Capitol roundup: Paid family leave advances, tax deal struck

Updated: 10:30 p.m.

More items from the ambitious checklist of the Capitol’s all-Democratic power base advanced Wednesday, including an expansive proposal to assure people time off with pay for family caregiving or serious illness.

Lawmakers have worked deep into the night this week given a Monday deadline to adjourn the session and a need to pass a new two-year budget by then.

Late Wednesday, negotiators on a multi-billion dollar tax bill outlined their almost-finished agreement. They said they would reconvene Thursday to complete it.

“I am very pleased with the amount of tax relief we are providing to Minnesota taxpayers,” said Senate Tax Chair Ann Rest, DFL-New Hope.

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The plan would result in $1.1 billion in one-time tax rebates of $260 per tax filer — $520 for couples — under an income limit. For qualifying households comprised of joint filers and three children, it would amount to $1,300 back. That’s far lower than the $1,000 per person and $200 dependent add-on that Gov. Tim Walz proposed.

An exemption for Social Security income would be enlarged to keep more retirees from facing taxes on those benefits and a new child tax credit aimed at low income families would offer another financial lift.

House Tax Chair Aisha Gomez, DFL-Minneapolis, said that child tax credit of up to $1,750 per dependent would “significantly cut child poverty.”

“In a state like Minnesota, I think we all should just come together and say no child should live in poverty. Period,” Gomez said. “And this moves us toward that.”

There are enhancements to property tax refund programs and those that absorb the shock of big jumps in tax bills of homeowners.

To make the numbers balance, some filers with investment earnings or businesses with global earnings would be forced to pay more — to the tune of $1 billion in this two-year budget and the next one.

“We hear in press conferences and so forth this is the biggest tax reduction in history. But we must also let the record reflect this is the largest tax increase in history, too,” said Rep. Greg Davids, R-Preston. “We need to be a little bit about both sides. Yes, you have some great tax relief in here. You really, really do.”

Earlier in the day, the House voted 68-62 – largely along party lines – to approve the leave program that would provide up to 20 weeks off per year with partial pay. That could be a combination of time off around a birth, adoption or family health emergency and around a worker’s own medical issues, although it is capped at 12 weeks for one qualifying event and another eight for a separate event. Leave could be taken intermittently, allowing, for example, regular days away for long-term treatments.

The Senate is expected to vote as soon as Thursday.

House sponsor, Rep. Ruth Richardson, said lawmakers who crafted the final plan took steps to accommodate smaller companies and limit the total leave a person could take. But she said the underlying principle is intact.

“Families know that a serious illness or an injury can be devastating for families, not only physically, but financially,” said Richardson, DFL-Mendota Heights. “And a uniting factor is that all of us at some point are going to need to care for ourselves or for a loved one.”

Republicans cast it as the state meddling in the employer-employee relationship with a requirement that will eventually require a payroll charge both would pay. The new tax won’t kick in until the benefit program is ready for launch, expected to be in 2026.

“You will be hearing the details of that and why it is important. We have listened to Minnesotans on this. We know this is something that is important,” said House Minority Leader Lisa Demuth, R-Cold Spring. “But as proposed in this bill, it is not sustainable. It is not going to work. It is not affordable.”

Rep. Pam Altendorf, R-Red Wing, was less charitable in her assessment.

“We continue down this path that we think we know better than small businesses. That we know better than the school boards that we know better than local governments, the counties, the cities,” she said. “And here in St. Paul, the bureaucrats manage and dictate to every other entity in Minnesota and tell them how to run their business.”

More than $650 million would be routed from Minnesota’s budget surplus to begin setting up the technology and agency structure around the benefit offering. The payroll tax of 0.7 percent – split between companies and workers – would be levied starting in January 2026.

Transportation still unresolved

Meanwhile, deliberations over a final tax bill and a transportation finance plan continued behind closed doors. Around transportation, a proposed delivery fee remained on the table, with a gas tax increase also in the mix as a way to provide dedicated funding to roadwork.

The House approved a 75 cent per delivery fee on a range of items, from restaurant food to online merchandise. The Senate didn’t include it, but some members have said they could get behind a lower fee that would apply only to deliveries above a certain value.

Walz, a DFLer in his second term, said he was on board with additional transportation-related revenue even if the package was a work in progress.

“People in Minnesota understand you get what you pay for when it comes to roads, we're going to figure out a dedicated stream,” Walz told reporters.

Equal rights amendment

The Minnesota Senate on Wednesday voted to approve a pair of proposals that would aim to ensure equal rights based on a person’s gender.

On a 42-25 vote, the chamber approved a resolution urging Congress to take the appropriate steps to adopt the Equal Rights Amendment at the federal level. And on a vote of 43-23, the chamber approved a bill that would submit to Minnesota voters a constitutional amendment in 2024 guaranteeing equality no matter a person’s race, color, creed, sex, sexual orientation, gender identity or expression, age, disability, ancestry, or national origin.

“We know that our Minnesota Constitution that was written over 165 years ago, before the Civil War time, at a time when the gendered language that was used throughout our constitution applied only to the majority of white land owning men,” Sen. Mary Kunesh, DFL-New Brighton, said. “It is well past that time to update it and to reflect our 21st Century values.”

Republicans in the chamber raised concerns about including gender identity and expression in the amendment. And they worried it could affect federal Title IX protections.

“Let's just be clear, we all agree on Minnesotans, we all agree on equal rights for women and girls, and we all want to oppose discrimination in society,” Sen. Carla Nelson, R-Rochester, said. “But that doesn't mean that this particular constitutional amendment is what we need to achieve our goal.”

Nelson voted in support of the bill.

The bill would need to pass the House before it would be included on the 2024 ballot.

Cash only bonding

Also on Wednesday, the Senate Rules Committee allowed a $1.3 billion capital investment move to the floor for a vote. The measure is intended to bypass GOP support since it does not require Republican votes to pass.

GOP lawmakers on the panel urged Democrats to instead take up a $1.9 billion package that included general obligation bonds. To issue bonds – or take on debt – three fifths of both bodies need to approve a capital investment bill.

And they took issue with the cash-only proposal focusing more on the metro area than Greater Minnesota and sending funding to nonprofit organizations.

“One could get confused if this is a jobs bill or a capital improvement bill,” Senate Minority Leader Mark Johnson, R-East Grand Forks, said. “I’m not here to argue if those organizations have a good mission and accomplish what they want for the state, however, whether that is appropriate for this bill or not is something that this committee really needs to look at.”

Senate Majority Leader Kari Dziedzic, DFL-Minneapolis, said Democrats had tried to work with Republicans on a bipartisan proposal but with time running out, they had to move forward on a cash-only plan.

“We’re going this route because we've waited, there hasn’t been a bonding bill since 2020 and there are needs across the state,” Dziedzic said.

State Flag

Minnesota’s state flag and emblem are up for replacement as part of a government agency budget bill prepped for final votes.

The rework is to begin soon and the new design would be released in January. The Legislature would have until May to change it.

Minnesota’s current flag has been in place since 1983, although the bulk of the design dates to the 1950s.

People pushing for a change have criticized the busy nature of the core emblem and some of its symbolism, which they say represents the displacement of Native Americans.

The bill sets up a panel of members with design expertise and diverse backgrounds, said Sen. Erin Murphy, DFL-St. Paul.

“It will give the work to a commission and they will make a determination,” Murphy said. “And that determination will stand unless the Legislature intervenes after its work is done.”