Minnesota Legislature
HF 5190
as introduced - 93rd Legislature (2023 - 2024) Posted on 04/02/2024 11:52am
Current Version - as introduced
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A bill for an act
relating to taxation; modifying certain requirements for the Tax Expenditure Review
Commission; repealing legislative requirements for new or renewed tax
expenditures; amending Minnesota Statutes 2022, sections 3.8855, subdivisions
5, 8; 270C.11, subdivision 4; Minnesota Statutes 2023 Supplement, section 3.8855,
subdivisions 4, 7; repealing Minnesota Statutes 2022, section 3.192.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2023 Supplement, section 3.8855, subdivision 4, is amended
to read:
Subd. 4.
Duties.
(a) For not more than three years after the commission is established,
the commission must complete an initial review of the state's tax expenditures. The initial
review must identify the purpose of each of the state's tax expendituresdeleted text begin , if none was identified
in the enacting legislation in accordance with section 3.192deleted text end . The commission may also
identify metrics for evaluating the effectiveness of an expenditure.
(b) The commission must review and evaluate Minnesota's tax expenditures on a regular,
rotating basis. The commission must establish a review schedule that ensures each tax
expenditure will be reviewed by the commission at least once every ten years. The
commission may review expenditures affecting similar constituencies or policy areas in the
same year, but the commission must review a subset of the tax expenditures within each
tax type each year. To the extent possible, the commission must review a similar number
of tax expenditures within each tax type each year. The commission may decide not to
review a tax expenditure that is adopted by reference to federal law.
(c) Before deleted text begin Decemberdeleted text end new text begin Februarynew text end 1 of the year a tax expenditure is included in a commission
report, the commission must hold a public hearing on the expenditure, including but not
limited to a presentation of the review components in subdivision 5.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective the day following final enactment.
new text end
Sec. 2.
Minnesota Statutes 2022, section 3.8855, subdivision 5, is amended to read:
Subd. 5.
Components of review.
(a) When reviewing a tax expenditure, the commission
must at a minimum:
(1) provide an estimate of the annual revenue lost as a result of the expenditure;
(2) identify the purpose of the tax expenditure deleted text begin if none was identified in the enacting
legislation in accordance with section 3.192deleted text end ;
(3) estimate the measurable impacts and efficiency of the tax expenditure in
accomplishing the purpose of the expenditure;
(4) compare the effectiveness of the tax expenditure and a direct expenditure with the
same purpose;
(5) identify potential modifications to the tax expenditure to increase its efficiency or
effectiveness;
(6) estimate the amount by which the tax rate for the relevant tax could be reduced if
the revenue lost due to the tax expenditure were applied to a rate reduction;
(7) if the tax expenditure is a significant tax expenditure, estimate the incidence of the
tax expenditure and the effect of the expenditure on the incidence of the state's tax system;
(8) consider the cumulative fiscal impacts of other state and federal taxes providing
benefits to taxpayers for similar activities; and
(9) recommend whether the expenditure be continued, repealed, or modified.
(b) The commission may omit a component in paragraph (a) if the commission determines
it is not feasible due to the lack of available data, third-party research, staff resources, or
lack of a majority support for a recommendation.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective the day following final enactment.
new text end
Sec. 3.
Minnesota Statutes 2023 Supplement, section 3.8855, subdivision 7, is amended
to read:
Subd. 7.
Report to legislature.
(a) By deleted text begin Decemberdeleted text end new text begin Februarynew text end 15 of each year, the
commission must submit a written report to the legislative committees with jurisdiction
over tax policy. The report must detail the results of the commission's review of tax
expenditures for the year, including the review components detailed in subdivision 5.
(b) Notwithstanding paragraph (a), during the period of initial review under subdivision
4, the report may be limited to the purpose statements and metrics for evaluating the
effectiveness of expenditures, as identified by the commission. The report may also include
relevant publicly available data on an expenditure.
(c) The report may include any additional information the commission deems relevant
to the review of an expenditure.
(d) The legislative committees with jurisdiction over tax policy must hold a public
hearing on the report during the regular legislative session in the year following the year in
which the report was submitted.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective the day following final enactment.
new text end
Sec. 4.
Minnesota Statutes 2022, section 3.8855, subdivision 8, is amended to read:
Subd. 8.
Terms; vacanciesnew text begin ; meetingsnew text end .
(a) Members of the commission serve a term
beginning upon appointment and ending at the beginning of the regular legislative session
in the next odd-numbered year. The appropriate appointing authority must fill a vacancy
for a seat of a current legislator for the remainder of the unexpired term. Members may be
removed or replaced at the pleasure of the appointing authority.
(b) If a commission member ceases to be a member of the legislative body from which
the member was appointed, the member vacates membership on the commission.
new text begin
(c) The commissioner of revenue must convene the first meeting of each year required
under subdivision 4, paragraph (c).
new text end
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective the day following final enactment.
new text end
Sec. 5.
Minnesota Statutes 2022, section 270C.11, subdivision 4, is amended to read:
Subd. 4.
Contents.
(a) The report shall detail for each tax expenditure item:
(1) the amount of tax revenue forgone;
(2) a citation of the statutory or other legal authority for the expenditure;
(3) the year in which it was enacted or the tax year in which it became effective;
(4) the purpose of the expenditure, as identified deleted text begin in the enacting legislation in accordance
with section 3.192 ordeleted text end by the Tax Expenditure Review Commission;
(5) the incidence of the expenditure, if it is a significant sales or income tax expenditure;
and
(6) the revenue-neutral amount by which the relevant tax rate could be reduced if the
expenditure were repealed.
(b) The report may contain additional information which the commissioner considers
relevant to the legislature's consideration and review of individual tax expenditure items.
This may include but is not limited to analysis of whether the expenditure is achieving that
objective and the effect of the expenditure on the administration of the tax system.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective the day following final enactment.
new text end
Sec. 6. new text begin REPEALER.
new text end
new text begin
Minnesota Statutes 2022, section 3.192,
new text end
new text begin
is repealed.
new text end
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective the day following final enactment.
new text end
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.