Bill Text: MN HF271 | 2011-2012 | 87th Legislature | Introduced


Bill Title: Tax Expenditure Advisory Commission created, and review and sunset of tax expenditures provided.

Spectrum: Partisan Bill (Democrat 11-0)

Status: (Introduced - Dead) 2011-02-02 - Author added Slocum [HF271 Detail]

Download: Minnesota-2011-HF271-Introduced.html

1.1A bill for an act
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.01] TITLE AND PURPOSE.
1.7    Subdivision 1. Citation. This chapter shall be known and cited as the Tax
1.8Expenditure Review Act.
1.9    Subd. 2. Purpose. State governmental policy objectives may be achieved both
1.10by direct expenditure of governmental funds and by granting special and selective tax
1.11preferences or tax expenditures. Both direct expenditures of governmental funds and tax
1.12expenditures have an effect on the ability of state and local governments to reduce general
1.13tax rates or to increase expenditures; therefore, tax expenditures should be subject to
1.14regular review and reauthorization in a manner similar to direct expenditures.

1.15    Sec. 2. [290D.02] DEFINITIONS.
1.16    Subdivision 1. Applicability. For purposes of this chapter, the following terms have
1.17the meanings given in this section unless the context clearly indicates a different meaning.
1.18    Subd. 2. Commission. "Commission" means the Tax Expenditure Advisory
1.19Commission.
1.20    Subd. 3. Commissioner. "Commissioner" means the commissioner of revenue or a
1.21person to whom the commissioner has delegated functions.
1.22    Subd. 4. Tax expenditure. "Tax expenditure" has the meaning given in section
1.23270C.11, subdivision 6.
2.1    Subd. 5. Tax. "Tax" has the meaning given in section 270C.11, subdivision 6.

2.2    Sec. 3. [290D.03] TAX EXPENDITURE ADVISORY COMMISSION.
2.3    Subdivision 1. Membership. The Tax Expenditure Advisory Commission consists
2.4of 12 members appointed by the governor, as follows:
2.5(1) three senators and three members of the house of representatives, including the
2.6chairs of the house of representatives and senate committees with jurisdiction over taxes,
2.7with no more than three of the six legislators being from the same political party; and
2.8(2) six public members, including at least one who must be a citizen representing
2.9working families, one must be a representative of a nonprofit organization, one must be a
2.10person with experience in economic or business development, and the remainder shall be
2.11individuals who have a basic understanding of state tax policy, government operations,
2.12and public services.
2.13    Subd. 2. Terms. Legislative members serve two-year terms expiring September 1 of
2.14each odd-numbered year. Public members serve two-year terms expiring September 1 of
2.15each odd-numbered year.
2.16    Subd. 3. Limits. Members who are not chairs of a house of representatives or senate
2.17committee with jurisdiction over taxes are subject to the following restrictions:
2.18(1) after an individual serves four years on the commission, the individual is not
2.19eligible for appointment to another term or part of a term;
2.20(2) a legislative member who serves a full term may not be appointed to an
2.21immediately succeeding term; and
2.22(3) a public member may not serve consecutive terms, and, for purposes of this
2.23prohibition, a member is considered to have served a term only if the member has served
2.24more than one-half of the term.
2.25    Subd. 4. Appointments. The governor shall make appointments before September
2.261 of each odd-numbered year.
2.27    Subd. 5. Legislative members. If a legislative member ceases to be a member
2.28of the legislative body from which the member was appointed, the member vacates
2.29membership on the commission. If a legislative member who is a chair of a house of
2.30representatives or senate committee with jurisdiction over taxes ceases to be a chair of that
2.31committee, the member vacates membership on the commission.
2.32    Subd. 6. Vacancies. If a vacancy occurs, the governor shall appoint a person to serve
2.33for the remainder of the unexpired term in the same manner as the original appointment.
2.34    Subd. 7. Officers. The commission shall have a chair and vice-chair as presiding
2.35officers. The chair and vice-chair must alternate every two years between the two
3.1membership groups: legislators and public members. The chair and vice-chair may not be
3.2from the same membership group.
3.3    Subd. 8. Quorum; voting. Seven members of the commission constitute a quorum.
3.4A final action or recommendation may not be made unless approved by a recorded vote
3.5of at least seven members. All other actions by the commission shall be decided by a
3.6majority of the members present and voting.
3.7    Subd. 9. Compensation. Each member of the commission is entitled to
3.8reimbursement for actual and necessary expenses incurred in performing commission
3.9duties. Each legislative member is entitled to reimbursement from the appropriate
3.10fund of the member's respective legislative body. Each public member is entitled to
3.11reimbursement from funds appropriated to the commission.

3.12    Sec. 4. [290D.04] STAFF.
3.13The commission shall employ an executive director to act as the executive head of
3.14the commission. The executive director shall employ persons necessary to carry out
3.15this chapter.

