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House bill would create state-level new markets tax credit program to steer investment to Greater Minnesota
Summary
A bill before the Minnesota House Tax Committee would create a $200 million, state-level New Markets-style tax credit program, with at least half the allocation targeted to Greater Minnesota; supporters said it would attract private capital to underserved communities, while some members raised budget and distribution concerns.
A bill to create a state-level New Markets-style tax credit program was heard April 9 before the Minnesota House Tax Committee. Representative Tim Swadzinski moved House File 2360, which would authorize a $200 million state allocation modeled on the federal New Markets Tax Credit program and reserve at least $100 million for Greater Minnesota.
Proponents said the program would attract private investment to communities that receive relatively little New Markets funding under the federal program. Alex Stepanek of Advantage Capital, an impact investor, told the committee that states that adopt similar programs substantially increase the amount of federal New Markets funding that comes to them and cited Nebraska’s program as an example of a state that moved up in national rankings after adopting a state program.
"This program gets entrepreneurs the financing they need, where they need it, when they need it," Stepanek said.
Jason Wabama, owner of Advanced Machine Guarding Solutions in Hibbing, described struggling to obtain working capital in rural Minnesota and said the credits would help firms expand and create jobs. "Wewant to go from 22 employees up to 50 employees in the next 2 years," Wabama said.
Committee members acknowledged the bill's potential but raised fiscal questions. Chair Gomez said changes in the bill— including a five-year carryforward and a regional allocation formula—warranted further discussion, and flagged the program's near-term cost. Representative Swadzinski said the fiscal note schedules the state cost to begin in 2028 and that the bill is structured to produce investment immediately while spreading budgetary impact over future years.
The committee laid House File 2360 over for possible inclusion in the omnibus tax bill.
Why it matters: Supporters called the proposal a proven tool for channeling federal and private investment into underserved communities and for supporting small businesses and job creation in Greater Minnesota. Opponents and some members asked for additional conversation about allocation formulas, program scale and near-term budgetary impacts.
Where it goes from here: The bill was laid over for possible inclusion in the omnibus tax bill. Committee members said they would continue negotiations on allocation, carryforward provisions and fiscal timing.
