Bill Text: MN SF53 | 2013-2014 | 88th Legislature | Engrossed
Bill Title: Tax expenditure advisory commission establishment; tax expenditures review and sunset provisions
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Introduced - Dead) 2013-03-05 - Comm report: To pass as amended and re-refer to Finance [SF53 Detail]
Download: Minnesota-2013-SF53-Engrossed.html
1.2relating to taxes; creating a Tax Expenditure Advisory Commission; providing
1.3for review and sunset of tax expenditures;proposing coding for new law as
1.4Minnesota Statutes, chapter 290D.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. [290D.02] DEFINITIONS.
1.7 Subdivision 1. Applicability. For purposes of this chapter, the following terms have
1.8the meanings given in this section unless the context clearly indicates a different meaning.
1.9 Subd. 2. Commission. "Commission" means the Tax Expenditure Advisory
1.10Commission.
1.11 Subd. 3. Commissioner. "Commissioner" means the commissioner of revenue or a
1.12person to whom the commissioner has delegated functions.
1.13 Subd. 4. Tax expenditure. "Tax expenditure" has the meaning given in section
1.14270C.11, subdivision 6.
1.15 Subd. 5. Tax. "Tax" has the meaning given in section 270C.11, subdivision 6.
1.16 Sec. 2. [290D.03] TAX EXPENDITURE ADVISORY COMMISSION.
1.17 Subdivision 1. Membership. The Tax Expenditure Advisory Commission consists
1.18of 14 members, as follows:
1.19(1) four senators, including the chair of the committee with jurisdiction over taxes,
1.20one senator appointed by the senate Subcommittee on Committees of the Committee on
1.21Rules and Administration, and two senators appointed by the senate minority leader;
2.1(2) four members of the house of representatives, including the chair of the
2.2committee with jurisdiction over taxes, one representative appointed by the speaker of the
2.3house of representatives, and two representatives appointed by the house minority leader;
2.4(3) six public members appointed by the governor, including at least one who is a
2.5taxpayer eligible for the Minnesota working family tax credit, one who is an owner of a
2.6small business as defined in section 645.445, one who is an officer or board member of a
2.7Fortune 500 company, one who is an officer or board member of a nonprofit organization,
2.8one who is a person with experience in economic or business development, and the
2.9remainder shall be individuals who have a basic understanding of state tax policy,
2.10government operations, and public services.
2.11 Subd. 2. Terms. Legislative members serve two-year terms expiring September 1 of
2.12each odd-numbered year. Public members serve two-year terms expiring September 1 of
2.13each odd-numbered year.
2.14 Subd. 3. Limits. Members who are not chairs of a house of representatives or senate
2.15committee with jurisdiction over taxes are subject to the following restrictions:
2.16(1) after an individual serves four years on the commission, the individual is not
2.17eligible for appointment to another term or part of a term;
2.18(2) a legislative member who serves a full term may not be appointed to an
2.19immediately succeeding term; and
2.20(3) a public member may not serve consecutive terms, and, for purposes of this
2.21prohibition, a member is considered to have served a term only if the member has served
2.22more than one-half of the term.
2.23 Subd. 4. Appointments. The appointing authorities shall make appointments before
2.24September 1 of each odd-numbered year.
2.25 Subd. 5. Legislative members. If a legislative member ceases to be a member
2.26of the legislative body from which the member was appointed, the member vacates
2.27membership on the commission. If a legislative member who is a chair of a house of
2.28representatives or senate committee with jurisdiction over taxes ceases to be a chair of that
2.29committee, the member vacates membership on the commission.
2.30 Subd. 6. Vacancies. If a vacancy occurs, the authority who appointed the vacating
2.31member shall appoint a person to serve for the remainder of the unexpired term in the
2.32same manner as the original appointment.
2.33 Subd. 7. Officers. The commission shall elect a chair and vice-chair as presiding
2.34officers from its membership. The chair and vice-chair must alternate every two years
2.35between the two membership groups: legislators and public members. The chair and
2.36vice-chair may not be from the same membership group.
