HF 2811

as introduced - 91st Legislature (2019 - 2020) Posted on 04/04/2019 02:16pm

A bill for an act
relating to taxation; creating a Tax Expenditure Advisory Commission; providing
for review and sunset of tax expenditures; proposing coding for new law as
Minnesota Statutes, chapter 290D.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [290D.01] TITLE AND PURPOSE.
new text end

new text begin Subdivision 1. new text end

new text begin Citation. new text end

new text begin This chapter shall be known and cited as the "Tax Expenditure
Review Act."
new text end

new text begin Subd. 2. new text end

new text begin Purpose. new text end

new text begin State governmental policy objectives may be achieved both by direct
expenditure of governmental funds and by granting special and selective tax preferences or
tax expenditures. Both direct expenditures of governmental funds and tax expenditures have
an effect on the ability of state and local governments to reduce general tax rates or to
increase expenditures; therefore, tax expenditures should be subject to regular review and
reauthorization in a manner similar to direct expenditures.
new text end

Sec. 2.

new text begin [290D.02] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Applicability. new text end

new text begin For purposes of this chapter, the following terms have the
meanings given in this section unless the context clearly indicates a different meaning.
new text end

new text begin Subd. 2. new text end

new text begin Commission. new text end

new text begin "Commission" means the Tax Expenditure Advisory Commission.
new text end

new text begin Subd. 3. new text end

new text begin Commissioner. new text end

new text begin "Commissioner" means the commissioner of revenue or a
person to whom the commissioner has delegated functions.
new text end

new text begin Subd. 4. new text end

new text begin Tax expenditure. new text end

new text begin "Tax expenditure" has the meaning given in section 270C.11,
subdivision 6.
new text end

new text begin Subd. 5. new text end

new text begin Tax. new text end

new text begin "Tax" has the meaning given in section 270C.11, subdivision 6.
new text end

Sec. 3.

new text begin [290D.03] TAX EXPENDITURE ADVISORY COMMISSION.
new text end

new text begin Subdivision 1. new text end

new text begin Membership. new text end

new text begin The Tax Expenditure Advisory Commission consists of
12 members appointed as follows:
new text end

new text begin (1) the chairs of the committees in the senate and the house of representatives with
jurisdiction over taxes;
new text end

new text begin (2) two senators, one from the majority caucus and one from the largest minority caucus,
appointed according to the rules of the senate;
new text end

new text begin (3) two members of the house of representatives, one from the majority caucus and one
from the largest minority caucus, appointed by the speaker; and
new text end

new text begin (4) six public members appointed by the governor, including at least one who must be
a citizen representing working families, one must be a representative of a nonprofit
organization, one must be a person with experience in economic or business development,
and the remainder shall be individuals who have a basic understanding of state tax policy,
government operations, and public services.
new text end

new text begin Subd. 2. new text end

new text begin Terms. new text end

new text begin Legislative members serve two-year terms expiring September 1 of
each odd-numbered year. Public members serve two-year terms expiring September 1 of
each odd-numbered year. Members may be removed and replaced at the pleasure of the
appointing authority.
new text end

new text begin Subd. 3. new text end

new text begin Limits. new text end

new text begin Members who are not chairs of a house of representatives or senate
committee with jurisdiction over taxes are subject to the following restrictions:
new text end

new text begin (1) after an individual serves four years on the commission, the individual is not eligible
for appointment to another term or part of a term;
new text end

new text begin (2) a legislative member who serves a full term may not be appointed to an immediately
succeeding term; and
new text end

new text begin (3) a public member may not serve consecutive terms, and, for purposes of this
prohibition, a member is considered to have served a term only if the member has served
more than one-half of the term.
new text end

new text begin Subd. 4. new text end

new text begin Appointments. new text end

new text begin The appointing authorities in subdivision 1 shall make
appointments before September 1 of each odd-numbered year.
new text end

new text begin Subd. 5. new text end

new text begin Legislative members. new text end

new text begin If a legislative member ceases to be a member of the
legislative body from which the member was appointed, the member vacates membership
on the commission. If a legislative member who is a chair of a house of representatives or
senate committee with jurisdiction over taxes ceases to be a chair of that committee, the
member vacates membership on the commission.
new text end

new text begin Subd. 6. new text end

new text begin Vacancies. new text end

new text begin If a vacancy occurs, the appointing authority shall appoint a person
to serve for the remainder of the unexpired term in the same manner as the original
appointment.
new text end

new text begin Subd. 7. new text end

new text begin Officers. new text end

new text begin The commission shall have a chair and vice-chair as presiding officers.
The chair and vice-chair must alternate every two years between the two membership groups:
legislators and public members. The chair and vice-chair may not be from the same
membership group.
new text end

new text begin Subd. 8. new text end

new text begin Quorum; voting. new text end

new text begin Seven members of the commission constitute a quorum. A
final action or recommendation may not be made unless approved by a recorded vote of at
least seven members. All other actions by the commission shall be decided by a majority
of the members present and voting.
new text end

new text begin Subd. 9. new text end

new text begin Compensation. new text end

new text begin Each public member of the commission is entitled to
reimbursement for actual and necessary expenses incurred in performing commission duties
as provided in section 15.059, subdivision 3. Each legislative member is entitled to
reimbursement from the appropriate fund of the member's respective legislative body. Each
public member is entitled to reimbursement from funds appropriated to the commission.
new text end

Sec. 4.

