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Committee hears constitutional amendment to return large surpluses to taxpayers; advocates and budget analysts urge caution
Summary
House File 4 would create a constitutional trigger to return general fund surpluses above a 105% threshold to taxpayers. Supporters urged returning surplus funds; budget analysts and advocacy groups warned the amendment would limit future legislative flexibility and could harm public investment.
The House Tax Committee considered House File 4 on Jan. 24, a proposed constitutional amendment that would create a state account for projected general-fund revenues that exceed 105% of projected expenditures and require legislative appropriation of those amounts for property- or income-tax relief.
Representative Johnson presented the measure as a mechanism to send surplus revenue back to taxpayers. "Instead of creating new ways to spend surpluses, this would actually put it back to the people who created the surplus," Johnson said, describing the proposal as a constitutional vehicle to return funds as refunds or one-time tax reductions.
Supporters included Rayann Lee of Americans for Prosperity, who told the committee, "We applaud the proposal to return surplus funds to taxpayers," and suggested alternative triggers such as automatic rate reductions. Lee urged changes to budgeting processes to reduce volatility and limit government growth.
Opponents included Nan Madden, director of the Minnesota Budget Project, who warned that embedding revenue limits in the state constitution would reduce legislative flexibility and harm long-term public investment. "Constitutional revenue limits prevent public investments from keeping pace with growth in the economy or changes in our population," Madden said, citing the Colorado TABOR experience and the risks of reduced ability to respond to recessions or crises.
Eric Bernstein of the We Make Minnesota coalition also opposed the amendment, arguing it would deplete resources for education, healthcare and infrastructure and remove decisions about spending from elected officials. "Putting tax cuts on autopilot will only limit the legislature's ability to respond to contemporary context and pressing social priorities," Bernstein said.
Committee members asked technical questions about implementation, including how the statute would use forecasts (members may select one of two recent official forecasts for the comparison), whether corporate property owners could receive refunds, and how the provision would interact with the current budget reserve. House fiscal and research staff said a fiscal note had been requested and was in process. Members also discussed referral steps for constitutional amendments under House Rule 4.15; staff advised that a referral to Ways and Means followed by Rules is a typical path.
Representative Johnson moved and the committee adopted the 4A2 amendment to put the bill in its amended shape; that amendment passed on a voice vote. Committee chairs did not forward HF4 to Ways and Means during the Jan. 24 meeting; the bill was laid over for further consideration and will be rescheduled. Members of both parties said additional technical work and fiscal analysis are needed before the committee advances a constitutional amendment to the full House.
