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Committee considers tax break for community banks to spur local lending; members press on pass‑through and definitions
Summary
Representative Baker presented House File 9.16, which would let qualifying community banks subtract income from small commercial and agricultural loans. Bankers testified in support; members asked whether tax savings must be passed to borrowers and raised concerns about parity with credit unions and the need for clearer definitions.
Representative Baker introduced House File 9.16 and an author amendment that narrowed eligibility to smaller community banks and capped loan sizes. The sponsor said the bill is intended to help community banks compete and keep capital flowing to small businesses and farms in greater Minnesota.
Supporters: Rich Jones, president and CEO of Bank in Minnesota, told the committee community banks provide a large share of small business and agricultural lending in the state and argued modest tax relief would be reinvested locally. A second banker (identified in the transcript as Jury writer, president/CEO) echoed those points and cited community banks’ role in PPP lending during the COVID pandemic.
Key member questions
Members asked whether the bill requires banks to pass tax savings to borrowers; Representative Baker and the testifiers said the bill creates a subtraction on bank income for qualifying loans but does not mandate pass‑through. Members also questioned parity with credit unions and nonprofit lenders and asked for a clearer statutory definition of ‘community bank’ to limit unintended beneficiaries.
Procedural outcome
The author A1 amendment to HF 9.16 was adopted by voice vote. Representative Baker moved HF 9.16, as amended, for possible inclusion in the House tax omnibus; the committee proceeded to adjourn after additional items were announced.
What’s next
Members requested clearer definitions and expressed interest in cost estimates and statutory language refinement to ensure benefits reach intended small banks and communities. The bill will be considered further for possible inclusion in the omnibus tax bill.
