• Minnesota Weekly Legislative Update: 01/18/2013
  • January 30, 2013
  • Law Firm: Faegre Baker Daniels - Minneapolis Office
  • The Capitol was buzzing this week, as committees held meetings that were introductory in nature, with members sharing personal backgrounds and legislative priorities. The House and Senate floor sessions had short agendas that were primarily housekeeping measure. However, a few committees did begin the process on significant, high-profile bills for the 2013 session. Among these were the Health Insurance Exchange bill, Affiliate Nexus sales tax bill and bills that expanded the sales tax base to clothing and digital products.

    Health Insurance Exchange

    On Wednesday, SF1, sponsored by Sen. Tony Lourey (DFL-Kerrick), passed the Senate Commerce Committee on a 7-5 vote. SF1 creates a state health insurance exchange, a centerpiece of the federal Affordable Care Act and a top priority of Governor Dayton. SF1 permits individuals and small businesses to begin buying health insurance coverage in October utilizing the exchange. The bill designs the exchange as an online tool, where consumers may shop for health plans. The operating cost for the exchange is expected to be in the range of $40 million-$50 million per year.

    The bill is expected to be heard in six Senate committees before it receives a final vote on the Senate floor. The House has not yet held a hearing for the health insurance exchange bill. The bill must be approved by the end of March or the federal exchange will be implemented in the state. Minnesota is one of seven states that has indicated it will create its own exchange, while more than 30 states will utilize the federal version.

    Affiliate Nexus

    The Senate Tax Reform Division, a subcommittee of the Senate Tax Committee, heard SF8, authored by Sen. Ann Rest (DFL-New Hope). SF8 seeks to require collection of the sales tax on online sales by establishing nexus for remote sellers with an affiliate in Minnesota. The Department of Revenue estimated that, if enacted, the bill would raise $4.5 million in the first year. The bill was laid over for potential inclusion in an omnibus tax bill.

    Broadening the Sales Tax Base

    In two separate hearings, the Senate Tax Reform Division heard bills that would broaden the sales tax base. SF9 (Sen. Rest) imposes a sales tax on clothing purchases over $200. SF11 (Sen. Rest) imposes the sales tax on clothing and creates a refundable income tax credit totaling $60 for married joint filers and $30 for all other filers. SF35 (Sen. Rest) seeks to adapt to the 21st Century marketplace by creating a broader base for the sales tax. This expansion would include digital services, such as online newspapers and magazines. All of the bills were laid over for potential inclusion in an omnibus tax bill.