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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
1.11 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 12 members appointed by the governor, as follows:
1.19(1) three senators and three members of the house of representatives, including the
1.20chairs of the house of representatives and senate committees with jurisdiction over taxes,
1.21with no more than three of the six legislators being from the same political party; and
1.22(2) six public members, including at least one who must be a citizen representing
1.23working families, one must be a representative of a nonprofit organization, one must be a
2.1person with experience in economic or business development, and the remainder shall be
2.2individuals who have a basic understanding of state tax policy, government operations,
2.3and public services.
2.4 Subd. 2. Terms. Legislative members serve two-year terms expiring September 1 of
2.5each odd-numbered year. Public members serve two-year terms expiring September 1 of
2.6each odd-numbered year.
2.7 Subd. 3. Limits. Members who are not chairs of a house of representatives or senate
2.8committee with jurisdiction over taxes are subject to the following restrictions:
2.9(1) after an individual serves four years on the commission, the individual is not
2.10eligible for appointment to another term or part of a term;
2.11(2) a legislative member who serves a full term may not be appointed to an
2.12immediately succeeding term; and
2.13(3) a public member may not serve consecutive terms, and, for purposes of this
2.14prohibition, a member is considered to have served a term only if the member has served
2.15more than one-half of the term.
2.16 Subd. 4. Appointments. The governor shall make appointments before September
2.171 of each odd-numbered year.
2.18 Subd. 5. Legislative members. If a legislative member ceases to be a member
2.19of the legislative body from which the member was appointed, the member vacates
2.20membership on the commission. If a legislative member who is a chair of a house of
2.21representatives or senate committee with jurisdiction over taxes ceases to be a chair of that
2.22committee, the member vacates membership on the commission.
2.23 Subd. 6. Vacancies. If a vacancy occurs, the governor shall appoint a person to serve
2.24for the remainder of the unexpired term in the same manner as the original appointment.
2.25 Subd. 7. Officers. The commission shall have a chair and vice-chair as presiding
2.26officers. The chair and vice-chair must alternate every two years between the two
2.27membership groups: legislators and public members. The chair and vice-chair may not be
2.28from the same membership group.
2.29 Subd. 8. Quorum; voting. Seven members of the commission constitute a quorum.
2.30A final action or recommendation may not be made unless approved by a recorded vote
2.31of at least seven members. All other actions by the commission shall be decided by a
2.32majority of the members present and voting.
2.33 Subd. 9. Compensation. Each member of the commission is entitled to
2.34reimbursement for actual and necessary expenses incurred in performing commission
2.35duties. Each legislative member is entitled to reimbursement from the appropriate
3.1fund of the member's respective legislative body. Each public member is entitled to
3.2reimbursement from funds appropriated to the commission.
3.3 Sec. 3. [290D.04] STAFF.
3.4The commission shall employ an executive director to act as the executive head of
3.5the commission. The executive director shall employ persons necessary to carry out
3.7 Sec. 4. [290D.05] RULES.
3.8The commission shall adopt rules necessary to carry out this chapter.
3.9 Sec. 5. [290D.06] REPORT TO COMMISSION.
3.10 Subdivision 1. State tax provisions. In addition to the information provided in each
3.11even-numbered year under section 270C.11, before September 1 of each year prior to the
3.12first year of a regular legislative session, the commissioner shall provide a report with
3.13the following information, where applicable, for each tax expenditure subject to review
3.14during the following biennium:
3.15(1) the positive and negative impacts of the expenditure on the taxpayer or taxpayers
3.16before or after the tax expenditure;
3.17(2) the impact of the tax expenditure on the tax incidence in the state;
3.18(3) the economic development impacts of the preference, including the impact on
3.19jobs, wages, and benefits;
3.20(4) the cumulative fiscal impacts of other state and federal taxes providing benefits
3.21to taxpayers for similar activities;
3.22(5) the measurable impacts of the tax expenditure in meeting the goal of the
3.24(6) a comparison of the tax expenditure with tax treatment of taxpayers engaged
3.25in similar activities in neighboring states;
3.26(7) consideration of the probable impact on overall uniformity and fairness of the
3.27tax code; and
3.28(8) the number of taxpayers impacted by the tax expenditure and the nature of
3.30 Subd. 2. Federal conformity. The commission must also report on outstanding
3.31federal conformity provisions considering the factors listed in subdivision 1.
