Inside the Minnesota Capitol

Inside the Minnesota Capitol

Minnesota politics, regulatory agencies and state government news updates

Political Notes

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Sertich Appointed to the Minnesota Stadium Facilities Authority

After the dust up with Stadium Authority member Duane Benson and Stadium Authority Chair Michele Kelm-Helgen, Governor Dayton appointed former IRRRB Commissioner Tony Sertich to replace Benson. Sertich served as Commissioner of the Iron Range Resources and Rehabilitation Board until 2011 when he stepped down to take a position with Northland Foundation. Sertich also served in the state House and rose to the House Majority Leader position.

Benson served in the Minnesota Senate as Minority Leader and played in the NFL for the Oakland Raiders. He resigned from the Board this June after saying Chair Kelm-Helgen called him “untrustworthy” and “a liar,” a charge Kelm-Helgen denied. The MSFA is tasked with overseeing the $1 billion football stadium development project which includes significant public funding.

Campaign Rumblings

Jim Abeler, former state Representative from Anoka who retired from the state House in 2014, is actively exploring a run for SD35. The current member representing Senate District 35, Branden Petersen (R-Andover), has announced he will not run for re-election in 2016.

Abeler represented the House District in the Anoka area for 8 terms from 1998 to 2014. He served as Chair of the Health and Human Services Finance Committee and was the House GOP lead on HHS related issues. He retired and ran for the U.S. Senate seat in 2014. He sought the GOP endorsement and ran in the Primary ultimately losing to the endorsed candidate Mike McFadden, who in turn lost to incumbent Senator Al Franken.

Federal Campaign Finance PAC Reports – Due July 31, 2015

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All Federal Political Action Committees (PACs) are required to submit a campaign finance report to the Federal Election Commission (FEC) on or before Friday, July 31, 2015. Unless the PAC has elected a monthly filing schedule, the semi-annual report must reflect all receipts and disbursements between January 1, 2015 and June 30, 2015.

Under the FEC’s mandatory electronic filing rules, any committee that receives contributions or makes expenditures in excess of $50,000 in a calendar year, or expects to do so, must submit all campaign finance reports electronically. Committees that do not meet the $50,000 threshold are permitted to file paper reports but the FEC strongly recommends the voluntary use of the electronic filing system. Once a committee begins to file reports electronically, on a voluntary basis, it must continue to do so for the remainder of the calendar year unless the FEC determines that extraordinary and unforeseeable circumstances make electronic filing impractical.

Electronic filers have until 11:59 PM Eastern Time on July 31, 2015, to file the July semi-annual report. Paper filers must ensure that the FEC receives their report by the close of business on the date of the filing deadline.

To file the Federal PAC Report online, filers may use the FECFile software, available for download here. Forms and information for paper filers may be accessed here.

Doug Loon named new Minnesota Chamber of Commerce President

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After a nationwide search conducted by an independent firm, the Minnesota Chamber of Commerce announced this week that  Doug Loon has been selected as its new president.   Loon, who will fill the vacancy left by David Olson who passed away in July of 2014, will assume his new role on September 8.

Loon began working for the U.S. Chamber of Commerce in 1995 and is currently employed as the national chamber’s vice president for regional affairs and advocacy for the Midwest Region.  Loon manages the national chamber’s seven regional offices that provide political and grassroots outreach across the nation.  In addition, he manages the U.S. Chamber’s Midwest Region that includes Minnesota.

Previously, he served as the U.S. Chamber’s director of Congressional and Public Affairs in Washington, D.C., legislative director in the U.S. Senate, and as acting director of the U.S. Senate Committee on Veterans’ Affairs. He earned a bachelor’s degree in government and international affairs from Augustana College in Sioux Falls, S.D., is married to Minnesota State Representative Jenifer Loon (R), and lives in Eden Prairie, Minn.

Post Session News

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Minimum Wage Hike for Airport Workers

On Monday, the Metropolitan Airports Commission backed a $10 an hour minimum wage for about 2,800 employees of airline subcontractors.

