Rebates, cannabis and abortion safeguards: What lawmakers got done in the 2023 legislative session
The Minnesota Legislature adjourned Monday night after a historically productive session that saw the passage of a $72 billion budget, along with dozens of new policies long pushed by DFLers.
With all three levers of power at the Capitol under their control, Democrats spent the nearly five months of the legislative session passing new measures on health care, the environment, taxes and employment that had long been on their wish list. And they said they were responding to what they heard from voters last fall.
Before the governor signs many of the measures into law on Wednesday, here’s what you need to know about what the Legislature did.
Taxes rebates and credits
Taxpayers are set to see a mix of tax credits and rebates, as well as some tax increases and new fees coming out of the legislative session.
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After months of fanfare and debate, lawmakers agreed to send tax rebates to Minnesotans who made up to $75,000 a year in 2021 (or $150,000 as a married couple). Those people would receive a $260 tax rebate (or $520 rebate for a couple), and the one-time rebate could be higher for families with children or dependents. A family of five that meets the threshold could get a $1,300 tax rebate overall.
Rebates are expected to go out via direct deposit and checks starting this fall.
Parents and those with dependents could also be eligible for additional tax credits. Couples who make $35,000 or less would see a $1,750 credit for each of their children. Those who make more than that could still see a tax credit, but it would likely be smaller. The credits phase out for those with higher incomes.
DFL lawmakers said about 265,000 families would be eligible for the credits and they’re estimated to cut child poverty in the state by one-third.
Some Social Security income exempted
More Social Security recipients will see their benefits exempted from state income taxes. While lawmakers initially considered a total exemption of Social Security income, they settled on exempting 100 percent for those who make $100,000 a year or less with a phased out exemption for joint filers who make up to $140,000.
The proposal also allows for an income subtraction for people who receive public pensions. Those who make less than $100,000 a year could subtract as much as $25,000.
Tax and fee increases
Now for the tax and fee increases. The Legislature approved a global intangible low-taxed income (or GILTI) tax that would pull in more money from businesses with global earnings.
And people who make money on investment earnings such as stocks will also see a tax hike. Overall, the proposed tax increases would net the state about $2 billion over four years.
Lawmakers also approved a variety of local sales tax increases aimed at funding local projects approved by voters, or in the metro area, for funding housing and transit. Minnesotans will also see a 50-cent fee on deliveries that cost more than $100, with some exceptions, higher motor vehicle sales and registration taxes, and a gradual gas tax increase tied to inflation.
DFL lawmakers said those new taxes and fees are needed to fund road and bridge work, housing programs and other infrastructure into the future.
“Our state has constitutionally dedicated resources for our roads and bridges, and that system has been in place I think, for about more than 50 years,” House Speaker Melissa Hortman, DFL-Brooklyn Park, said. “Our grandparents invested in these roads for us. We're investing in these roads for our children and our grandchildren. And what we tried to do was move to a better way, a more modern way of funding the roads that recognizes how society works today.”
Republicans, meanwhile, said that lawmakers should have sent more of the state’s record $17.5 billion surplus back to taxpayers. And the Legislature shouldn’t be hiking taxes and fees when it has that surplus, they said.
“Our budget grew from $52 billion to $72 billion. We've raised taxes, something like $9 billion this session, Senate Democrats and House Democrats. So long term, this is going to be an issue,” Senate Minority Leader Mark Johnson, R-East Grand Forks, said. “This is going to be an issue in our economy. This is going to be an issue getting businesses to come here, families to come here that want to grow this economy in this state. We're extremely concerned about that.”
The Legislature approved a proposal to legalize cannabis for adults 21 and older. The plan will allow people to possess, use and grow cannabis, and it will expunge some drug-related crimes from criminal records.
With the governor’s signature, Minnesota will become the 23rd state to legalize marijuana for recreational use. Fewer than half of the other states allow people to grow their own.
The state has had a medical marijuana program for nearly a decade that started with oils, pills and other non-smokable forms. Leaf form was authorized for that program in 2021.
Beginning in August, adults will be able to grow and possess small amounts of marijuana without penalties. But Minnesotans will have to wait longer — maybe up to a year to 18 months — for cannabis dispensaries to set up shop.
The bill will create a new board to oversee licensing of cannabis retailers, and sponsors said that process could take up to 18 months to roll out.
Paid family leave and earned sick and safe time
The Legislature approved two new programs that will allow workers to take paid time off. The first will create a state program like unemployment insurance to cover partial payment if a worker gets sick, needs to care for a baby or a loved one. Workers and employers will pay a 0.7 percent payroll tax to fund the program.