3.1 Subd. 8. Quorum; voting. Eight members of the commission constitute a quorum.
3.2A final action or recommendation may not be made unless approved by a recorded vote
3.3of at least eight members. All other actions by the commission shall be decided by a
3.4majority of the members present and voting.
3.5 Subd. 9. Compensation. Public members shall be compensated as provided
3.6in section 15.059, subdivision 3.
3.7 Subd. 10. Acting chair and first meeting. The chair of the senate committee with
3.8jurisdiction over taxes shall convene the first meeting of the commission by December
3.931, 2013. At the first meeting, the commission shall elect a chair and vice chair from
3.10its membership.
3.11 Sec. 3. [290D.04] STAFF.
3.12The Legislative Coordinating Commission shall provide staff and administrative
3.13services for the commission.
3.14 Sec. 4. [290D.06] REPORT TO COMMISSION.
3.15 Subdivision 1. State tax provisions. In addition to the information provided in each
3.16even-numbered year under section 270C.11, before September 1 of each year prior to the
3.17first year of a regular legislative session, the commissioner shall provide a report with
3.18the following information, where applicable, for each tax expenditure subject to review
3.19during the following biennium:
3.20(1) the positive and negative impacts of the expenditure on the taxpayer or taxpayers
3.21before or after the tax expenditure;
3.22(2) the impact of the tax expenditure on the tax incidence in the state;
3.23(3) the economic development impacts of the preference, including the impact on
3.24jobs, wages, and benefits;
3.25(4) the cumulative fiscal impacts of other state and federal taxes providing benefits
3.26to taxpayers for similar activities;
3.27(5) the measurable impacts of the tax expenditure in meeting the goal of the
3.28expenditure;
3.29(6) a comparison of the tax expenditure with tax treatment of taxpayers engaged
3.30in similar activities in neighboring states;
3.31(7) consideration of the probable impact on overall uniformity and fairness of the
3.32tax code; and
3.33(8) the number of taxpayers impacted by the tax expenditure and the nature of
3.34the impact.
4.1 Subd. 2. Federal conformity. The commission must also report on outstanding
4.2federal conformity provisions considering the factors listed in subdivision 1.
4.3 Sec. 5. [290D.07] COMMISSION DUTIES.
4.4 Subdivision 1. Review of tax expenditures. Before February 1 of the first year of a
4.5regularly scheduled legislative session, the commission shall (1) review information from
4.6the most recent tax expenditure budget report under section 270C.11 and the additional
4.7report under section 290D.06; (2) take public testimony; and (3) vote on recommendations
4.8for continuation or repeal of each tax expenditure subject to review in that legislative
4.9session.
4.10 Subd. 2. Public hearings. Before January 1 of the year a tax expenditure is included
4.11in a commission report, the commission shall conduct public hearings concerning the
4.12impact of the tax expenditure on (1) the beneficiaries; (2) the state economy; (3) its
4.13performance in meeting its purpose; (4) its impact on the tax incidence in the state; and (5)
4.14any other information that the commission deems relevant.
4.15 Subd. 3. Commission report; recommendations. By February 1 of the first year of
4.16every regular legislative session, the commission shall present to the chairs of the senate
4.17and house of representatives committees with jurisdiction over taxes and over finance, the
4.18majority and minority leaders of the house of representatives and senate, the commissioner
4.19of revenue, the commissioner of management and budget, and the governor, a report on the
4.20tax expenditures reviewed. In the report the commission shall report its recommendations
4.21for each tax expenditure, its findings on the demonstrated ability of each tax expenditure to
4.22meet its stated goal, the impact on the general fund budget of retaining or abolishing the tax
4.23expenditure, draft legislation to implement its recommendations, and any other information
4.24that the commission deems relevant to explain its recommendation for each expenditure.
4.25 Sec. 6. [290D.08] REQUIREMENT FOR REVIEW AND PERIODIC
4.26REENACTMENT OF ALL EXISTING AND NEW TAX EXPENDITURES.