Commission members voted 11-4 for the proposal, which requires the airport minimum wage to always be $1 more than the State minimum. It takes effect August 1. Commission Chair Dan Boivin expects wage talks to continue, but said the airport needs to stay competitive to keep airlines from going to similar size airports in the Midwest. The four members who voted against the measure said it wasn’t their place to set minimum wage standards, preferring the decision be left to State lawmakers.

Some union leaders say the Commission’s decision should be viewed only as a first step and are advocating for at least $15 an hour.

Winkler’s Seat

Gov. Mark Dayton set a special election for Nov. 3 to fill the House District 46A seat. If a primary is needed it would be held Aug. 11.

The seat is being vacated by Rep. Ryan Winkler (DFL-Golden Valley) on July 1. Winkler resigned because his family is moving to Belgium this summer for his wife’s job.

The filing period for candidates runs from June 17 until June 22. Two DFL candidates have already registered campaign committees for the contest: Peggy Flanagan of St. Louis Park, Executive Director of Children’s Defense Fund, Minnesota; and Tim Reardon of Golden Valley, founder of Cheassisi Consulting. Winkler has endorsed Flanagan. She has been active in efforts to raise the minimum wage, which was a key issue for Winkler.

Rural MN Report Card

During last year’s state House elections, Minnesota Republicans promised voters the GOP would focus on issues of relevance to Greater Minnesota. Republicans and Democrats are arguing about the effectiveness of the session in helping rural Minnesotans.

“If this was the session for greater Minnesota and economic development, greater Minnesota better not hope for another session like this,” Rep. Tim Mahoney (DFL-St. Paul) said during a hearing on the Jobs and Economic Development budget bill at the end of session.

Lawmakers heard about the poor condition of roads and bridges in greater Minnesota and the need for more spending to fix them and both Republicans and Democrats pledged to take action. However, the impasse over a major transportation funding package turned into one of the session’s greatest failures. The standoff came down to differences over whether to increase the gas tax to pay for new road and bridge construction. In the end, only a “lights-on” transportation bill was signed into law.

Legislators may revisit the issue next year, but political positions are unlikely to change before the 2016 election.

Also abandoned was a Republican effort to pass a tax bill, which included property tax cuts for farmers, and an increase in local government aid for rural towns.

A proposed thirty million dollars in broadband funding, a priority for rural Minnesotans, fell to ten million dollars.

Not all was lost. Farmers who lost bird flocks due to Avian Flu got some relief and lawmakers added $138 million to the budget for nursing homes – a key issue since outstate Minnesota has higher concentrations of elderly people and nursing home care is in high demand.

Sex Offender Program Ruling

U.S. District Judge Donovan Frank ruled Wednesday it’s unconstitutional for Minnesota to keep civilly committed sex offenders locked up indefinitely. He made it clear he wants to work quickly, ordering a pre-hearing conference for August 10 “to fashion suitable remedies.”

State officials sought to assure the public that the ruling would not bring the immediate release of offenders and that the State would continue to defend its law. “We continue to believe that both the Minnesota Sex Offender Program and the civil commitment statute are constitutional,” Gov. Mark Dayton said in a statement suggesting the State plans to appeal the decision.

More than 700 civilly committed sex offenders had sued the State claiming it was unconstitutional to keep them locked up indefinitely and that they don’t get adequate treatment from the program run by the Minnesota Department of Human Services.

Legislators have been waiting to see how the case played out in federal court. Frank said lawmakers have to do something about a program he called “draconian” and in need of “substantial changes.”

Electricity Rates

Gov. Mark Dayton signed a Jobs and Energy budget bill that gives an electricity rate break to mining companies, paper mills and steel mills. It aims to help lower energy costs for companies competing in a global marketplace, among them the taconite mines on the Iron Range. Sen. David Tomassoni (DFL-Chisholm) said about 1,000 people working in the taconite mines on the Iron Range have been laid off in the past year. He said lowering the cost of electricity will help these companies compete.

To pay for the break for industrial companies, residents and smaller businesses may have to pay more. Sen. John Marty (DFL-Roseville) said he didn’t object to helping out steel and paper companies, but worries that the way the law is written, other companies could also take advantage of it. He said that means higher rates for everyone else.

It’s not clear yet how many companies would seek a rate reduction under the new law. Those that do would have to apply to their power company, which would then have to ask for approval from the Minnesota Public Utilities Commission.

