Retail at the Capitol | March 29, 2013
legislative updates for retailers from the Minnesota Retailers Association | |
Week 12 | Legislators in their Districts
Minnesota Retail Mid-Session Report
This week marks the mid-point of Minnesota's 2013 legislative session. Legislators returned to their districts for conversations with constituents, town hall meetings, vacations, and in some cases ice fishing. At MnRA we take the opportunity to inventory retail issues at the Capitol and provide you this update. If you have any questions on any of the issues below contact MnRA Government Affairs Director Rochelle Westlund at (651) 227-6631, or rochelle@mnretail.org.
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Taxes and Fees
Early in the legislative session Minnesota Governor Mark Dayton released his comprehensive budget proposal including broad changes to the sales tax system. Following feedback from taxpayers and businesses concerned with the impact of several of the proposals (business-to-business taxes, clothing taxes, retail services taxes) the Governor released a supplemental budget proposal recalling those initiatives. The Governor maintained his support for the MnRA-championed e-fairness initiative. In the area of tax increases, the Governor left in his new upper income tax tier and increases in the tobacco excise tax. Stay tuned for the scheduled release of the House and Senate omnibus tax bills around the third week of April. Provided below are updates on tax issues impacting retailers.
E-Fairness (Main Street Tax Collection Fairness)
At the national level the Marketplace Fairness Act gained momentum recently when the U.S. Senate amended the Act to a federal budget proposal. The amendment received bipartisan support with a 75-24 vote. The amendment's passage signals there is sufficient support to pass the Marketplace Fairness Act in the Senate.
At the state level, e-fairness was included in the Governor's budget proposal and has the support of leadership in both the House and the Senate. Related "affiliate nexus" bills were introduced in the House and Senate (H.F. 492 and S.F. 8). Sen. Ann Rest held a hearing on her bill early in the session, and affiliate nexus was heard in the House Tax Committee as part of the Governor's budget. Thank you to Roberta Bonoff, Creative Kidstuff, for testifying in favor of e-fairness. Omnibus tax bills are scheduled to the introduced by April 19 in both legislative bodies. We expect e-fairness language will be included in both bills.
MnRA supports e-fairness legislation at the state and federal level.
Clothing Sales Tax
One of the provisions in Governor Dayton's original budget proposal was the expansion of the sales tax to clothing items over $100. MnRA has lead the fight against the clothing sales tax. We launched a grassroots call to action webpage at www.noclothingtaxmn.com, including a petition against clothing tax expansion.
When Gov. Dayton released his revised budget, this provision was no longer included. There is still however some support for this tax in the Senate and House. MnRA continues to work with our partners on this issue and we await the release of the omnibus tax bills.
MnRA opposes expanding Minnesota's sales tax on clothing.
Tobacco Excise Tax
Retailers worry that taking disposable income out of the hands of consumers reduces their ability to spend.
And legislation increasing the excise tax on tobacco products is extremely regressive. If Minnesota raises the excise tax on tobacco above surrounding states, retailers here are saddled with a price disadvantage.
Bills have been introduced and heard in both houses relating to increasing the excise tax on tobacco by as much as $1.60/per pack. In addition a 94 cent increase remains in the Governor's budget. MnRA has remained engaged in conversations with key players on this issue.
MnRA opposes increasing the tobacco excise tax, especially to a level that makes Minnesota uncompetitive with neighboring states.
Retail Services Tax
A tenant of the Governor's original tax reform proposal was a broadening of the state sales in order to lower the overall tax rate. Part of the proposed tax expansion package was a tax on retail services. This would include items such as snow plowing, hair cuts, auto repair and other services that consumers use on a regular basis.
Many industries opposed this proposed expansion. In the Governor's revised budget, the expansion of the sales to retail services is no longer included. While it is possible that this expansion could be seen in the tax omnibus bills, it does not appear to have broad in the House and Senate.
MnRA opposes extending Minnesota's sales tax to retail services.
