The reinsurance program is a medium-term market stabilization program that uses state dollars to cover a portion of high-cost claims, allowing health plans to better moderate costs and rein in premiums. The original $542 million for operations was offset by federal funding and the federal dollars will continue through 2022 with this extension.
Meanwhile, the Minnesota House of Representatives passed House File 91, authored by Representative Rick Hansen (DFL-South St. Paul). This legislation bans perchloroethylene, a chemical commonly used for dry cleaning, and helps businesses transition to less harmful alternatives. The bill passed 127-0.
Senate Republican Caucus Pushes for Tax Exemption for PPP Loans
Following Friday’s news that Minnesota is projected to have a $1.6 billion surplus for the next budget cycle, the Minnesota Senate Republican Caucus announced that it will be moving forward with legislation to ensure forgiven PPP loans are not taxed by the state.
If the legislature does not act, the state will tax businesses that received forgiven PPP loans as income at the corporate tax rate of 9.8%. If the state chooses to make forgiven PPP loans tax exempt, it will cost the state $438 million in revenue.
Congress approved the PPP program as part of the March 2020 federal stimulus legislation to address last spring's increasing unemployment rate as a result of the COVID-19 pandemic. The program provided $11.3 billion to 102,352 Minnesota businesses in 2020. Last December, Congress passed legislation clarifying that forgiven PPP loans are not taxable for federal returns.
Senate Majority Leader Paul Gazelka (R-East Gull Lake) said that House Speaker Melissa Hortman (DFL-Brooklyn Park) has expressed “some openness” to the idea of not taxing forgiven PPP loans.
Senator Tom Bakk (I-Cook), who is authoring the legislation to make forgiven PPP loans non-taxable, said his goal is to get this legislation on the governor’s desk by March 15, which is the tax filing deadline for many Minnesota businesses. Gazelka said he hopes to pass the bill off the Senate floor within a week.
Amos A. Briggs | Government Relations
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