Even though the threat of a rate hike is real for residents, rates could go even higher if U.S. Steel and other companies go out of business.

Net Metering

Local power companies have had to buy excess electricity from Minnesota homeowners who have solar panels on their roofs and farmers with small wind turbines. The utilities must also sell electricity to those customers when they need it. The arrangement is known as “net metering.”

As part of the recently passed Jobs and Energy budget bill, beginning in July, a municipal utility or a co-op can begin charging new net metering customers a “reasonable and appropriate” fee simply for being part of their electric grid system.

Current customers are not affected by the change. The new language also does not apply to the State’s largest power company, Xcel Energy, so Xcel customers interested in adding solar would not be affected.

Net metering was designed as an incentive for renewable energy investment. According to Science Policy Director for Fresh Energy, J. Drake Hamilton, the upcoming change is unfair. Supporters of the change insist it will level the playing field for all customers. Kristi Robinson, Distribution System Engineer at Steele-Waseca Cooperative Electric, said net metering customers pay less than other customers but use the system more, because they both buy and sell electricity.

It’s also not clear how much utilities will charge. It’s up to the municipal utility or co-op to decide.

Senate Environment and Energy Chair John Marty (DFL-Roseville) thinks it will cause market uncertainty for Minnesota businesses involved with renewable energy. However, House Energy Chair Pat Garofalo (R-Farmington) believes it was a necessary fix.

Special Session: Signed, Sealed and Delivered

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The illusive Special Session lived up to its hype. Despite the close proximity of the two temporary chambers in the State Office Building, the bodies were far apart in their desired outcome for the session.

After endless hours of deal making and debate among legislators within the same party, across party lines, and between chambers in an attempt to pass a controversial Agriculture/Environment budget bill, the Minnesota Legislature passed the three reworked vetoed budget bills (Education, Ag/Environment, and Jobs/Energy) as well as the Legacy, Capital Bonding and Revisers’ bills and adjourned Sine Die in the wee hours on Saturday, June 13. Governor Mark Dayton signed the bills Saturday morning as soon as they landed on his desk.

The first time the Senate voted on the Agriculture/Environment bill it fell one vote short of the 34 necessary to pass. Eventually the Senate voted to alter the bill and reinstate the Minnesota Pollution Control Citizens’ Board and remove a provision that allows copper nickel mining waste to be exempt from solid waste permitting, even though Governor Dayton had an agreement from legislative leaders not to adopt any amendments to the bills as introduced.

The Senate then passed the bill and sent it to the House, which promptly reinstated the changes the Senate had made and sent the bill back to the Senate. Despite opposition from Sen. Scott Dibble (DFL-Minneapolis) and other metro area legislators, the bill’s sponsor, Senator David Tomassoni (DFL-Chisholm) said overall, with requirements for buffer strips between cropland and water supported by the Governor, and money to help turkey farmers struggling with avian flu, the measure was worth supporting.

Senate Majority Leader Tom Bakk (DFL-Cook) and Senate Republicans were able to scramble and find 5 more votes to pass the bill.  Republican Senate Minority Leader David Hann (R-Eden Prairie) said all but one of his members voted for the bill because Bakk promised to pass significant tax cuts next year. Since then, Bakk has said he didn’t characterize the tax cuts as “significant.”

Lawmakers will reconvene at noon on March 8, 2016, and begin the work on how to allocate the approximately $800 million of the $1.9 billion surplus left unspent. Rest assured it won’t be an easy ride and election year politics are sure to feature prominently.

Special Session Set For Today – June 12, 2015

Posted in Bills, Budget, Democrats, House of Representatives, Republicans, Tax

After weeks of negotiations, speculation, and a late night caucus, Governor Mark Dayton called the Special Session for today at 10 a.m.  The six bills on the approved agenda are the three budget bills that Dayton vetoed at the close of session a month ago: Agriculture/Environment, Jobs/Energy, and Education; as well as the Legacy, Bonding and Revisors bills that didn’t make it through both chambers before the clock struck midnight on the last day of the regular legislative session.