new text begin [290D.04] STAFF.
new text end

new text begin The Legislative Coordinating Commission shall employ an executive director for the
commission and may employ other staff necessary to carry out this chapter. The Legislative
Coordinating Commission shall provide administrative support services to the commission.
new text end

Sec. 5.

new text begin [290D.05] REPORT TO COMMISSION.
new text end

new text begin In addition to the information provided in each even-numbered year under section
270C.11, before September 1 of each year prior to the first year of a regular legislative
session, the commissioner shall provide a report with the following information for each
tax expenditure scheduled to expire during the following biennium:
new text end

new text begin (1) the positive and negative impacts of the expenditure on the taxpayer or taxpayers
before or after the tax expenditure;
new text end

new text begin (2) the impact of the tax expenditure on the tax incidence in the state;
new text end

new text begin (3) the economic development impacts of the preference, including the impact on jobs,
wages, and benefits;
new text end

new text begin (4) the cumulative fiscal impacts of other state and federal taxes providing benefits to
taxpayers for similar activities;
new text end

new text begin (5) the measurable impacts of the tax expenditure in meeting the goal of the expenditure;
new text end

new text begin (6) a comparison of the tax expenditure with tax treatment of taxpayers engaged in
similar activities in neighboring states; and
new text end

new text begin (7) consideration of the probable impact on overall uniformity and fairness of the tax
code.
new text end

Sec. 6.

new text begin [290D.06] COMMISSION DUTIES.
new text end

new text begin Subdivision 1. new text end

new text begin Review of tax expenditures. new text end

new text begin Before February 1 of the first year of a
regularly scheduled legislative session, the commission shall (1) review information from
the most recent tax expenditure budget report under section 270C.11 and the additional
report under section 290D.05; (2) take public testimony; and (3) vote on recommendations
for continuation or repeal of each tax expenditure subject to expire in that legislative session.
new text end

new text begin Subd. 2. new text end

new text begin Public hearings. new text end

new text begin Before January 1 of the year a tax expenditure is included in
a commission report, the commission shall conduct public hearings concerning the impact
of the tax expenditure on (1) affected taxpayers; (2) the state economy; (3) its performance
in meeting its purpose; (4) its impact on the tax incidence in the state; and (5) any other
information that the commission deems relevant.
new text end

new text begin Subd. 3. new text end

new text begin Commission report; recommendations. new text end

new text begin By February 1 of the first year of
every regular legislative session, the commission shall present to the chairs of the senate
and house of representatives committees with jurisdiction over taxes, a report on the tax
expenditures reviewed. In the report the commission shall report its recommendations for
each tax expenditure, its findings on the demonstrated ability of each tax expenditure to
meet its stated goal, the impact on the general fund budget of retaining or abolishing the
tax expenditure, and any other information that the commission deems relevant to explain
its recommendation for each expenditure.
new text end

Sec. 7.

new text begin [290D.07] REQUIREMENT FOR REVIEW AND PERIODIC
REENACTMENT OF ALL EXISTING AND NEW TAX EXPENDITURES.
new text end

new text begin Subdivision 1. new text end

new text begin Expiration of existing tax expenditures. new text end

new text begin The tax expenditures in statute
as of July 1, 2019, are subject to sunset review and expiration on the following schedule:
new text end

new text begin (1) all tax expenditures in chapters 168, 297A, and 297B, on December 31, 2021, and
every tenth year thereafter;
new text end

new text begin (2) all tax expenditures in chapters 295, 296A, 297D, 297E, 297F, 297G, 297H, and
297I, on December 31, 2023, and every tenth year thereafter;
new text end

new text begin (3) all tax expenditures in chapters 290 and 298, on December 31, 2025, and every tenth
year thereafter;
new text end

new text begin (4) all tax expenditures in chapters 287, 290A, 290B, and 291, on December 31, 2027,
and every tenth year thereafter; and
new text end

new text begin (5) all tax expenditures in chapters 88, 270, 272, 273, 290C, 469, and 473H, on December
31, 2029, and every tenth year thereafter.
new text end

new text begin Subd. 2. new text end

new text begin New and renewed tax expenditures. new text end

new text begin Any legislation that creates a tax
expenditure effective after July 1, 2019, or renews or continues a tax expenditure must
include the following provisions:
new text end

new text begin (1) an intent statement that clearly provides the purposes for the tax expenditure and a
standard or goal against which its effectiveness can be measured; and
new text end

new text begin (2) an expiration date for the tax expenditure that may not exceed 12 years from the day
the provision takes effect and must correspond to the expiration date for other tax
expenditures in the same tax area, as listed in subdivision 1.
new text end

Sec. 8.

new text begin [290D.08] MONITORING OF RECOMMENDATIONS.
new text end

new text begin During each legislative session, the staff of the commission shall monitor legislation
affecting tax expenditures that have undergone sunset review and shall periodically report
to the members of the commission on proposed changes which would modify prior
recommendations of the commission.
new text end

Sec. 9.

new text begin [290D.09] GIFTS AND GRANTS.
new text end

new text begin The commission may accept gifts, grants, and donations from any organization described
in section 501(c)(3) of the Internal Revenue Code for the purpose of funding any activity
under this chapter. All gifts, grants, and donations must be accepted in an open meeting by
a majority of the voting members of the commission and reported in the public record of
the commission with the name of the donor and purpose of the gift, grant, or donation.
Money received under this section is appropriated to the commission.
new text end