4.27 Subdivision 1. Review of existing tax expenditures. The tax expenditures in statute
4.28as of July 1, 2013, are subject to sunset review on the following schedule:
4.29(1) all tax expenditures in chapters 168, 297A, and 297B, on December 31, 2015,
4.30and every tenth year thereafter;
4.31(2) all tax expenditures in chapters 295, 296A, 297D, 297E, 297F, 297G, 297H, and
4.32297I, on December 31, 2017, and every tenth year thereafter;
4.33(3) all tax expenditures in chapter 290, on December 31, 2019, and every tenth
4.34year thereafter;
5.1(4) all tax expenditures in chapters 287, 290A, 290B, 291, and 298, on December
5.231, 2021, and every tenth year thereafter; and
5.3(5) all tax expenditures in chapters 88, 270, 272, 273, 290C, 469, and 473H, on
5.4December 31, 2023, and every tenth year thereafter.
5.5 Subd. 2. New and renewed tax expenditures. Any legislation that creates, renews,
5.6or continues a tax expenditure must include the following provisions:
5.7(1) an intent statement that clearly provides the purposes for the tax expenditure and
5.8a standard or goal against which its effectiveness can be measured; and
5.9(2) an expiration date for the tax expenditure that may not exceed 12 years from
5.10the day the provision takes effect and must correspond to the expiration date or review
5.11schedule for other tax expenditures in the same tax area, as listed in subdivision 1.
5.12 Sec. 7. [290D.09] MONITORING OF RECOMMENDATIONS.
5.13During each legislative session, the staff of the commission shall monitor legislation
5.14affecting tax expenditures that have undergone sunset review and shall periodically
5.15report to the members of the commission on proposed changes which would modify
5.16prior recommendations of the commission.
5.17 Sec. 8. [290D.10] CONTINUATION BY LAW.
5.18During the regular session in which the commission's report is received, the
5.19legislature may enact legislation to continue a tax expenditure contained in the report
5.20for a period not to exceed ten years. This chapter does not prohibit the legislature from
5.21eliminating a tax expenditure on a date earlier than that provided in this chapter.
1.3for review and sunset of tax expenditures;proposing coding for new law as
1.4Minnesota Statutes, chapter 290D.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. [290D.02] DEFINITIONS.
1.7 Subdivision 1. Applicability. For purposes of this chapter, the following terms have
1.8the meanings given in this section unless the context clearly indicates a different meaning.
1.9 Subd. 2. Commission. "Commission" means the Tax Expenditure Advisory
1.10Commission.
1.11 Subd. 3. Commissioner. "Commissioner" means the commissioner of revenue or a
1.12person to whom the commissioner has delegated functions.
1.13 Subd. 4. Tax expenditure. "Tax expenditure" has the meaning given in section
1.14270C.11, subdivision 6.
1.15 Subd. 5. Tax. "Tax" has the meaning given in section 270C.11, subdivision 6.
1.16 Sec. 2. [290D.03] TAX EXPENDITURE ADVISORY COMMISSION.
1.17 Subdivision 1. Membership. The Tax Expenditure Advisory Commission consists
1.18of 14 members, as follows:
1.19(1) four senators, including the chair of the committee with jurisdiction over taxes,
1.20one senator appointed by the senate Subcommittee on Committees of the Committee on
1.21Rules and Administration, and two senators appointed by the senate minority leader;
2.1(2) four members of the house of representatives, including the chair of the
2.2committee with jurisdiction over taxes, one representative appointed by the speaker of the
2.3house of representatives, and two representatives appointed by the house minority leader;
2.4(3) six public members appointed by the governor, including at least one who is a
2.5taxpayer eligible for the Minnesota working family tax credit, one who is an owner of a
2.6small business as defined in section 645.445, one who is an officer or board member of a
2.7Fortune 500 company, one who is an officer or board member of a nonprofit organization,
2.8one who is a person with experience in economic or business development, and the
2.9remainder shall be individuals who have a basic understanding of state tax policy,
2.10government operations, and public services.