3.32 Sec. 6. [290D.07] COMMISSION DUTIES.
4.1 Subdivision 1. Review of tax expenditures. Before February 1 of the first year of a
4.2regularly scheduled legislative session, the commission shall (1) review information from
4.3the most recent tax expenditure budget report under section 270C.11 and the additional
4.4report under section 290D.06; (2) take public testimony; and (3) vote on recommendations
4.5for continuation or repeal of each tax expenditure subject to review in that legislative
4.7 Subd. 2. Public hearings. Before January 1 of the year a tax expenditure is included
4.8in a commission report, the commission shall conduct public hearings concerning the
4.9impact of the tax expenditure on (1) the beneficiaries; (2) the state economy; (3) its
4.10performance in meeting its purpose; (4) its impact on the tax incidence in the state; and (5)
4.11any other information that the commission deems relevant.
4.12 Subd. 3. Commission report; recommendations. By February 1 of the first year of
4.13every regular legislative session, the commission shall present to the chairs of the senate
4.14and house of representatives committees with jurisdiction over taxes, a report on the tax
4.15expenditures reviewed. In the report the commission shall report its recommendations for
4.16each tax expenditure, its findings on the demonstrated ability of each tax expenditure to
4.17meet its stated goal, the impact on the general fund budget of retaining or abolishing the
4.18tax expenditure, and any other information that the commission deems relevant to explain
4.19its recommendation for each expenditure.
4.20 Sec. 7. [290D.08] REQUIREMENT FOR REVIEW AND PERIODIC
4.21REENACTMENT OF ALL EXISTING AND NEW TAX EXPENDITURES.
4.22 Subdivision 1. Review of existing tax expenditures. The tax expenditures in statute
4.23as of July 1, 2013, are subject to sunset review on the following schedule:
4.24(1) all tax expenditures in chapters 168, 297A, and 297B, on December 31, 2015,
4.25and every tenth year thereafter;
4.26(2) all tax expenditures in chapters 295, 296A, 297D, 297E, 297F, 297G, 297H, and
4.27297I, on December 31, 2017, and every tenth year thereafter;
4.28(3) all tax expenditures in chapter 290, on December 31, 2019, and every tenth
4.30(4) all tax expenditures in chapters 287, 290A, 290B, 291, and 298, on December
4.3131, 2021, and every tenth year thereafter; and
4.32(5) all tax expenditures in chapters 88, 270, 272, 273, 290C, 469, and 473H, on
4.33December 31, 2023, and every tenth year thereafter.
4.34 Subd. 2. New and renewed tax expenditures. Any legislation that creates, renews,
4.35or continues a tax expenditure must include the following provisions:
5.1(1) an intent statement that clearly provides the purposes for the tax expenditure and
5.2a standard or goal against which its effectiveness can be measured; and
5.3(2) an expiration date for the tax expenditure that may not exceed 12 years from
5.4the day the provision takes effect and must correspond to the expiration date or review
5.5schedule for other tax expenditures in the same tax area, as listed in subdivision 1.
5.6 Sec. 8. [290D.09] MONITORING OF RECOMMENDATIONS.
5.7During each legislative session, the staff of the commission shall monitor legislation
5.8affecting tax expenditures that have undergone sunset review and shall periodically
5.9report to the members of the commission on proposed changes which would modify
5.10prior recommendations of the commission.
5.11 Sec. 9. [290D.10] CONTINUATION BY LAW.
5.12During the regular session in which the commission's report is received, the
5.13legislature may enact legislation to continue a tax expenditure contained in the report
5.14for a period not to exceed ten years. This chapter does not prohibit the legislature from
5.15eliminating a tax expenditure on a date earlier than that provided in this chapter.
5.16 Sec. 10. [290D.11] GIFTS AND GRANTS.
5.17The commission may accept gifts, grants, and donations from any organization
5.18described in section 501(c)(3) of the Internal Revenue Code for the purpose of funding
5.19any activity under this chapter. All gifts, grants, and donations must be accepted in an
5.20open meeting by a majority of the voting members of the commission and reported in the
5.21public record of the commission with the name of the donor and purpose of the gift, grant,
5.22or donation. Money received under this section is appropriated to the commission.