3.16    Sec. 5. [290D.05] RULES.
3.17The commission shall adopt rules necessary to carry out this chapter.

3.18    Sec. 6. [290D.06] REPORT TO COMMISSION.
3.19In addition to the information provided in each even-numbered year under section
3.20270C.11, before September 1 of each year prior to the first year of a regular legislative
3.21session, the commissioner shall provide a report with the following information for each
3.22tax expenditure scheduled to expire during the following biennium:
3.23(1) the positive and negative impacts of the expenditure on the taxpayer or taxpayers
3.24before or after the tax expenditure;
3.25(2) the impact of the tax expenditure on the tax incidence in the state;
3.26(3) the economic development impacts of the preference, including the impact on
3.27jobs, wages, and benefits;
3.28(4) the cumulative fiscal impacts of other state and federal taxes providing benefits
3.29to taxpayers for similar activities;
3.30(5) the measurable impacts of the tax expenditure in meeting the goal of the
3.31expenditure;
3.32(6) a comparison of the tax expenditure with tax treatment of taxpayers engaged in
3.33similar activities in neighboring states; and
4.1(7) consideration of the probable impact on overall uniformity and fairness of the
4.2tax code.

4.3    Sec. 7. [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 report under section 270C.11 and the additional report
4.7under section 290D.06; (2) take public testimony; and (3) vote on recommendations for
4.8continuation or repeal of each tax expenditure subject to expire in that legislative session.
4.9    Subd. 2. Public hearings. Before January 1 of the year a tax expenditure is included
4.10in a commission report, the commission shall conduct public hearings concerning the
4.11impact of the tax expenditure on (1) the beneficiaries; (2) the state economy; (3) its
4.12performance in meeting its purpose; (4) its impact on the tax incidence in the state; and (5)
4.13any other information that the commission deems relevant.
4.14    Subd. 3. Commission report; recommendations. By February 1 of the first year of
4.15every regular legislative session, the commission shall present to the chairs of the senate
4.16and house of representatives committees with jurisdiction over taxes, a report on the tax
4.17expenditures reviewed. In the report the commission shall report its recommendations for
4.18each tax expenditure, its findings on the demonstrated ability of each tax expenditure to
4.19meet its stated goal, the impact on the general fund budget of retaining or abolishing the
4.20tax expenditure, and any other information that the commission deems relevant to explain
4.21its recommendation for each expenditure.

4.22    Sec. 8. [290D.08] REQUIREMENT FOR REVIEW AND PERIODIC
4.23REENACTMENT OF ALL EXISTING AND NEW TAX EXPENDITURES.
4.24    Subdivision 1. Expiration of existing tax expenditures. The tax expenditures in
4.25statute as of July 1, 2011, are subject to sunset review and expiration on the following
4.26schedule:
4.27(1) all tax expenditures in chapters 168, 297A, and 297B, on December 31, 2013,
4.28and every tenth year thereafter;
4.29(2) all tax expenditures in chapters 295, 296A, 297D, 297E, 297F, 297G, 297H, and
4.30297I, on December 31, 2015, and every tenth year thereafter;
4.31(3) all tax expenditures in chapters 290 and 298, on December 31, 2017, and every
4.32tenth year thereafter;
4.33(4) all tax expenditures in chapters 287, 290A, 290B, 291, and 298, on December
4.3431, 2019, and every tenth year thereafter; and
5.1(5) all tax expenditures in chapters 88, 270, 272, 273, 290C, 469, and 473H, on
5.2December 31, 2021, and every tenth year thereafter.
5.3    Subd. 2. New and renewed tax expenditures. Any legislation that creates, renews,
5.4or continues a tax expenditure must include the following provisions:
5.5(1) an intent statement that clearly provides the purposes for the tax expenditure and
5.6a standard or goal against which its effectiveness can be measured; and
5.7(2) an expiration date for the tax expenditure that may not exceed 12 years from
5.8the day the provision takes effect and must correspond to the expiration date for other tax
5.9expenditures in the same tax area, as listed in subdivision 1.

5.10    Sec. 9. [290D.09] MONITORING OF RECOMMENDATIONS.
5.11During each legislative session, the staff of the commission shall monitor legislation
5.12affecting tax expenditures that have undergone sunset review and shall periodically
5.13report to the members of the commission on proposed changes which would modify
5.14prior recommendations of the commission.

5.15    Sec. 10. [290D.10] CONTINUATION BY LAW.
5.16During the regular session in which the commission's report is received, the
5.17legislature may enact legislation to continue a tax expenditure contained in the report
5.18for a period not to exceed ten years. This chapter does not prohibit the legislature from
5.19eliminating a tax expenditure on a date earlier than that provided in this chapter.

5.20    Sec. 11. [290D.11] GIFTS AND GRANTS.
5.21The commission may accept gifts, grants, and donations from any organization
5.22described in section 501(c)(3) of the Internal Revenue Code for the purpose of funding
5.23any activity under this chapter. All gifts, grants, and donations must be accepted in an
5.24open meeting by a majority of the voting members of the commission and reported in the
5.25public record of the commission with the name of the donor and purpose of the gift, grant,
5.26or donation. Money received under this section is appropriated to the commission.
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