Following House Speaker Kurt Daudt’s (R-Crown) urging, on Monday the Governor announced that he was dropping his battle with Republicans over a new law allowing counties to bypass the State Auditor and hire private accountants so lawmakers can finish the budget and prevent a July 1 partial government shutdown. In the same breath, he said he had several other demands that needed to be met before he would call a special session.

Dayton said he wanted three changes to the jobs bill: $5 million for programs that help people with disabilities find jobs, striking language regarding changes to the way utility customers are credited for producing solar or wind energy on their utility bills, and language lowering electricity rates for some major trade-exposed industries such as mining and forest products in northeastern Minnesota.

He also said he’d like the Legislature to reconsider and approve more funding for rural broadband, facilities for sex offenders, and rail grade crossing safety, along with a Destination Medical Center spending formula fix to give Rochester the flexibility to use its local sales tax for DMC.

The Governor and House Republicans came to terms late Tuesday on the jobs and energy bill, agreeing to include $5 million to assist disabled Minnesotans, adding a provision to help mining and paper companies with energy costs, and the tax clarification provision for the Destination Medical Center in Rochester.

Dayton insisted that the caucuses agree to no amendments, saying that “self-serving amendments and grandstanding are not acceptable.” The caucuses met Thursday evening and Dayton addressed the Senate Democrats. Bakk said he still doesn’t know if there are enough Senate DFL votes to pass the reworked budget bills. He needed Republicans’ help to pass the first version of the agriculture and environment bill, and many Democrats remain opposed to that bill because of what they view as a weakening of environmental protections.

Daudt said he is confident he has the votes to pass the budget bills in the House.

Sales Tax Change

The Legislature is set to delay by a year a previously approved sales tax exemption for cities, counties and other government entities that team up to provide services through “joint powers” arrangements.

Local officials say the change, which is part of an education bill that will come up in a special session, came out of nowhere in May and runs contrary to the state’s demands they deliver services more efficiently.

In 2013, the Legislature passed a law that exempted cities and counties from paying state sales taxes on certain equipment, computers and office supplies. But lawmakers had to clarify the law in 2014 to explicitly include transactions involving joint powers arrangements in which police, fire and other services are collaboratively provided across municipal boundaries.

The tax exemption was set to kick in this January, but the bill lawmakers will vote on pushes it back to 2017. The delay cleared the Legislature on the last day of session, but Dayton vetoed the education funding bill.

Speaker Daudt said he doesn’t anticipate changing the education budget bill to address the sales tax issue. Daudt said the idea of a delay originated with majority Senate Democrats in the regular session’s waning hours as leaders worked to finalize a budget. Majority Leader Bakk has said leaders needed to find extra money because Republicans were insistent on leaving $1 billion aside for the 2016 session. It was put in the education bill because a separate tax bill failed to move.

In The Weeds

Manny Munson-Regala, Assistant Commissioner of the Minnesota Department of Health is stepping over to run the Cottage Grove-based cannabis manufacturer, LeafLine Labs. The Office of Medical Cannabis was responsible for day-to-day operation of the program but its Director, Michelle Larson, was beneath Munson-Regala in the agency’s hierarchy.

Qualifying patients are just a few weeks away from being able to buy cannabis from LeafLine and one other approved manufacturer.

Munson-Regala’s latest move between the public and private sector involves one of the most controversial recent state initiatives, and his exit is raising questions about independence. Sen. Warren Limmer (R-Maple Grove) who opposed the medical marijuana legalization measure, voiced concerns. State Sen. John Marty, DFL-Roseville, said Munson-Regala’s new job should give the public pause. Marty said he plans to again introduce legislation aimed at former government officials moving to the private sector who then lobby on behalf of their new employer.

Munson-Regala also said he played no direct role in selecting LeafLine as a one of the state’s two cannabis providers last fall, and hasn’t had a direct role in regulating the medical cannabis industry since then. The Health Department says he’s been relieved of his responsibilities related to the medical cannabis program until he formally leaves the Department. He’ll join LeafLine in early July.

Week In Review

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Special Session – Not Yet

Governor Mark Dayton and House Republican leaders on Monday tentatively agreed to a two-year school spending budget, moving them one step closer to avoiding a partial government shutdown come July 1.