Business-to-Business Tax
Like the expansion of the sales tax to retail services, the business-to-business tax would extend the state sales tax to items like legal, accounting and advertising services. Not only would this tax be a disadvantage to Minnesota companies offering these services, it would also increase the cost of doing business in the state. Businesses opposed this provision of the Governor's original budget. Upon releasing his supplemental "Plan B+" budget, the Governor removed this proposal.
It is unlikely we will see a broad business-to-business services tax in the upcoming omnibus tax bills, however legislators have mentioned an interest in taking a look at specific services.
MnRA opposes extending Minnesota's sales tax to business-to-business services.
Snack Tax
H.F. 1249 was introduced in an attempt to expand the Minnesota's sales tax to include prepackaged snack foods sold in packages or a group of packages in which each individual package contains no more than eight ounces of snacks. Steve Rush, Holiday Companies, along with MnRA and the state grocers association testified against the bill in the House. While the bill was held over for possible inclusion in the House Tax Committee omnibus tax bill, it appears to lack support. Senate hearings on the bill are yet to be scheduled.
MnRA opposes a snack tax increase.
Street Improvement Utility Fee
A street utility district fee bill that has floated around the Capitol for years allows cities to impose broad taxes for transportation improvements. If this bill were to pass businesses could see an assessment of this fee based on traffic to their business or shopping center. This would potentially increase the fixed costs of businesses that already pay property taxes.
MnRA opposes this legislation and is working with a coalition to prevent passage.
Capital Equipment Sales Tax Exemption
Bills were introduced in the House and the Senate to change the capitol equipment tax credit to an upfront exemption. There appears to be bipartisan support for this change this year (as there has been in the past). Bills on this issue have been heard in House and Senate Tax Committees and have been laid over for possible inclusion in the omnibus tax bills.
MnRA supports an upfront tax exemption on capital equipment purchases.
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Convenience Retail
Gasoline Pre-Pay Preemption
Last year, the Coon Rapids City Council passed an ordinance requiring gas station patrons to pre-pay for fuel purchases. The City cited public safety costs associated with drive-offs as a catalyst for the ordinance. Mandating pre-payment has had a negative impact on gas sales and in-store sales for some Coon Rapids retailers. H.F. 1248 and S.F. 1131 were introduced to preempt municipalities from requiring pre-payment for gasoline. These bills were passed out of necessary policy committees. Thank you to Steve Rush, Holiday Companies, for testifying on these bills. Both the House and Senate bills await a floor vote. MnRA supports the pre-pay preemption legislation.
Bio-Fuel Mandates
H.F. 462 and S.F. 448 extend Minnesota's mandates for biofuel in the state of Minnesota through 2020, while increasing the minimum rate. These bills also expands the definition of biofuel from ethanol to biobutenol. The Minnesota Petroleum Marketers Association has done significant work on these bill to the satisfaction of stakeholders. Both the bills are on the General Register for a vote on the floors of the House and Senate.
MnRA is watching this legislation to ensure its workability for gas retailers.
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Product Safety & Producer Responsibility
Product Safety
This year a number of bills have been introduced dealing with product safety. Three bills have been moving through the House and Senate.
H.F. 459 and S.F. 379 would ban Bisphenol-A from children's products or products marketed to children under 12. This would have included soups with characters used on packaging. While the burden for ensuring product safety falls primarily on manufacturers, work was done on the bill to eliminate liability of retailers. Additional work was done to reduce the age of child to three. Changes were made to narrow the bill to children's food containers. Bills are on the General Register waiting to be heard on the floors.
H.F. 458 and S.F. 357 would ban formaldehyde from children's products. Similar work was achieved in amending the original language of this bill to protect retailers from liability at the time of sale if they did not know a product contained formaldehyde.These bills made the committee deadlines in both houses and are waiting to be heard for a vote on the floor.
H.F.605 and S.F. 466 aimed to protect children against a list of known chemicals. These bills require manufactures to disclose the use of certain chemicals in production and prohibits retailers from selling products containing these chemicals.This bill was based in part off of a Washington state law. The Senate bill was voted down in the Senate Commerce Committee after the author offered an amendment to address concerns of the business community. The House bill did not make the committee deadline.
MnRA is closely watching these bills and their impact on retailers.