Workers will be able to take up to 20 weeks of leave in a year and employers will be barred from retaliating against workers who take time. Employers will have to keep the worker’s position, or a similar one, open for them when they return from leave. 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 new tax won’t kick in until the benefit program is ready for launch, expected to be in 2026. More than $650 million would be routed from Minnesota’s budget surplus to begin setting up the technology and agency structure around the plan.
A separate provision will allow workers to accrue paid time off if they fall ill, face a threat to their safety or need to recover from sickness or injury. Under the plan, an employee will earn up to one hour of time off for every 30 hours they work with a cap of 48 hours each year. So after six weeks, a worker would earn one 8-hour day off. Bloomington, Duluth, Minneapolis and St. Paul have similar local ordinances in place already.
As many as 900,000 Minnesota workers could benefit from the change.
Health care providers, labor unions and faith leaders pressed for the changes and said that following the pandemic, workers should have more protections to keep full or partial pay if they need to take time off to care for themselves or others.
Business groups and Republican lawmakers said many businesses offer paid leave benefits already and they worried that they would struggle to find replacement workers needed to keep things up and running while an employee took leave.
New funding for schools
After being elected to a second term, Walz promised “the largest investment in public education in Minnesota’s history.” DFL lawmakers also made it a top goal to boost funding to public schools while offsetting costs associated with special education and English learner programs.
They ultimately approved a proposal that is set to boost the per-pupil funding formula by 4 percent in 2024 and 2 percent in 2025 with increases tied to inflation at a maximum of 3 percent in following years. That will bring the formula up to $7,281 per pupil by 2025, as compared to the $6,863 per pupil the state currently spends.
The measure also increases the amount the state contributes to the general education formula, adds new money for libraries, school support staff, menstrual products in school restrooms, changes to reading instruction, an ethnic studies requirement and full-service community schools, bringing the total spent on K-12 up to $23 billion. Lawmakers also approved additional funding for school-based mental health services.
The bill seeks to address shortages schools face when it comes to funding special education and English language learning programming — also known as cross-subsidies.
Schools are required to run these programs for their students, but the state only pays for 6.4 percent of special education costs and 28 percent of English learner costs. Under the bill, the state will increase payments to cover 44 percent of special education costs by 2024 and 50 percent of costs in 2027. English learner funding will increase to cover 87 percent of costs as compared to the 28 percent currently paid for.
Democrats said lawmakers for two decades had underfunded Minnesota schools and this bill will take a step toward helping school districts break even. Republicans, meanwhile, said the plan came with too many new requirements for school districts without time or funding to implement those requirements.
Universal meals for students
Minnesota became the fourth state in the country to provide free breakfasts and lunches to students at participating schools after Walz signed the universal school meals bill into law.
Many — but not all — students in Minnesota qualify for free and reduced-price meals already. That program was based on household income, and if families are below a certain threshold their students could receive school meals for free or for a reduced price.
Providing the meals at no cost to all students will cost the state almost $400 million in the first two years, and that price tag would grow in the future. The new funding covers the cost of meals, but not of second helpings or of separate a la carte items. Students can access the free school meals starting next school year.
Health and protecting access to gender-affirming care
Late on Monday, lawmakers approved a health and human services bill that will create a new Department of Children and Families and boost funding for the Child Care Assistance Program and for homelessness prevention. It would also lay the groundwork for a public buy-in option for MinnesotaCare and make undocumented immigrants eligible to enroll in MinnesotaCare.
In a separate measure, they also approved legislation that will create new violence prevention initiatives for hospitals, fund loan forgiveness and child care aid for nurses, and conduct a study on why nurses are leaving the field. The bill was gutted of provisions that would create committees at hospitals to set safe staffing levels after the Mayo Clinic told legislative leaders and the governor that it would pull investments from the state if it didn’t get an exemption.
And in response to other states that barred transgender youth from accessing gender-affirming care, DFL legislators advanced policies this year that would create legal protection for patients traveling to the state for care and for the doctors in Minnesota who provide it.
Environment and climate
DFL lawmakers said that addressing climate change would be among their top priorities this year. Shortly after taking office, the Legislature approved and the governor signed into law a plan to require the state’s utilities to use only carbon-free sources to generate electricity by 2040.
And in later provisions, lawmakers approved significant investments that supporters said could help Minnesota fight climate change and move more aggressively toward a carbon-free economy.