The Governor had vetoed education and other budget bills as the session closed in May. State officials have already sent layoff notices to more than 9,400 state employees warning of July 1 layoffs if there is no budget deal.

One of the major sticking points had been Dayton’s push for immediate spending on universal pre-kindergarten. Dayton conceded that demand but said he’ll still push for universal pre-K in the future.

He said he would agree to a Republican proposal to increase overall school spending by $525 million over the next two years instead of the $550 million he wanted. Although negotiations have been largely behind closed doors for the past few weeks, it was a public offer from Republican House Speaker Kurt Daudt (R-Crown) that Dayton ultimately accepted.

Daudt’s offer eliminates Republican proposals to change teacher tenure laws and their push to reverse a Minnesota State High School League policy that allows transgender athletes to play on the team of their choice.  The deal will add two percent to the per pupil funding formula for each of the next two years.

Dayton will need to call lawmakers back to St. Paul soon to revisit the three budget bills he vetoed last month. In addition to education, he rejected finance bills for agriculture/environment and jobs/energy. In the negotiations on the Agriculture/Environment bill, Dayton conceded on abolishment of Minnesota Pollution Control Agency Citizens’ Board. However, the Governor said he wants changes to clean water language. On another issue, the Governor signed the State Government Finance bill accepting a provision allowing counties’ use of private auditors. Now he wants lawmakers to retain the State Auditor’s exclusive oversight of county financial records.

Dayton said he will insist that all Minnesota legislative leaders sign off on the agreement before he calls a Special Session and Dayton late yesterday afternoon yielded no resolution on the budget. It is still not known when the Special Session will be called.

In the meantime, the Senate Finance and House Ways & Means Committees have scheduled a joint hearing for Friday afternoon to do a walk-through of the revised budget bills on which there is agreement. A large group of bipartisan rank and file members are urging Governor Dayton and legislative leaders to release the bills to the public at least 48 hours before acting on them.

Private vs. Public Audits

A provision in the State Government Finance bill, which Governor Dayton signed into law, would allow Minnesota counties to bypass the State Auditor and hire private-sector accountants to conduct annual financial reviews. Dayton, who once served as State Auditor, said this week that it is a Constitutional office and an unacceptable change. He wants lawmakers to repeal the provision as part of the anticipated Special Session.

Daudt, who once served as a county commissioner, said county government officials have been seeking this change for years as a way to trim costs. Cities and school districts already have the option of using private auditors. Julie Ring, Executive Director of the Association of Minnesota Counties, said members view it as an issue of fairness and competitiveness.

Rep. Sarah Anderson (R-Plymouth) notes that 28 of the State’s 87 counties are already permitted to use private auditors. She says allowing counties to contract with private firms will save taxpayer money to be used for road repair or to hold the line on property taxes.  Anderson also says Dayton effectively agreed to the provision when he signed her State Government Budget bill that included the Auditor language. Dayton countered that he signed it to protect the jobs of thousands of state workers who could be laid off on July 1 if a budget deal isn’t reached.

Speaker Daudt said House Republicans are inclined to make a technical fix to the bill but are not likely to eliminate the change entirely. He said giving counties an option is a priority for his caucus.

State Auditor Rebecca Otto said she’s considering filing a lawsuit to argue that the Legislature overstepped its authority by infringing on the rights of a Constitutional officer.

Bonding Bill

Legislative leaders have reached an agreement on a bonding bill to be considered during the upcoming Special Session. The bill would authorize $373 million in bonding for several projects, including transportation bonds for rerouting Highway 53 on the Iron Range. It includes nearly $180 million in general obligation bonding money for projects including finishing the state Capitol renovation and building animal testing labs in St. Paul and Willmar prompted by the recent outbreak of Avian flu. The bill also includes funding for disaster relief in Scott County and several other counties.

A 60% supermajority is needed to pass bonding bills. In the House, Republicans need at least nine Democratic votes to pass the bill, but Rep. Paul Torkelson (R-Hanska) said they may need additional DFL support because he doesn’t expect unanimous Republican support.

Senate Capital Investment Chair LeRoy Stumpf (DFL-Plummer) said the plan does not include a parking garage underneath the Capitol, a provision that had been included in the bill passed by the Senate on the final night of session.

