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Tax Expenditure Review Commission 10/28/26

Minnesota HouseThursday, October 29, 2026
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Evaluation of Minnesota State Housing Tax Credit

Proposed Objectives for Essential Tangible Goods Sales Tax Exemption

Proposed Objective for Film Production Credit

Proposed Objectives for Military-Related Motor Vehicle Registration Tax (MVRT) Exemptions

Proposed Objectives for Education-Related Motor Vehicle Registration Tax (MVRT) Exemptions

Proposed Objectives for Public Service-Related Motor Vehicle Registration Tax (MVRT) Exemptions

Full Document Analysis

Votes (7)

Tax Expenditure Review Commission Meeting Call to Order and Minutes Approval

Motion prevails (roll call vote, specifics not provided)

Moved by Representative Egabaje [N/A]

The meeting was called to order with a quorum present. The minutes from September 23rd, 2026, were moved and approved. Public testimony for the Housing Contribution Credit Evaluation Report was deferred until the December meeting.

LBO Presentation: Housing Contribution Credit Evaluation Report

Information item, no vote on action or objective

LBO presented findings on the Minnesota State Housing Tax Credit, noting its objective to increase affordable housing. The evaluation highlighted a struggle to make causal claims but provided descriptive statistics on contributions and project types. Concerns were raised about the disparity in housing types (rentals vs. homeownership) between metro and Greater Minnesota, with designated contributions heavily favoring the metro and specific project types. The administrative burden on Minnesota Housing was also discussed.

LBO Presentation: Proposed Objective for Essential Tangible Goods Sales Tax Exemption Bundle (4.101-4.106, 4.108, 4.109)

6 Ayes, 0 Nays, 3 Excused. Motion prevails.

Moved by Representative Egabaje [N/A]

The LBO proposed an objective for the essential tangible goods sales tax exemption bundle: 'to reduce the regressivity of the sales and use tax for low-income households.' The presentation detailed the eight expenditures, their history, and estimated foregone revenue. Chair Gomez provided additional context regarding the clothing exemption, noting its significant cost and how its benefits are distributed regressively, with higher-income individuals receiving the largest share.

LBO Presentation: Proposed Objective for Film Production Credit

Vote deferred for revised objective language

The LBO presented a proposed objective for the film production credit: 'to encourage investment in Minnesota film productions.' Representative Egabaje suggested that the objective should be broader to include ancillary economic development and ripple effects on the state's economy. The commission decided to defer the vote on this objective to allow the LBO to revise the language for the next meeting.

LBO Presentation: Proposed Objectives for Military-Related Motor Vehicle Registration Tax Exemptions (14.103, 14.104, 14.105)

7 Ayes, 0 Nays, 2 Excused. Motion prevails.

Moved by Representative Egabaje [N/A]

The LBO provided an overview of the Motor Vehicle Registration Tax (MVRT) and then presented proposed objectives for three military-related exemptions. These included exemptions for non-resident military personnel (to avoid double taxation), Medal of Honor recipients and former prisoners of war (to make special license plates more affordable), and disabled veterans (to provide state tax relief on vehicles). No specific questions or discussions beyond the presentation were recorded for these items.

LBO Presentation: Proposed Objectives for Education-Related Motor Vehicle Registration Tax Exemptions (14.102, 14.107, 14.108, 14.201)

7 Ayes, 0 Nays, 2 Excused. Motion prevails.

Moved by Representative Egabaje [N/A]

The LBO presented proposed objectives for four education-related MVRT exemptions. These included exemptions for school buses (to reduce student transportation costs), buses contracted for student transportation (to reduce tax burden on companies), driver education programs at non-public high schools (to extend tax benefits for driver education), and commercial driving schools (to extend similar tax benefits). The proposed objectives aim to support educational services and reduce operational costs associated with vehicle registration.

LBO Presentation: Proposed Objectives for Public Service-Related Motor Vehicle Registration Tax Exemptions (14.101, 14.106, 14.109)

7 Ayes, 0 Nays, 2 Excused. Motion prevails.

Moved by Representative Egabaje [N/A]

The LBO presented proposed objectives for three public service-related MVRT exemptions. These covered local government vehicles (to extend general sales tax exempt status), transport of disabled persons by non-profit charities (to extend tax-exempt status and reduce administrative costs), and private ambulance services (to provide consistent treatment and state assistance for emergency vehicles). The proposed objectives aim to support essential government and charitable services.

