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Tax Expenditure Review Commission approves LBO’s draft 2025 report; staff outline evaluation tools
Summary
The commission approved the Legislative Budget Office’s draft 2025 annual report and discussed evaluation methods, including synthetic control models and new software (Remy), with staff saying recommendations will appear in next year’s report unless otherwise directed.
The Tax Expenditure Review Commission approved the Legislative Budget Office’s draft 2025 annual report during a Jan. 28 meeting and heard LBO staff describe how they plan to improve tax‑expenditure evaluations.
Carlos Wedka, a lead analyst with the Legislative Budget Office, told members the draft meets the requirements of Minnesota Statutes 3.8855, subdivision 7, and noted this is the commission’s first report to include full evaluation appendices. He said the report includes an updated glossary and appendices with evaluation material previously presented to members and that a draft cover letter to tax‑committee leadership will be updated after the commission’s review.
Christian Larson, director of the LBO, outlined that the report summarizes five evaluation presentations covering 15 tax expenditures and includes a new procedure for making formal recommendations. “The annual report … must be published by February 15th,” Larson said as the office emphasized statutory timing and internal processes.
Members focused questions on methodology and outside partnerships. LBO staff described three analytic areas they are adopting or testing: (1) input–output or REMI‑style modeling platforms used for project‑level impact estimates (the LBO referenced use of MLIN in prior work), (2) a recently purchased license for Remy software to support tax‑expenditure modeling, and (3) consideration of synthetic control models to address “but‑for” questions when suitable panel data exist. Vlad Fuimo (LBO) said synthetic control approaches and other tools are being reviewed but that data limitations can constrain their use.
Representative Robbins urged the office to try complementary analyses that address whether funds would have greater public value returned directly to taxpayers: “We don’t have a way to say what if the money was just returned to the public,” she said, asking for additional methods where feasible.
Co‑chair Davids moved to adopt the draft report subject to technical and conforming changes; the roll call recorded seven yes, zero no, and two excused. The commission’s vote approves the draft for inclusion in the commission record and signals the LBO to finalize materials for the 2026 report cycle.
Members asked that the final materials to the tax committees include both the LBO’s tabulated evaluation responses and a summary of discussion points and vote records so committee members have full context when deciding whether to act on the commission’s recommendations. The commission also asked staff to report back after internal meetings with academic partners and practitioners used as benchmarks.
The commission then moved to consider specific tax‑expenditure evaluations included in the report.