Pipeline Concerns

This week, the Mille Lacs and White Earth Ojibwe bands are holding their own public hearings on plans for the Sandpiper line, a $2.6 billion pipeline that would pump North Dakota crude 300 miles across Minnesota to its terminal in Superior, Wis., and eventually to refineries around the Great Lakes. The Minnesota Public Utilities Commission (MPUC) is about to hand down a major ruling on the project.

While the route preferred by Canadian pipeline company Enbridge Energy does not cross any tribal reservations, it does cross a large area of lakes and forests in northern Minnesota where treaties give tribes the right to hunt, fish and gather. Tribal members say they are especially concerned about potential impacts on their right to gather wild rice.

Additionally, the Friends of the Headwaters group contend that the risk of a spill in those areas is too significant. The group suggested several alternative routes, one of which was endorsed by experts from the Minnesota Pollution Control Agency and the Department of Natural Resources. However, Enbridge argued the other routes were unworkable because they would not connect to its terminals in Clearbrook and Superior.

Public hearings on the need for Sandpiper were held in Duluth, Bemidji and other cities, but not on any reservations. The White Earth Band asked for one, but the MPUC declined saying the tribal voices have had a chance to be heard in written comments.

The MPUC is scheduled to decide on Sandpiper’s “certificate of need” today. Mille Lacs and White Earth leaders have asked the Commission to delay its decision until they submit reports from their hearings.

Even if the Commission rules the pipeline is needed, the MPUC would still have to approve a final route for the pipeline, a process that will require more public hearings, and according to the MPUC, more chances for tribal input.

Rate Hikes

Eight health insurance companies in Minnesota are proposing double-digit increases in average premiums, according to the federal Centers for Medicare & Medicaid Services. Gov. Mark Dayton called the proposed rate increases “outrageous” given that the cost of health care is currently increasing at just three percent.

In Minnesota, 56% of people receive insurance through their employer, 30% through public programs, and individual and family coverage makes up six percent of the State’s total health insurance market.

Blue Cross and Blue Shield (BCBS) of Minnesota, for example, wants to raise rates an average of 54% on nine plans. Officials at BCBS say the company needs higher premiums to account for rapidly rising medical costs for individual and family plans. The company lost $135 million on its portfolio of individual products in 2014 and is on track to lose significantly more on those plans this year, they said.

Of the six insurance companies that reported 2014 operating results as part of their rate request, all but one paid out more in individual claims in 2014 than they collected in premiums. Some said their health plan members were sicker and needed more care than expected.

The federal Affordable Care Act requires early disclosure of rate requests of 10% or more. Those that seek to increase rates below that threshold are not required to disclose their plans.

Rep. Greg Davids (R-Preston) called the news of the proposed rate increases “another disheartening sign that Obamacare and MNsure are not working for Minnesotans.”

Commerce Commissioner Mike Rothman promised a thorough review of the rate increase proposals to determine whether they are justified. The 2016 individual market rates will be finalized by October 1.

3 Vetoes; 2 Hearing Rooms; 1 Month ‘Til Shutdown

Posted in Bills, Budget, Energy, Environment, Health Care, Legislation, Minnesota Governor, Telecommunications


Gov. Mark Dayton vetoed two more budget bills (he vetoed E-12 last week) over the last weekend. The latest vetoes mean there are even more issues for legislators and the Governor to resolve in a Special Session. No dates have yet been scheduled.

On Saturday, the Governor vetoed the omnibus agriculture, environment and natural resources bill. Environmentalists had called on the Governor to do so because of the elimination of a citizens’ board that oversees certain decisions at the Minnesota Pollution Control Agency.  However, the bill also included something Dayton wanted regarding water quality: a requirement that farmers maintain buffers between cropland and waterways.

Rep. Denny McNamara (R-Hastings) said the veto affects avian flu funding, extended unemployment benefits, state parks and the Minnesota Zoo.

Dayton also vetoed the omnibus jobs and energy bill to fund the Department of Commerce, the Bureau of Mediation Services and Minnesota Workers’ Compensation Court of Appeals. He criticized the inadequate funding for broadband and also the amount budgeted for the state’s Olmstead Plan efforts to address the needs of community living for people with disabilities. In his veto letter, Dayton also said he objected to the “changes to Minnesota’s net metering laws that will disincentivize the use of wind and solar power.”