Notable Quotes (19)

The objective of the State Housing Tax Credit is to increase the development and availability of affordable housing to persons and families of low and moderate incomes in Minnesota.

— Annie Lemieux/Program Evaluator, Legislative Budget Office [N/A]
LBO Presentation: Housing Contribution Credit Evaluation Report

about 58% of respondents said that they would not have contributed to housing projects in Minnesota if the tax credit did not exist.

— Vlad Fleurimond/Economist, Legislative Budget Office [N/A]
LBO Presentation: Housing Contribution Credit Evaluation Report

I am a little bit concerned if we're going to concentrate rental units in the seven-county metro versus uh home ownership opportunities and vice versa.

— Commissioner Markwort [N/A]
LBO Presentation: Housing Contribution Credit Evaluation Report

we're never going to when we look at the the impact and the the credit, where we're at, we're never going to tax credit our way into housing affordability. And so I think we've got a greater issue outside of uh uh about this tax credit is that we just drastically increase the cost to build a home in Minnesota.

— Senator Curran [N/A]
LBO Presentation: Housing Contribution Credit Evaluation Report

the $100,000 appropriation will will help to offset uh the cost of an FTE uh for program administration. Other costs incurred by the agency are our closing and underwriting staff, uh attorneys, accounting staff that um end up contributing to to the um to the closing and and um getting across the finish line of projects.

— Dan Kitsberg/Legislative Director, Minnesota Housing [N/A]
LBO Presentation: Housing Contribution Credit Evaluation Report

The proposed objective of the exemption on essential tangible goods is to reduce the regressivity of the sales and use tax for low-income households.

— Jordan Peoples/Analyst, Legislative Budget Office [N/A]
LBO Presentation: Proposed Objective for Essential Tangible Goods Sales Tax Exemption Bundle (4.101-4.106, 4.108, 4.109)

it's good that furs and billfolds and other luxury goods are omitted from this, but if you go to the, you know, Dollar Tree and you buy a onesie for a $1.25 at the $1.25 Tree now, um you get a you don't pay sales tax on that. If you go buy a Gucci suit, you don't pay sales tax on that. And so, that's where you see that, you know, kind of that we're spending $1.2 billion and the vast majority of it is benefiting the highest-income Minnesotans who just buy more clothing, buy more expensive clothing.

— Chair Gomez/Chair [N/A]
LBO Presentation: Proposed Objective for Essential Tangible Goods Sales Tax Exemption Bundle (4.101-4.106, 4.108, 4.109)

The proposed objective of the film production credit is to encourage investment in Minnesota film productions.

— Carl Palmen/Analyst, Legislative Budget Office [N/A]
LBO Presentation: Proposed Objective for Film Production Credit

I'm just wondering if there's a way that our objective statement can um capture that a little bit more um because if if this credit is performing the way folks anticipate that it is, I would assume that there would be um some data around ancillary economic development um in terms of uh you know, the location of where the production is, you know, the types of jobs both directly and indirectly from the film or the or the arts project um and similarly just kind of you know, what type of ripple effects there are from that.

— Representative Egabaje [N/A]
LBO Presentation: Proposed Objective for Film Production Credit

The proposed objective of the non-resident military personnel exemption is to avoid double taxation of vehicles owned by armed forces members stationed in Minnesota by exempting them from the motor vehicle registration tax if the vehicle is already registered in their state of residence.

— Jordan Peoples/Analyst, Legislative Budget Office [N/A]
LBO Presentation: Proposed Objectives for Military-Related Motor Vehicle Registration Tax Exemptions (14.103, 14.104, 14.105)

The proposed objective of the Medal of Honor recipients and former prisoners of war exemption is to make my license plates more affordable and accessible to Medal of Honor recipients and former prisoners of war.

— Jordan Peoples/Analyst, Legislative Budget Office [N/A]
LBO Presentation: Proposed Objectives for Military-Related Motor Vehicle Registration Tax Exemptions (14.103, 14.104, 14.105)

The proposed objective of the disabled veterans exemption is to provide state tax relief on a motor vehicle that is given in whole or part to a disabled veteran by the federal government and to decrease vehicle related costs for all disabled veterans living in the state of Minnesota.

— Jordan Peoples/Analyst, Legislative Budget Office [N/A]
LBO Presentation: Proposed Objectives for Military-Related Motor Vehicle Registration Tax Exemptions (14.103, 14.104, 14.105)

The proposed objective is to reduce the cost of transporting students to and from educational institutions so more resources can be allocated for education purposes.

