Friends and neighbors,
As the New Year unfolds, I am preparing to serve you in the upcoming legislative session that begins on January 31. One of the main debates will be: What should be done with our state’s massive budget surplus? As chairwoman of the Senate Taxes Committee, I will be heavily involved in these discussions.
In early December, the state’s budget office announced that Minnesota has a record-breaking projected $7.7 billion surplus. The surplus was driven by a higher than expected increase in tax collections, including a 10% increase in individual income tax collections.
In addition to historic budget surpluses, the state’s reserve and cash flow accounts are topped out at $2.65 billion and $350 million respectively. And a whopping $62 billion in Covid-related aid from the federal government has come to our state already.
At the same time, two realities are working against middle-class families:
- Minnesota routinely has some of the highest tax burdens in our nation. We really are a tax island. We tax more goods and services at higher rates than our neighbors. Even our lowest income tax brackets are higher than the highest tax bracket in 15 states.
- Too many middle-class Minnesotans are getting squeezed with inflation and higher prices on everyday goods: The price of a gallon of gas is almost a dollar higher than it was a year ago. Electric and gas rates are increasing – significantly, in many cases. Natural gas prices went up 80% from September 2020 to September 2021. According to the Bureau of Labor Statistics, grocery bills have spiked too.
With the state’s enormous budget surplus comes the responsibility and opportunity to examine our tax code and find ways to empower Minnesota families and drive economic growth through significant, broad tax relief.
One needed and bipartisan goal is to stop taxing Social Security benefits. It’s simply absurd that we continue to tax seniors twice on their Social Security income. The tax also has severe long-term consequences because it drives people out of Minnesota – along with their economic activity, their contributions to our community, and their volunteerism. Minnesota is one of only 12 states that continue to tax Social Security income. This has been a top priority of mine for years, and it will be again in 2022.
Another key priority for me is support for working families who are now facing 40-year-high inflationary increases. Significantly increasing the refundable Minnesota Child Tax Credit will put money back into their pockets and empower them to use those dollars for child care, costs for sick leave, tutoring, or whatever needs face their families.
The economic impact of the pandemic has been grueling. A lot of our neighbors just barely made it through. Many small businesses didn’t. Now inflation is adding to middle-class struggles. It’s time to provide some relief.
With a focus on serving and strengthening Minnesotans and laying aside political gamesmanship, we can use these significant resources to bring relief for real needs facing Minnesotans all across our state.
I’m eager to hear from you. What changes would help your family the most? How would you like to see the surplus used? What would not only help our state succeed but what would help drive positive outcomes for your family as well?
Please feel free to contact me anytime. You can email me at sen.carla.nelson@senate.mn or call me at 651-296-4848. You can also follow me at Facebook.com/SenatorCarlaNelson. It is an honor and a privilege to serve you!
Sincerely,
Sen. Nelson is in her 4th term in the Minnesota State Senate and is chair of the Senate Tax Committee. Carla represents Chatfield, Dover, Eyota, Rochester, Stewartville and 14 townships in Olmsted county.