Senate Counsel, Research
and Fiscal Analysis
Minnesota Senate Bldg.
95 University Avenue W. Suite 3300
St. Paul, MN 55155
(651) 296-4791
Alexis C. Stangl
Director
   Senate   
State of Minnesota
 
 
 
 
 
S.F. No. 53 - Establishing a Tax Expenditure Advisory Commission (As Proposed to be Amended by a Delete-All Using the Committee Engrossment from the Tax Reform Division, Reported 2/13/13, and the A-6 Amendment)
 
Author: Senator Roger Reinert
 
Prepared By: Nora Pollock, Senate Counsel (651/297-8066)
Stephanie James, Senate Counsel (651/296-0103)
 
Date: February 26, 2013



 

Section 1 provides definitions of terms used in the Act.

Section 2 subdivision 1, establishes the Tax Expenditure Advisory Commission.  The commission consists of 12 members.

Legislative members:  four Senators and four members of the House of Representatives, including the chairs of the House and Senate committees with jurisdiction over taxes. 

Public members:  six public members appointed by the governor, including at least one who is a taxpayer eligible for the Minnesota working family tax credit, one who is an owner of a small business as defined elsewhere in statute, one who is an officer or board member of a Fortune 500 company, one who is an officer or board member of a nonprofit organization, one who is 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.

Subdivision 2 states that members serve two-year terms expiring September 1 of each odd-numbered year.

Subdivision 3 states that members (except for the chairs of the House and Senate committees with jurisdiction over taxes) are subject to term limits.  After an individual serves four years on the commission, that person may not be appointed to another full or partial term.  A legislative member who serves a full term may not be appointed to an immediately succeeding term.  A public member may not serve consecutive terms; a term is considered more than one-half of the term. 

Subdivision 4 requires that members be appointed by September 1 of each odd-numbered year. 

Subdivision 5 provides that if a legislative member ceases to be a member of the legislative body from which that member was appointed, the member’s seat on the commission is vacated.  If a member who is chair of the House or Senate committees with jurisdiction over taxes ceases to be chair of that committee, the member’s seat on the commission is vacated.

Subdivision 6 states that if a vacancy on the commission occurs, the appointing authority must appoint a person to serve the remainder of the term in the same manner as the original appointment. 

Subdivision 7 requires the commission to have a chair and vice-chair, who may not be from the same membership group (legislators and public members).  The chair and vice-chair positions must alternate every two years between legislators and public members. 

Subdivision 8 states that seven members of the commission constitute a quorum.  Final action or recommendation may not be made unless approved by a recorded vote of at least seven members; other actions are decided by a majority of the members present and voting.

Subdivision 9 entitles members to reimbursement of expenses incurred in performing commission duties.  Public members are reimbursed from funds appropriated to the commission.  Legislative members are entitled to reimbursement of expenses from their respective legislative bodies. 

Section 4 requires the commission to employ an executive director, who must employ staff to carry out necessary functions.

Section 5 requires the Commissioner of Revenue to provide a report before September 1 of each year prior to the first year of a regular legislative session with required information for each tax expenditure subject to review during the following biennium.  The report must contain:

1.  the positive and negative impacts of the tax expenditure on taxpayers before or after the expenditure;

2.  the impact of the tax expenditure on state tax incidence;

3.  economic development impacts of the tax preference, including the impact on wages, jobs, and benefits;

4.  the cumulative fiscal impacts of other state and federal taxes providing taxpayer benefits for similar activities;

5.  the measurable impacts of the tax expenditure in meeting the expenditure's goal;

6.  a comparison of the tax expenditure with similar expenditures in neighboring states; and

7. a consideration of the probable impact on overall fairness and uniformity of the tax code.

Section 6 states the duties of the commission. 

Subdivision 1 requires the commission, before February 1 of the first year of a regular legislative session, to review the tax expenditure budget report (required under current law) and the commissioner's report required under section 5, take public testimony, and vote on recommendations for continuation or repeal of the tax expenditures subject to review in that legislative session.      

Subdivision 2 requires the commission, before January 1 of the year a tax expenditure is included it a commission report, to conduct public hearings on the impact of the tax expenditure on:  1) its beneficiaries; 2) the state economy; 3) its performance in meeting its purpose; 4) its impact on tax incidence in the state; and 5) other relevant information.

Subdivision 3 requires the commission, before February 1 of the first year of a regular legislative session, to present a report on the tax expenditures reviewed: to the chairs of the House and Senate tax committees; the chairs of the House and Senate finance committees; the majority and minority leaders of the House and Senate; the Commissioner of Revenue; the Commissioner of Management and Budget; and the Governor.  The report must contain the commission’s 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; draft legislation to implement its recommendations; and any other information that the commission deems relevant to explain its recommendation for each expenditure.

Section 7, subdivision 1 sets the schedule for review of tax expenditures:

1.  tax expenditures in chapters 168 (vehicle registration), 297A (general sales and use taxes), and 297B (motor vehicle sales), on December 31, 2015, and every tenth year thereafter;

2.  tax expenditures in chapters 295 (gross revenues and gross receipts taxes), 296A (petroleum and other fuels), 297D (marijuana and controlled substances), 297E (gambling), 297F (cigarette and tobacco), 297G (liquor), 297H (solid waste management), and 297I (insurance), on December 31, 2017, and every tenth year thereafter;

3.  tax expenditures in chapter 290 (income and corporate franchise taxes) on December 31, 2019, and every tenth year thereafter;

4.  tax expenditures in chapters 287 (mortgage registry and deed taxes), 290A (property tax refund), 290B (senior citizens' property tax deferral), 291 (estate taxes), and 298 (minerals taxes), on December 31, 2021, and every tenth year thereafter; and

5.  tax expenditures in chapters 88 (auxiliary forests taxation), 270 (airline flight property tax; railroad property; contamination taxes), 272 (general property taxes), 273 (various aids; assessments), 290C (sustainable forest incentive), 469 (economic development), and 473H (metropolitan agricultural preserves), on December 31, 2023, and every tenth year thereafter.

Subdivision 2 requires that legislation that creates, renews, or continues a tax expenditure must include:

1.  a statement of intent providing the purpose for the tax expenditure and a standard of measurement for its effectiveness; and

2.  an expiration date for the expenditure not more than 12 years from the day the provision takes effect.  The date must correspond to the dates for expiration or review of other tax expenditures in subdivision 1.

Section 8 requires commission staff to monitor legislation affecting tax expenditures that have undergone review and report to commission members on proposed changes that would modify the commission’s prior recommendations.

Section 9 states that during the regular session in which the commission’s report is received, the legislature may enact legislation to continue a tax expenditure contained in the report.  The continuation may not exceed ten years.  The legislature may eliminate a tax expenditure earlier than the dates provided in this chapter.

 NBP/SJJ/rdr

 
Check on the status of this bill
 
Back to Senate Counsel and Research Bill Summaries page
 

 
This page is maintained by the Office of Senate Counsel, Research, and Fiscal Analysis for the Minnesota Senate.
 
Last review or update: 02/26/2013
 
If you see any errors on this page, please e-mail us at webmaster@senate.mn