— Zach Reeves/Analyst, Legislative Budget Office [N/A]
LBO Presentation: Proposed Objectives for Education-Related Motor Vehicle Registration Tax Exemptions (14.102, 14.107, 14.108, 14.201)

The proposed objective for the preferential computation is to reduce the tax burden on companies contracted by Minnesota school districts to provide the same service as school buses um owned or leased by uh school districts themselves.

— Zach Reeves/Analyst, Legislative Budget Office [N/A]
LBO Presentation: Proposed Objectives for Education-Related Motor Vehicle Registration Tax Exemptions (14.102, 14.107, 14.108, 14.201)

The proposed objective for the drivers education program at non-public high schools exemption is to extend the same tax benefit to non-public high schools and other educational institutions receive for providing driver education and training by reducing their operational costs related to vehicle registration.

— Zach Reeves/Analyst, Legislative Budget Office [N/A]
LBO Presentation: Proposed Objectives for Education-Related Motor Vehicle Registration Tax Exemptions (14.102, 14.107, 14.108, 14.201)

The proposed objective for this expenditure is to extend the same tax benefit to commercial driving schools that public and private schools receive for providing driver's education training by reducing the operational costs related to vehicle registration.

— Zach Reeves/Analyst, Legislative Budget Office [N/A]
LBO Presentation: Proposed Objectives for Education-Related Motor Vehicle Registration Tax Exemptions (14.102, 14.107, 14.108, 14.201)

The objective of the motor vehicle registration tax exemption for local government vehicles is to extend the general sales tax exempt status for local governments to vehicles that are owned or leased by political subdivisions of Minnesota.

— Laura Secor/Analyst, Legislative Budget Office [N/A]
LBO Presentation: Proposed Objectives for Public Service-Related Motor Vehicle Registration Tax Exemptions (14.101, 14.106, 14.109)

The objective of the transport of disabled persons by non-profit charities exemption is to extend the tax exempt status of charitable organizations to include the motor vehicle registration tax and to reduce administrative costs for non-profit organizations that provide charitable services.

— Laura Secor/Analyst, Legislative Budget Office [N/A]
LBO Presentation: Proposed Objectives for Public Service-Related Motor Vehicle Registration Tax Exemptions (14.101, 14.106, 14.109)

The objective of the private ambulance services exemption is to provide consistent treatment of emergency vehicles and provide state assistance to private ambulance services providing emergency response services.

— Laura Secor/Analyst, Legislative Budget Office [N/A]
LBO Presentation: Proposed Objectives for Public Service-Related Motor Vehicle Registration Tax Exemptions (14.101, 14.106, 14.109)

Ordinances & Resolutions (16)

Housing Contribution Credit Evaluation ReportReport

LBO's report on the Minnesota State Housing Tax Credit.

Minnesota State Housing Tax Credit (SSHTC)Statute/Program

State tax credit for affordable housing development.

HF 991-2ELegislative Bill

House File from 2021 regular session, source for Film Production Credit objective.

Minnesota Statutes 168.013Statute

Governs the Motor Vehicle Registration Tax.

Minnesota Statutes 168.04, subdivision 1Statute

Pertains to the non-resident military personnel MVRT exemption.

Minnesota Statutes 168.03bStatute

Pertains to Medal of Honor recipients MVRT exemption.

Minnesota Statutes 168.124Statute

Pertains to Medal of Honor recipients MVRT exemption.

Minnesota Statutes 168.125Statute

Pertains to former prisoners of war MVRT exemption.

Minnesota Statutes 168.031BStatute

Pertains to disabled veterans MVRT exemption.

Minnesota Rules 7411.0850Rule

Outlines vehicle requirements for driver education programs.

Senate File 1434Legislative Bill

Bill from 1999 regular legislative session, discussed regarding commercial driving schools exemption.

Minnesota Statutes 114E.10Statute

Licenses private ambulance services.

Internal Revenue Code 501(c)(3)Code

Reference for tax-exempt status of charitable organizations.

2024 Tax Expenditure BudgetReport

Department of Revenue report providing data for tax expenditure analyses.

2026 Tax Expenditure BudgetReport

Upcoming Department of Revenue report with updated data for tax expenditure evaluations.

Article 14 of the state constitutionConstitution Section

Governs the distribution of revenue into the highway user tax distribution fund.

Raw materials

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