The fifth special session of 2020 proved to be the charm for the Minnesota legislature earlier this week. The primary reason Gov. Tim Walz (DFL) called the session was to extend his executive emergency powers as they related to the COVID-19 pandemic that has gripped the country for the better part of 2020.Since the legislature gaveled out the 2020 regular session at the end of May, Walz called four additional special sessions - one each month. Per the state constitution, the legislature must be in session and the only lawmaker who can call a legislature into a special session is the governor.
In addition to Gov. Walz extending his emergency powers, which was unsuccessfully challenged by republican lawmakers each special session, several unfinished items left over from the regular and special sessions were also up for debate. Among them were the passage of a tax bill and a capital investment bonding bill. Critical to the passage of a tax bill for AgriGrowth was the inclusion of full Section 179 tax conformity that had been championed by our members and multiple stakeholders from the agricultural community for the past several legislative sessions. However, until this week that effort had not proven successful between the GOP-led Senate, the DFL-led House and Governor Walz.
While these two major items lingered all summer, an additional issue that arose included the crafting of an agreement to determine state oversight of COVID-19-related funding received from the federal government. And on top of the unprecedented pandemic dynamics, lawmakers were also eager to address police reform-related measures as a result of the tragic death of George Floyd on Memorial Day. During the special sessions earlier this summer, lawmakers were in fact able to come to agreements on both the COVID-19 related oversight legislation and the police reform measures.
However, that left two major outstanding issues left to address before the upcoming elections on November 3: the passage of a capital investment bonding bill and the full Section 179 tax conformity measure. With time running out and the possibility of an impasse during lame-duck legislative sessions in November or December, lawmakers rolled up their sleeves and passed the biggest bonding bill in state history by overwhelming margins in both the House and Senate this week.
The $1.36 billion bonding bill (House File 1) included a host of strong infrastructure investments that stand to benefit AgriGrowth’s membership throughout the state. Among them were $328 million to the Minnesota Department of Transportation for local road improvements and bridge replacements, rail service improvement, regional rail authority assistance, rail crossing safety, and port development assistance. In addition, $21 million was appropriated to the Minnesota Department of Agriculture and Minnesota Department of Health for lab building and equipment infrastructure. Also of note was a $17 million infusion for flood hazard mitigation and $270 million for wastewater infrastructure funding for communities and projects throughout the state.
The only major tax provision included in the bonding bill was the establishment of full federal conformity of Section 179 expensing and the recognition of tax impacts on like-kind exchanges (trade-ins), retroactive for tax years 2018 and 2019. This long-awaited change will help farmers and small businesses by allowing them to take a 100% deduction in the first year of a purchase when equipment is put into operation. The passage of this provision means approximately $200 million in tax relief to farmers and small business owners. The changes to the federal tax code several years ago created a problem in Minnesota because they required trade-in value to be counted as income, meaning farmers and small-business owners were hit with tax increases because the state tax code only allowed a 20% deduction in the first year. The change would align Minnesota with the federal tax code by allowing a 100% deduction. These tax changes are extremely important for AgriGrowth and our farmers and business members, and we are grateful to our lawmakers that they saw to it the measure was included.
The bonding bill now awaits Governor Tim Walz's signature which is expected in the coming days. One major outstanding policy priority for AgriGrowth that did not reach the finish line this year was funding for the Border-to-Border Broadband grant program. It is highly anticipated funding for this program, which is a model nationwide, will receive an infusion of general fund dollars during the 2021 legislative session.
If you have any questions about the recent special session or any other legislative priorities, please contact me at email@example.com or (651) 238-0089.