c) Before December February 1 of the year a tax expenditure is included in a commission 
2.2 	report, the commission must hold a public hearing on the expenditure, including but not 
2.3 	limited to a presentation of the review components in subdivision 5.

2.4 	EFFECTIVE DATE. This section is effective the day following final enactment.

2.5 	Sec. 2. Minnesota Statutes 2022, section 3.8855, subdivision 5, is amended to read:
2.6 		Subd. 5.Components of review. (a) When reviewing a tax expenditure, the commission 
2.7 	must at a minimum:
2.8 	(1) provide an estimate of the annual revenue lost as a result of the expenditure;
2.9 	(2) identify the purpose of the tax expenditure if none was identified in the enacting 
2.10 	legislation in accordance with section 3.192;
2.11 	(3) estimate the measurable impacts and efficiency of the tax expenditure in 
2.12 	accomplishing the purpose of the expenditure;
2.13 	(4) compare the effectiveness of the tax expenditure and a direct expenditure with the 
2.14 	same purpose;
2.15 	(5) identify potential modifications to the tax expenditure to increase its efficiency or 
2.16 	effectiveness;
2.17 	(6) estimate the amount by which the tax rate for the relevant tax could be reduced if 
2.18 	the revenue lost due to the tax expenditure were applied to a rate reduction;
2.19 	(7) if the tax expenditure is a significant tax expenditure, estimate the incidence of the 
2.20 	tax expenditure and the effect of the expenditure on the incidence of the state's tax system;
2.21 	(8) consider the cumulative fiscal impacts of other state and federal taxes providing 
2.22 	benefits to taxpayers for similar activities; and
2.23 	(9) recommend whether the expenditure be continued, repealed, or modified.
2.24 	(b) The commission may omit a component in paragraph (a) if the commission determines 
2.25 	it is not feasible due to the lack of available data, third-party research, staff resources, or 
2.26 	lack of a majority support for a recommendation.

2.27 	EFFECTIVE DATE. This section is effective the day following final enactment.

3.1 	Sec. 3. Minnesota Statutes 2023 Supplement, section 3.8855, subdivision 7, is amended 
3.2 	to read:
3.3 		Subd. 7.Report to legislature. (a) By December February 15 of each year, the 
3.4 	commission must submit a written report to the legislative committees with jurisdiction 
3.5 	over tax policy. The report must detail the results of the commission's review of tax 
3.6 	expenditures for the year, including the review components detailed in subdivision 5.
3.7 	(b) Notwithstanding paragraph (a), during the period of initial review under subdivision 
3.8 	4, the report may be limited to the purpose statements and metrics for evaluating the 
3.9 	effectiveness of expenditures, as identified by the commission. The report may also include 
3.10 	relevant publicly available data on an expenditure.
3.11 	(c) The report may include any additional information the commission deems relevant 
3.12 	to the review of an expenditure.
3.13 	(d) The legislative committees with jurisdiction over tax policy must hold a public 
3.14 	hearing on the report during the regular legislative session in the year following the year in 
3.15 	which the report was submitted.

3.16 	EFFECTIVE DATE. This section is effective the day following final enactment.

3.17 	Sec. 4. Minnesota Statutes 2022, section 3.8855, subdivision 8, is amended to read:
3.18 		Subd. 8.Terms; vacancies; meetings. (a) Members of the commission serve a term 
3.19 	beginning upon appointment and ending at the beginning of the regular legislative session 
3.20 	in the next odd-numbered year. The appropriate appointing authority must fill a vacancy 
3.21 	for a seat of a current legislator for the remainder of the unexpired term. Members may be 
3.22 	removed or replaced at the pleasure of the appointing authority.
3.23 	(b) If a commission member ceases to be a member of the legislative body from which 
3.24 	the member was appointed, the member vacates membership on the commission.
3.25 	(c) The commissioner of revenue must convene the first meeting of each year required 
3.26 	under subdivision 4, paragraph (c).

3.27 	EFFECTIVE DATE. This section is effective the day following final enactment.

3.28 	Sec. 5. Minnesota Statutes 2022, section 270C.11, subdivision 4, is amended to read:
3.29 		Subd. 4.Contents. (a) The report shall detail for each tax expenditure item:
3.30 	(1) the amount of tax revenue forgone;
4.1 	(2) a citation of the statutory or other legal authority for the expenditure;
4.2 	(3) the year in which it was enacted or the tax year in which it became effective;
4.3 	(4) the purpose of the expenditure, as identified in the enacting legislation in accordance 
4.4 	with section 3.192 or by the Tax Expenditure Review Commission;
4.5 	(5) the incidence of the expenditure, if it is a significant sales or income tax expenditure; 
4.6 	and
4.7 	(6) the revenue-neutral amount by which the relevant tax rate could be reduced if the 
4.8 	expenditure were repealed.
4.9 	(b) The report may contain additional information which the commissioner considers 
4.10 	relevant to the legislature's consideration and review of individual tax expenditure items. 
4.11 	This may include but is not limited to analysis of whether the expenditure is achieving that 
4.12 	objective and the effect of the expenditure on the administration of the tax system.

4.13 	EFFECTIVE DATE. This section is effective the day following final enactment.

4.14 	Sec. 6. REPEALER.
 4.15 	Minnesota Statutes 2022, section 3.192, is repealed.

4.16 	EFFECTIVE DATE. This section is effective the day following final enactment.

APPENDIX 

Repealed Minnesota Statutes: 24-05788 

3.192 REQUIREMENTS FOR NEW OR RENEWED TAX EXPENDITURES.
(a) Any bill that creates, renews, or continues a tax expenditure must include a statement of intent that clearly provides the purpose of the tax expenditure and a standard or goal against which its effectiveness may be measured. 

(b) For purposes of this section, "tax expenditure" has the meaning given in section 270C.11, subdivision 6. 

(c) Any bill that creates a new tax expenditure or continues an expiring tax expenditure must include an expiration date for the tax expenditure that is no more than eight years from the day the provision takes effect.