The Minnesota Chamber of Commerce's recent annual Session Priorities banquet featured discussion of many perennial Chamber issues, such as tax competitiveness and avoiding new mandates on employee benefits. But at this year's event, marijuana legalization and consequences thereof made a new appearance as a top concern for businesses as they try to negotiate rapidly changing local, state, and federal rules around medical and recreational drug use.

"As I've traveled the state, I continue to hear concerns expressed by the business community because they are not quite sure how this will affect their business, how it will affect their workplace, how it will affect productivity, how it aligns with federal laws," Chamber President Doug Loon told Gov. Tim Walz.

The odds of changes at the state level appear remote, at least for the time being. When asked about legalization, the state's four highest-ranking legislators ranged from ambivalence to opposition in their responses, with Senate Majority Leader Paul Gazelka saying such proposals have "no future as long as I'm here." Walz, who supports legalization and believes prohibition is ineffective, said he favors a slow and deliberative process before any legislation is passed.

"I trust adults to make those decisions, but I also recognize whether it's alcohol, whether it's cigarettes, gambling, any of the vices, you have to be very careful about the unintended consequences happening to society," he said. "... It's not going to happen overnight, nor should it."

But even if Minnesota does not act, companies are watching closely the experience of other states. Depending on how it is enacted and what safeguards are in place, legalization can bring a range of problems for employers, said Lauren Doroghazi, Policy Director with the Council of State Chambers.

"When Washington State recently legalized recreational marijuana... employees that worked at Boeing for 30 years started failing their drug tests that were required as federal contractors, and they had to be let go from their jobs," Doroghazi said. "This is not something that the employers wanted-their great employees that have been there for a long time, but now they can't pass a drug test."

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Republican leaders indicate their plan saves money for taxpayers by increasing the maximum income tax deduction from 11.4 percent to 13.2 percent, clarifying the personal property tax exemption on machinery, tools, and patterns for manufacturers, and using $100 million toward paying down outstanding debt. In total, the tax plan sent to the Governor would reduce general fund taxes by approximately $248 million for the 2020-21 biennium, provide $44.7 million to local governments for the personal property tax exemption, and utilize $100 million to reduce outstanding general-purpose revenue supported debt. By law, half of the overall surplus must go to the state's rainy day fund first before any remaining funds can be tapped. Under the GOP plan, the state's rainy-day or "budget stabilization fund" would have a projected balance of $956 million going into the next budget cycle. The income tax cut will occur through increasing the standard deduction. The deduction for "married joint" filers will go from $20,470 to $23,170 (for incomes under $144,670), for "individual" filers from $11,050 to $12,510 (for incomes under $120,361), for "head-of-household" filers from $14,280 to $16,170 (for incomes less than $54,504) and for "married separate" filers from $9,720 to $11,000 (for incomes less than $68,684). According to the LFB, the average filer would see a $105 reduction in their income taxes for 2020 and $300 when combined with other tax cuts in the current budget.

In stark contrast, Governor Evers sent his own plan to the Legislature that proposed to fully fund public schools by two-thirds state funding, increase mental health care in schools, and provide $130 million in property tax relief to homeowners. The Governor prioritized property tax relief while legislative Republicans prioritized income tax cuts. Republican lawmakers, who are in the majority in both the Assembly and the Senate, quickly rejected Evers' plan before passing their own tax cut proposal and sending it to the Governor's desk.

On the Personal Property Tax (PPT) side, the tax cut plan sent to the Governor has a provision to reduce personal property taxes specifically for manufacturers by fully exempting machinery, tools, and patterns. Wisconsin's personal property tax unfortunately is not administered uniformly throughout the state and this latest exemption is a clear example of that. In 2017, the Legislature thought they exempted machinery, tools, and patterns from the personal property tax. However, municipalities around the state interpreted the exemption differently, making an already unfair tax even more inequitable and unconstitutional, with personal property taxed in one municipality or business and exempt in another. The Republican tax plan clarifies this exemption for manufacturing.

The personal property tax has existed in Wisconsin longer than it has been a state and even prior to Wisconsin becoming a territory in 1836. The first iteration of the personal property tax exempted $75 worth of household items and over the past 180+ years, dozens of additional exemptions have been added to the point now where there are more exemptions than items taxed. Today's personal property tax is a tax on furniture, fixtures, boats, and other random items traditionally found in small and main street businesses, hence it is called a "Main Street" tax, and it's time for lawmakers to work up the political courage to do away with it once and for all.

While the State Assembly recently adjourned its final session day of 2020 and the State Senate has one final day remaining in late March, MHA will continue to work with our industry partners to prioritize our advocacy efforts on fully repealing the personal property tax in Wisconsin .