Minnesota Senate clears tax breaks in face of coronavirus pandemic

The Minnesota Senate approved a tax-relief package Thursday in response to the coronavirus pandemic, setting up a battle with House Democrats who have raised concerns about the cost.

The bill, approved on a 40-27 vote, would postpone the due date for roughly $1 billion in state taxes, expand a number of tax credits and cut rates for charitable gambling. Republican Sen. Roger Chamberlain of Lino Lakes, the sponsor of the legislation, said lawmakers are "directly, aggressively trying to support employers and employees across the state" with the changes.

The measure faces opposition in the DFL-controlled House, where Democrats are pushing their own relief package that would add state funding for housing assistance and rural broadband and for low-income families. Democrats have criticized the $330 million price tag of the GOP tax proposal, given the expected revenue losses from the pandemic.

Sen. Tom Bakk, DFL-Cook, warned of a "mammoth problem" ahead. "Unless the federal government comes in with a boatload of money, I don't know how we are going to get out of this hole that we've got here," he said.

Senate Majority Leader Paul Gazelka, R-East Gull Lake, acknowledged the uncertain fiscal future. But he called the tax package a "smart bill and slimmed-down bill," noting Republicans already shelved a proposal for a full rollback of state Social Security taxes, a key element of the caucus' 2020 agenda.

"This is something we can use right now to help our small-business owners," he said. "Even buying them another 60 days in not having to pay those taxes could be the difference in them making it or not making it."

Lawmakers started the year with a projected $1.3 billion surplus. The crisis is expected to wipe out that budget reserve. Minnesota budget officials are expected to provide an update on the state's finances in early May.

Torey Van Oot • 651-925-5049