Third time isn’t the charm: Legislature fails again to pass Section 179 conformity

July 22, 2020 / Categories: Uncategorized

The Minnesota Soybean Growers Association is extremely disappointed and dismayed by the Minnesota Legislature’s inability to reach an agreement on a bonding bill during multiple special sessions in June and July.

“We’d like to see a more cooperative spirit from the elected officials we send to St. Paul,” MSGA President Jamie Beyer said. “It’s disheartening to see election-year politics take precedence over common-sense policies that would help Minnesota farmers and the state’s economy.”

The Legislature’s second special session was highlighted by the passage of a police reform bill in the wake of the George Floyd homicide. The reform bill includes several provisions, including the banning of chokeholds and other restraint methods (with exceptions).

The proposed $1.8 billion bonding and tax bill agreed upon by the Republican-majority Senate was set to include full Section 179 Conformity, MSGA’s top legislative priority, along with substantial infrastructure upgrades. While MSGA helped to successfully advocate for partial conformity in 2019, the current law still caps deductions at $25,000, far below the $1 million cap set at the federal level in the 2017 Tax Cuts and Jobs Act. The changes to like-kind exchanges in the 2019 legislative session led to many unintended tax consequences for agriculture. Full Section 179 conformity (retroactive to 2018 and 2019) in 2nd Special Session House File 3 aimed to fix the discrepancy. The bonding bill would have made Minnesota farmers eligible for more than $200 million in tax relief.

MSGA President Jamie Beyer (left) and Secretary Darin Johnson (right) spoke with House Speaker Melissa Hortman about Section 179 conformity during the 2020 Hill Visit in March.

“Everyone we met with during Hill Visits, from Speaker (Melissa) Hortman to Senator Bill Weber, wanted to see this get done,” said Beyer, who farms in Wheaton. “We understand this session was unusual, to say the least, but we need to see more urgency from the Legislature.”

Throughout the 2020 Legislative Session, MSGA farmer leaders were assured that full conformity of Section 179 received bipartisan support in the House and Senate, and Gov. Tim Walz would put his signature to the bonding bill. Last week, MSGA activated a Phone2Action campaign to urge legislators to come to an agreement on a bonding bill, which requires a supermajority (three-fifths, or 81 votes) from the Democratic-controlled House. Some Republicans in the House wanted to be more involved in the negotiations, and argued Gov. Walz should be stripped of his COVID-19 emergency powers. In response to the bill’s collapse, the governor authored a seven-page letter to House Minority Leader Kurt Daudt.

“The majority caucuses wanted to negotiate things so bad they forgot to include everybody in the negotiations. So they just did it between their two caucuses,” Daudt said earlier this week.

Roughly 100 days remain until the November election. Section 179 will once again figure to be a topic during upcoming special sessions, which could start as soon as August. However, Senate Majority Leader Paul Gazelka and House Speaker Hortman indicated Section 179 conformity may not be addressed until 2021.

MSGA will continue advocating for full Section 179 conformity through the election season, Vice President Mike Skaug said.

“We need this tax relief now,” he said.

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