As part of a $2 billion environment and climate package, legislators adopted the country’s toughest restrictions on PFAS and created new requirements to limit the spread of chronic wasting disease.
The massive budget bill also invests hundreds of millions of dollars in dozens of initiatives to cut greenhouse gas emissions, from funding for solar panels on schools to electric vehicle rebates. And it makes substantial new funding toward natural resources, from planting trees and restoring wetlands to building new boat ramps and fish hatcheries.
Lawmakers also approved a proposed constitutional amendment for the 2024 ballot that will ask voters to decide whether a portion of state lottery proceeds should continue to be dedicated to the state’s environment and natural resources trust fund.
The fund was originally approved by voters in 1988, and is set to expire in 2025. If voters approve the ballot measure next fall, it would extend the dedication of the funds until 2050.
Lawmakers approved and the governor signed into law a $1 billion housing bill that would let the state create a new rental voucher system, a first-generation homebuyers assistance program and boost workforce housing around the state.
The plan would also increase funding to homelessness prevention and impose a 0.25 percent sales tax increase in the seven county metro area to raise funds for affordable housing into the future.
Housing advocates said the measure is needed to reduce homelessness and improve access to affordable housing around the state. Republican lawmakers and homebuilding organizations meanwhile, said the bill didn’t do enough to address some of the restrictions that lead to higher prices in building new homes in Minnesota.
Scattered through other health, human services and separate bills, lawmakers also approved legislation to set aside funding for emergency shelters, transitional housing and services that help youth experiencing homelessness.
After years of failed attempts to pass gun control policies at the Capitol, Democrats approved two bills that will make Minnesota the 20th state to enact what are known as red flag orders designed to remove firearms from those deemed a danger to themselves or others. Another bill would also expand criminal background checks to private transfers of firearms.
The bills’ supporters said the measures will prevent some gun-related homicides and suicides. Gun rights groups and Republicans said the bills will create an undue burden on lawful gun owners and won’t address root causes of gun violence.
In the final hours of the legislative session, lawmakers approved a more than $2.5 billion package of capital investment projects around the state.
After striking a last-minute deal, Republicans agreed to put up the votes to pass a bill letting the state sell bonds — or take on debt — to fund some of the projects. The overall bonding package included $1.5 billion in general obligation bonds and $1 billion in cash to fund construction and repair on state agency and public university buildings, wastewater treatment plants, roads, bridges, parks and grants to nonprofit organizations.
The bill is the largest construction bill to pass in the state’s history and it comes after the Legislature went almost three years without passing a capital investment bill. Local governments and state agencies submitted more than $5 billion in prospective projects heading into the 2023 legislative session.
DFL leaders said lawmakers will pass another capital investment bill exceeding $1 billion in 2024.
As part of the deal to get a bonding bill across the finish line, legislative leaders agreed to pass $300 million in emergency aid for nursing homes in crisis.
The money will be spent over four years and can be used to cover operating expenses, debt, employee bonuses and benefits. As part of a larger health bill, nursing homes will also get additional recruitment and retention pay for caregivers, a boost in funding for low-income seniors in assisted living and senior housing and an option to apply for $100 million in zero-interest loans.
Long term care facilities have been sounding the alarm this year after the pandemic, rising inflation and workforce shortages have left them short staffed and financially struggling. Many nursing homes have had to reduce the number of patients they care for due to short staffing, and that has meant people have been turned away while the facilities continue to face budget shortages.
Shortly after lawmakers were sworn in for the 2023 legislative session, DFL leaders approved a proposal to guarantee in state law the right to an abortion and access to other reproductive health care in Minnesota. This bill, known as PRO Act, was signed by Gov. Tim Walz in January.
The law includes access to birth control, sterilization, family planning support and other services, and prohibits local governments from enacting policies that infringe on people seeking them.
Lawmakers also approved a bill that extends legal protections to patients who travel to Minnesota for an abortion and the providers who treat them. As other states limit access to abortion services or ban it altogether, DFL leaders said it’s important to help people from other states who come to Minnesota seeking reproductive care.
As part of a broader health bill, lawmakers on Monday also struck several state laws restricting abortion, including removing a 24-hour waiting period, allowing birth centers to perform abortions and dropping a requirement that providers read medically inaccurate information to patients.
They also pared back reporting requirements for abortions that providers must send to the state department of health. The bill also expanded situations where medical assistance could be used to cover abortion services, cut funding for “crisis pregnancy centers” and allowed state grant funding to flow to community clinics that offer reproductive health services.