The 2023 legislative session will likely go down as one of the most consequential in modern history. In addition to retaining the Governor’s office and the House of Representatives, the Democrat Farm Labor (“DFL”) party was able to flip control of the state Senate by the narrowest of margins in November, taking a 34-33 seat lead in the Chamber after having lost it in both 2016 and 2020. The November results that laid the foundation for this session were somewhat surprising. The President’s party typically loses seats in midterm elections, and key economic indicators preceding the fall election were thought to be obstacles for Democrats across the country.
Winning complete control of state government is one thing; keeping slim majorities together to pass sweeping and occasionally controversial legislation is another matter entirely. But Governor Tim Walz, House Speaker Melissa Hortman, and Senate Majority Leader Kari Dziedzic did just that by successfully negotiating an end to the 2023 legislative session and enacting a new $72 billion two-year state budget.
The newly minted majority used nearly all of the state’s record $17.5 billion surplus and passed policies that have long been on the DFL wish list. Some priorities included codifying state abortion rights, enacting a paid family and medical leave program, legalizing adult use of cannabis, enacting gun regulations, providing property tax relief, and much more.
This article will highlight some of the more prominent programs and changes enacted this year.
Paid Family and Medical Leave
One long-held DFL priority has been enacting a state paid family and medical leave program (“PFML”). In past years, the DFL-controlled House advanced versions of this legislation, but the bill hit roadblocks in the Republican-controlled Senate. Like many long-standing issues not advancing under divided-government, that all changed for PFML in 2023 when the DFL attained control of the Legislature and Governor’s office.
There is a lot of work remaining to develop, implement and create oversight for this new program, and as such, it will not take effect until January 1, 2026. The law allows employees up to 12 weeks of paid time off for a severe medical condition and up to 12 weeks to care for family members with serious illnesses or to bond with a new child. The benefits are capped at 20 weeks in a year and workers receive only a portion of their normal wages.
The program is funded with a new payroll tax, which is 0.7% and can be split evenly between employers and employees. The bill includes a wage exclusion, which allows employers with fewer than 30 employees to pay a lower premium. It also provides funding for grants to small businesses for temporary workers.
Earned Sick and Safe Time
The Legislature also passed earned sick and safe time, a separate policy from PFML. Starting January 2024, workers will be eligible to accrue at least of one hour of earned sick time for every 30 hours worked, with a maximum of 48 hours annually. Employees can use that time for medical appointments, short-term illnesses such as a cold or flu, or to care for a child who may be out of school. This time off can also be used to secure services or alter living arrangements in response to domestic violence, which is referenced in the title as “safe” time.
Adult Use Cannabis
Minnesota will become the 23rd state to legalize marijuana for recreational use. On August 1, 2023, possession of marijuana (up to two ounces in public and two pounds at home) will not be a crime and neither will home growing of the plant. The bill establishes a process to regulate the retail sale of cannabis. Still, it is expected to take 12 to 18 months to create the state office, write new rules and regulations, and sort through permits and licenses before retail sales begin.
Gun Regulations
Another long-held DFL priority enacted this year is strengthening the state’s gun regulations. Two new provisions were passed this session, an expansion of existing background check requirements to extend to private firearm transfers and the establishment of an Extreme Risk Protection Order, also known as a “red flag” law. This will allow a judge to remove firearms from someone deemed a threat to themselves or others.
Gun regulations have always been difficult to enact in Minnesota with our longstanding hunting tradition, and the fate of these measures was unknown until the final weeks of the session. In the end, DFL leaders were again able to keep their members in line and pass these provisions along a 34-33 party-line vote in the Senate.
Bonding Bill
Perhaps one of the most consequential bills passed at the end of session was a Capital Investment “Bonding” bill, which aims to improve state-owned infrastructure and assets. Bonding bills are typically passed in the second year of the biennium, but the last Legislature was unable to agree on bonding so the state has gone without a bill since 2020. After much squabbling and a healthy amount of political theater, lawmakers were able to come to an agreement on the final day of session on a bill that included a mix of cash and bonding for roughly $2.6 billion. This will fund projects in every corner of the state and should help the state catch up on the backlog of capital requests from cities, counties, and our college and university systems.
Tax Bill
Lawmakers were also able to come together to pass a tax bill, which included record tax cuts and credits totaling roughly $3 billion. The bill also established several new tax increases totaling approximately $1 billion. These new increases focused mainly on multinational corporations as well as individuals who make over $1 million in adjusted gross income or take in over $1 million in investment income. Tax increases were also included in the transportation budget, with an increase to the gas tax, and a new fee on deliveries over $100.
There are one-time rebate checks of $260 for individuals and $520 for couples with income caps of $75,000 and $150,000, respectively. The bill also establishes a new child tax credit for low-income families. Eligible families can receive $1,750 for every child, but the credit begins to phase out at $35,000 of adjusted gross income for joint filers. The tax bill also increases local government aid and country program aid payments to offset property tax burdens on residential homeowners.
Lawmakers have certainly earned a break after a very busy and significant session. The same cast of characters will be back for the second year of the biennium starting on February 12, 2024.
Samuel Richie is an attorney with Fryberger, Buchanan, Smith & Frederick, P.A., practicing primarily in the government relations and legislation areas and also administrative law.
