// Advocacy, News

March 20, 2018: Capitol News

Tags: Angel Investor Tax Credit, Budget, Day at the Capitol, Federal Tax, Governor Dayton, Legislature, Minnesota Capitol, MinnesotaCare

Quick Recap of Medical Alley Day at the Capitol

Last Monday, March 12, was Medical Alley Day at the Capitol. Several Medical Alley members brought their innovative, life-saving products to the Minnesota Capitol for legislators and the broader capitol community to see firsthand. Other members met with legislative leaders from both the House & Senate to advocate for issues important to the Health Innovation & Care industry. Overall it was a very successful day and we are already looking forward to next year!

Please see more – including pictures – at our 2018 Day at the Capitol page on the Medical Alley Association website.

Last Week at the Legislature

This past Thursday Medical Alley Association testified in the Senate Health and Human Services Policy & Finance with concerns on SF730. This bill, authored by Sen. Julie Rosen, would create a new tax on opioids sold in Minnesota. It would also establish a large annual registration fee on opioid manufacturers and surcharge on these manufacturers in 2019. These funds would be used to fund opioid addiction prevention, treatment, and other similar programs, as well as the ongoing operation of the Prescription Monitoring Program.

Medical Alley Association raised a number of concerns with this proposal. These include the creation of an extensive tracking system and reporting responsibilities for manufacturers; lack of clarity on impact to non-opioid pain management solutions; and significant cost increases to healthcare systems and patients through a new tax on opioids sold in Minnesota, in addition to concerns over implementing a new tax when other funding mechanisms are available.

The bill was passed to the Finance Committee. We will keep you updated as this bill progresses.

The companion bill – HF1440 – passed out of Health and Human Services Reform in the House on Thursday. The new opioid tax (no registration fees or surcharges appeared in this bill) was amended out of the bill and replaced with a general fund appropriation. It was passed to the Civil Law & Data Practices committee where it is scheduled for a hearing on Tuesday. We will continue to track this bill as well.

Governor Dayton Releases His 2018 Supplemental Budget

On Friday Governor Dayton released his Supplemental Budget recommendations. Overall, Governor Dayton recommended $20 million in net tax relief and $227 million in spending increases for a total of $206 million (rounding throws off the numbers) impact to the state budget. That leaves $123 million on the bottom line.

He proposed a number of changes including expanding the state operated pre-k program, more money for Border-to-Border broadband, and a myriad of opioid treatment and prevention programs and activities. Below are some of the proposals Medical Alley Association will be watching more closely:

$10 million for the Angel Investor Tax Credit

• Governor Dayton provides for one-time funding for this program. This is the top item on Medical Alley’s Health Technology Economy Agenda
• We are very grateful that Governor Dayton included funding for the Angel Investment Credit in his Supplemental budget. We will continue to work with his office and the legislature to ensure this is included in a bill that is signed into law.

Federal Tax Conformity

• The Governor proposes switching Minnesota from using Federal Taxable Income (FTI) as its base for income taxes to Federal Adjusted Gross Income (FAGI); this would provide Minnesota more control over its income tax system
• He also creates a new $60 non-refundable tax credit for each individual
• He proposes conforming to all Section 179 changes (including eliminating the 80% add-back) and other accounting method options
  • He proposes NOT conforming with elimination of the corporate AMT, estate tax exclusion increase, or the 20% deduction for pass-through income
  • Governor Dayton also proposes having Minnesota apply its corporate income tax to income that was repatriated from overseas as a result of a one-time, lower federal tax rate on this income
• The summary is light on details, so once we have language from the Governor, it will be passed along

Creation of a special fund for the Spinal Cord Injury & Traumatic Brain Injury grant program

• There is no increase to the appropriations, but would allow for more time for the recipients to increase research projects.
• Medical Alley was supportive of the creation of this grant program

Offer a MinnesotaCare Buy-In on the Individual Market (“MNCare for All”)

• This is a signature proposal from Governor Dayton and key DFLers on the House & Senate HHS committees
• This would allow all individuals to buy into MinnesotaCare for their health plan

Repeal of the 2% Provider Tax Sunset

• This tax is scheduled to disappear at the end of 2019
• This 2% tax is currently charged to most services to patients, including at hospitals and surgical centers

Opioid Stewardship Tax

• As announced earlier this year, Governor Dayton is proposing to tax manufacturers of opioids to fund a variety of prevention, treatment, and mitigation of the opioid epidemic in Minnesota
• The summary of this provision indicates this tax will be charged at the wholesale level
• This would generated $19.2 million of revenue annually

A link to the summary document is here.

More supporting documents are here.

Looking Ahead at the Minnesota Legislature

Things are starting to heat up at the state legislature as this Thursday is the first committee deadline. This means that unless a bill gets out of all necessary policy committees in either the House or Senate before Thursday at 11:59 PM, no action can be taken on it this year. As a result, policy committees in both the House & Senate are hearing a large number of bills every day. Medical Alley Association is keeping close track of all of these bills for any potential impact on the Health Innovation and Care industry. We will update you next week on bills of note that did or did not meet deadline.

Federal Update (Budget Deadline This Week)

It will be a very busy week in Congress this week as well as the deadline for passing the FY2018 budget is this Friday. The text of the omnibus spending bill was released on Monday evening and likely faces a vote in the House on Wednesday. This would give the Senate two days – until Friday – to give its sign-off. We are in constant communication with Minnesota’s Congressional delegation for any issues that could impact the Health Innovation & Care industry. Please reach out to our Government Affairs team if you have any comments, questions, or concerns about the Federal budget bill or any other issue.