2.11 Subd. 2. Terms. Legislative members serve two-year terms expiring September 1 of
2.12each odd-numbered year. Public members serve two-year terms expiring September 1 of
2.13each odd-numbered year.
2.14 Subd. 3. Limits. Members who are not chairs of a house of representatives or senate
2.15committee with jurisdiction over taxes are subject to the following restrictions:
2.16(1) after an individual serves four years on the commission, the individual is not
2.17eligible for appointment to another term or part of a term;
2.18(2) a legislative member who serves a full term may not be appointed to an
2.19immediately succeeding term; and
2.20(3) a public member may not serve consecutive terms, and, for purposes of this
2.21prohibition, a member is considered to have served a term only if the member has served
2.22more than one-half of the term.
2.23 Subd. 4. Appointments. The appointing authorities shall make appointments before
2.24September 1 of each odd-numbered year.
2.25 Subd. 5. Legislative members. If a legislative member ceases to be a member
2.26of the legislative body from which the member was appointed, the member vacates
2.27membership on the commission. If a legislative member who is a chair of a house of
2.28representatives or senate committee with jurisdiction over taxes ceases to be a chair of that
2.29committee, the member vacates membership on the commission.
2.30 Subd. 6. Vacancies. If a vacancy occurs, the authority who appointed the vacating
2.31member shall appoint a person to serve for the remainder of the unexpired term in the
2.32same manner as the original appointment.
2.33 Subd. 7. Officers. The commission shall elect a chair and vice-chair as presiding
2.34officers from its membership. The chair and vice-chair must alternate every two years
2.35between the two membership groups: legislators and public members. The chair and
2.36vice-chair may not be from the same membership group.
3.1 Subd. 8. Quorum; voting. Eight members of the commission constitute a quorum.
3.2A final action or recommendation may not be made unless approved by a recorded vote
3.3of at least eight members. All other actions by the commission shall be decided by a
3.4majority of the members present and voting.
3.5 Subd. 9. Compensation. Public members shall be compensated as provided
3.6in section 15.059, subdivision 3.
3.7 Subd. 10. Acting chair and first meeting. The chair of the senate committee with
3.8jurisdiction over taxes shall convene the first meeting of the commission by December
3.931, 2013. At the first meeting, the commission shall elect a chair and vice chair from
3.10its membership.
3.11 Sec. 3. [290D.04] STAFF.
3.12The Legislative Coordinating Commission shall provide staff and administrative
3.13services for the commission.
3.14 Sec. 4. [290D.06] REPORT TO COMMISSION.
3.15 Subdivision 1. State tax provisions. In addition to the information provided in each
3.16even-numbered year under section 270C.11, before September 1 of each year prior to the
3.17first year of a regular legislative session, the commissioner shall provide a report with
3.18the following information, where applicable, for each tax expenditure subject to review
3.19during the following biennium:
3.20(1) the positive and negative impacts of the expenditure on the taxpayer or taxpayers
3.21before or after the tax expenditure;
3.22(2) the impact of the tax expenditure on the tax incidence in the state;
3.23(3) the economic development impacts of the preference, including the impact on
3.24jobs, wages, and benefits;
3.25(4) the cumulative fiscal impacts of other state and federal taxes providing benefits
3.26to taxpayers for similar activities;
3.27(5) the measurable impacts of the tax expenditure in meeting the goal of the
3.28expenditure;
3.29(6) a comparison of the tax expenditure with tax treatment of taxpayers engaged
3.30in similar activities in neighboring states;
3.31(7) consideration of the probable impact on overall uniformity and fairness of the
3.32tax code; and
3.33(8) the number of taxpayers impacted by the tax expenditure and the nature of
3.34the impact.
4.1 Subd. 2. Federal conformity. The commission must also report on outstanding
4.2federal conformity provisions considering the factors listed in subdivision 1.