Product Stewardship
Even before the legislative session began, product stewardship was expected to be a hot topic at the Capitol this year. Recycling Reinvented, a national non-profit sponsored in large part by Nestle Waters, began conversations with groups and legislators proposing sweeping changes to the recycling system.
It was anticipated that these changes would be introduced in the legislature this year along with a "bottle bill". Bills requiring a study about the recycling system in Minnesota have been introduced. A "bottle bill" has not been introduced.
MnRA is closely watching potential changes to Minnesota's recycling system.
H.F. 865 and S.F. 639 have been introduced, dealing with paint, carpet, and primary batteries. The bills would set up a "take back program" in these specified areas. These bills generally have industry support, citing issues of free rider problems in recycling and leveling the playing field for manufactures.
MnRA is concerned with the potential impact of the primary batteries definition as it related to retailers.
Consumer Protection
In an effort to protect consumers against fraud, Rep. John Lesch introduced a bill that would allow private action by individual consumers when there is an alleged violation of the public interest.This bill would greatly increase civil suits as citizens rather than the Attorney General could file suit against a company. No hearings were held on this measure in the Senate. The bill did not meet committee deadlines and will likely not move forward.
MnRA opposes this bill.
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Retail Pharmacy
Board of Pharmacy Updates and Compounding
The Senate Health, Human Services, and Housing Committee heard the Minnesota Board of Pharmacy's policy bill, S.F. 1081, addressing Board initiatives relating to licensing requirement modifications, compounding requirements clarifications, and prescription monitoring program provisions modifications. A "delete all" amendment modified the bill in agreement with stakeholders, including the Minnesota Pharmacists Association, MnRA, and our related Pharmacy Business Coalition. As such, industry groups support the bill. S.F. 1081 has been sent to the Committee on Rules and Administration. The companion file H.F. 1136 was also amended and passed from Committee. MnRA supports these bills as amended.
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Employment Issues
Health Care
MnSure, the Minnesota health care exchange designed in response to federal health care reform, has been signed into law and is scheduled to be up and running by October, 2013. The exchange will be financed almost entirely by premium taxes on individuals and small businesses purchasing through the exchange. MnSure will be governed by a new seven-person board appointed by the Governor. For more information on implementation for small businesse, visit the MnSure website.
MnRA supported a state-based exchange but has several concerns over the final version of the MnSure exchange legislation.
Minimum Wage
In the House an amendment was added to H.F. 92 to increase Minnesota's minimum wage to $9.95 by August 1, 2015. Under this bill the minimum wage would be indexed annually at the rate of inflation using the consumer price index.
In the Senate, bill author Sen. Eaton proposed an amendment to make the Minnesota minimum wage $7.25 per hour (equal to the current Federal minimum wage) effective August 1, 2013, with increases to $7.75 by August 1, 2015. There is no indexing in the Senate version of the bill.
Both bills await floor votes in the House and Senate. These bills will end up in conference committee. Thank you to Jeff Lindoo, Thrifty White Pharmacy, for testifying on this issue.
MnRA opposes raising Minnesota's minimum wage, especially above the federal minimum wage level.
Expanded Mandated Pregnancy Leave
Rep. Kahn introduced a bill that would have required employers to give an additional twelve weeks of pregnancy leave to individuals having difficulty recovering from pregnancy. This bill failed to meet committee deadlines in both the House and the Senate. It is possible this bill will be seen again as an amendment to a related bill.
MnRA opposes expanded mandated pregnancy leave.
"Ban the Box" Questions on Employment Applications
"Ban the box" legislation prevents employers from inquiring at the initial time of application as to the criminal history of an applicant. Once an interview has been granted an employer may inquire as to an applicant's criminal history. Changes to the original language of the bill have been made based on business community concerns.
MnRA has reached out to the Commissioner of Human Rights (the state agency that will be responsible for enforcement) to discuss several issues relating to how the department will interpret the potential law.
This bill has passed through committees in both houses and is expected to be heard on the floors in the next couple of weeks. Amendments to reduce the fee for small businesses are expected to be offered on the floor.
While MnRA does not support "ban the box" legislation, proposed amendments improve its language.
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