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Tax Expenditure Review Commission adopts updated procedures, repeals small-alcohol producers credit bundle and modifies data-center exemption
Summary
At its June 17, 2026 meeting the Tax Expenditure Review Commission adopted updated evaluation procedures, recommended repeal of the Small Alcohol Producers Credit bundle, approved modifications to the Data Center Equipment Exemption, and continued several other tax-expenditure bundles. Multiple LBO evaluation reports were presented and several items were deferred to the July meeting.
The Tax Expenditure Review Commission on June 17 adopted updated evaluation procedures, voted to repeal a small-alcohol producers tax-expenditure bundle and approved a modification to the Data Center Equipment Exemption, the Commission’s co-chairs said.
Co-Chair Greg Davids opened the hybrid meeting at 12:00 p.m. and a quorum of five members was present. Christian Larson, director with the Legislative Budget Office, presented proposed changes to the Commission’s evaluation procedures that the Commission adopted by roll-call vote (AYE: Rep. Esther Agbaje, Rep. Greg Davids, Sen. Doron Clark, Sen. Mark Koran, Commissioner Paul Marquart; four excused).
The Commission considered evaluations prepared by the Legislative Budget Office of several tax-expenditure bundles and individual credits. After LBO staff summarized aggregated evaluations of the Small Alcohol Producers Credit bundle, Co-Chair Rep. Esther Agbaje moved to remove the Small Winery Credit (7.2.03) from that bundle because responses received for that credit did not meet the quorum requirement in the TERC procedures; that motion passed by roll call. Agbaje then moved, and renewed, a recommendation to repeal the Small Alcohol Producers Credit bundle as modified (affecting 7.2.01 Credit for Small Brewers and 7.2.02 Microdistillery Credit); the Commission adopted the recommendation by a 4–1 roll-call vote (AYE: Agbaje, Davids, Clark, Koran; NAY: Commissioner Marquart; four excused).
The Commission also reviewed LBO evaluations of a package of lawful-gambling tax expenditures (including various bingo and raffle exemptions and credits) and voted unanimously among present members to recommend continuation of that bundle. Similarly, the Commission voted unanimously among present members to continue the Residential Utility Services bundle, covering Residential Heating Fuels (4.1.14), Residential Water Services (4.1.15) and Sewer Services (4.1.16).
On the Data Center Equipment Exemption (4.2.12), Co-Chair Davids initially moved to continue the exemption but withdrew that motion and instead moved to recommend a modification. The Commission approved the recommendation to modify the exemption by roll-call vote (5–0 with four excused).
Legislative Budget Office staff also presented evaluation reports on the Interest on Contributions to a First Time Homebuyer Account (1.4.14) and the Home Mortgage Interest Tax Deduction (1.3.05). Several other reports — including Mortgage Registration Tax Expenditure evaluations for Agricultural Loans (9.1.01) and Government Housing (9.1.02), and DEED transfer items (10.1.01–10.1.06) — were deferred to the July meeting because of time constraints.
Votes at a glance: Co-Chair Davids called roll for each recorded motion and the Commission recorded the following outcomes: (1) Adopted updated TERC evaluation procedures (passed, 5–0; SEG 009–017). (2) Removed Small Winery Credit (7.2.03) from Small Alcohol Producers bundle (passed, 5–0; SEG 019–025). (3) Recommended repeal of the Small Alcohol Producers Credit bundle as modified (passed, 4–1; SEG 028–036). (4) Recommended continuation of Lawful Gambling tax-expenditures bundle (passed, 5–0; SEG 037–043). (5) Recommended continuation of Residential Utility Services bundle (passed, 5–0; SEG 044–053). (6) Withdrew motion to continue Data Center Equipment Exemption, then moved and passed a recommendation to modify it (passed, 5–0; SEG 054–064). (7) Adopted evaluation objectives and directed LBO to proceed on Metropolitan Agricultural Preserves Land (13.2.05), Metropolitan Agricultural Preserves Credit (13.3.03), and Special Use Valuation (3.1.01) (each passed, 5–0; SEG 071–089).
The Commission adjourned at 1:32 p.m. Director Larson told members that going forward evaluation responses will be collected by an online survey rather than a fillable PDF and reminded members that deferred items would be taken up at the July meeting.
Background: The Tax Expenditure Review Commission carries out responsibilities assigned in Minnesota Statutes, section 3.8855, to evaluate and recommend continuation, modification or repeal of state tax expenditures. The Commission’s June actions direct the Legislative Budget Office to proceed with evaluations and produce any follow-up materials required under statute.