4.3 Sec. 5. [290D.07] COMMISSION DUTIES.
4.4 Subdivision 1. Review of tax expenditures. Before February 1 of the first year of a
4.5regularly scheduled legislative session, the commission shall (1) review information from
4.6the most recent tax expenditure budget report under section 270C.11 and the additional
4.7report under section 290D.06; (2) take public testimony; and (3) vote on recommendations
4.8for continuation or repeal of each tax expenditure subject to review in that legislative
4.9session.
4.10 Subd. 2. Public hearings. Before January 1 of the year a tax expenditure is included
4.11in a commission report, the commission shall conduct public hearings concerning the
4.12impact of the tax expenditure on (1) the beneficiaries; (2) the state economy; (3) its
4.13performance in meeting its purpose; (4) its impact on the tax incidence in the state; and (5)
4.14any other information that the commission deems relevant.
4.15 Subd. 3. Commission report; recommendations. By February 1 of the first year of
4.16every regular legislative session, the commission shall present to the chairs of the senate
4.17and house of representatives committees with jurisdiction over taxes and over finance, the
4.18majority and minority leaders of the house of representatives and senate, the commissioner
4.19of revenue, the commissioner of management and budget, and the governor, a report on the
4.20tax expenditures reviewed. In the report the commission shall report its recommendations
4.21for each tax expenditure, its findings on the demonstrated ability of each tax expenditure to
4.22meet its stated goal, the impact on the general fund budget of retaining or abolishing the tax
4.23expenditure, draft legislation to implement its recommendations, and any other information
4.24that the commission deems relevant to explain its recommendation for each expenditure.
4.25 Sec. 6. [290D.08] REQUIREMENT FOR REVIEW AND PERIODIC
4.26REENACTMENT OF ALL EXISTING AND NEW TAX EXPENDITURES.
4.27 Subdivision 1. Review of existing tax expenditures. The tax expenditures in statute
4.28as of July 1, 2013, are subject to sunset review on the following schedule:
4.29(1) all tax expenditures in chapters 168, 297A, and 297B, on December 31, 2015,
4.30and every tenth year thereafter;
4.31(2) all tax expenditures in chapters 295, 296A, 297D, 297E, 297F, 297G, 297H, and
4.32297I, on December 31, 2017, and every tenth year thereafter;
4.33(3) all tax expenditures in chapter 290, on December 31, 2019, and every tenth
4.34year thereafter;
5.1(4) all tax expenditures in chapters 287, 290A, 290B, 291, and 298, on December
5.231, 2021, and every tenth year thereafter; and
5.3(5) all tax expenditures in chapters 88, 270, 272, 273, 290C, 469, and 473H, on
5.4December 31, 2023, and every tenth year thereafter.
5.5 Subd. 2. New and renewed tax expenditures. Any legislation that creates, renews,
5.6or continues a tax expenditure must include the following provisions:
5.7(1) an intent statement that clearly provides the purposes for the tax expenditure and
5.8a standard or goal against which its effectiveness can be measured; and
5.9(2) an expiration date for the tax expenditure that may not exceed 12 years from
5.10the day the provision takes effect and must correspond to the expiration date or review
5.11schedule for other tax expenditures in the same tax area, as listed in subdivision 1.
5.12 Sec. 7. [290D.09] MONITORING OF RECOMMENDATIONS.
5.13During each legislative session, the staff of the commission shall monitor legislation
5.14affecting tax expenditures that have undergone sunset review and shall periodically
5.15report to the members of the commission on proposed changes which would modify
5.16prior recommendations of the commission.
5.17 Sec. 8. [290D.10] CONTINUATION BY LAW.
5.18During the regular session in which the commission's report is received, the
5.19legislature may enact legislation to continue a tax expenditure contained in the report
5.20for a period not to exceed ten years. This chapter does not prohibit the legislature from
5.21eliminating a tax expenditure on a date earlier than that provided in this chapter.