House Speaker Kurt Daudt (R-Crown) said he was very disappointed with all three vetoes.

Dayton and Daudt met privately Tuesday and Wednesday to discuss the coming special legislative session, but a deal on the budget bills has not been reached. Agreement on provisions of the three vetoed budget bills will have to be reached by June 30 to avoid a partial government shutdown. Minnesota Management and Budget estimates the number of employees who will be laid off on July 1, the start of the Fiscal Year 2016, if agreement is not reached on the three budget bills to be 9,451. Daudt said they’re working for a one-day special session, as soon as possible.

Rep. Pat Garofalo (R-Farmington), Chair Jobs/Energy, said with three budget bills now on the agenda for a special session, the negotiations should not be limited to the Governor and top legislative leaders.

Lawmakers are also expected to take up the bonding bill and legacy bill that failed to pass in time before adjournment.

A tax bill could also be part of the mix. Dayton is proposing a $260 million, one-year income tax cut in exchange for an additional $250 million in education spending, including partial funding for preschool. That’s a bigger increase than Dayton was willing to settle for at the end of the regular session. During his weekend news conference, the Governor said he’s taken back the previous, lower offer, which was made in hopes of avoiding a special session.

Senate Democrats wouldn’t support a tax cut bill in the regular session because House Republicans wouldn’t support their approach to transportation funding, including a gas tax. But Senate Majority Leader Tom Bakk, (DFL-Cook) who also had a private meeting with Dayton, said he could go along with the Governor’s latest offer.

One item that has been decided is the location for the Special Session. It will be held in Rooms 5 and 10 of the State Office Building. Capitol construction and renovation makes that building unavailable for the special session.

E-12 Funding

In anticipation of the upcoming Special Session, lawmakers are laying the ground to position themselves regarding spending priorities on early learning programs.

Prior to meeting with the Governor on Wednesday, Speaker Daudt and several other Republicans met privately with Art Rolnick, a former research director at the Federal Reserve Bank of Minneapolis and a leading proponent of directing taxpayer money to help disadvantaged children attend preschool. Rolnick said he believes child care scholarships are the best way to close the achievement gap, rather than universal pre-K.

Republicans included funding for early childhood education scholarships in their budget but did not fund Dayton’s plan for universal pre-k. Daudt said he isn’t convinced that universal pre-k is a better option. The Governor insists scholarships could end up further segregating low-income children from peers whose parents still might not be able to afford to pay for pre-kindergarten.

Party Divided

Setting aside negotiations with Republicans, Dayton appears to be facing challenges within his own party. Democrats who disagree on big issues in the bills he vetoed, including education, economic development and the environment, expose an urban-rural divide in the party.

Dayton said this week that his toughest veto was the spending bill for agriculture, environment and natural resources. Although the bill included money for avian flu relief and a compromise on the buffer strips for farms, the Governor said there were too many bad policy provisions in the bill. He blamed the DFL-controlled Senate.

Dayton’s list of objections included the elimination of the Minnesota Pollution Control Agency’s citizen review board, added rule-making steps for the MPCA, cuts to two landfill accounts and amnesty for polluters that self-report violations. The bill would put air, water and land at risk, said Sen. Scott Dibble (DFL-Minneapolis). Ten Democrats, nearly all from rural districts, joined Republicans to pass the Environment bill, 35 to 30.

Senate Majority Leader Bakk said coalitions based on geography are nothing new at the Capitol. The Special Session, Bakk said, provides an opportunity to improve three of those bills.

Private vs. Public

The Association of Minnesota Counties (AMC) is pushing Gov. Dayton and legislators to preserve a new law to allow counties to hire private firms to conduct annual audits. Executive Director Julie Ring said many of their members believe this is an issue of fairness and competitiveness for counties to have the option of private audits. However, she noted that they are also comfortable working with the State Auditor’s office and don’t see a change in law as something that would automatically result in counties not utilizing the State Auditor.

The counties have long asked the Legislature for the flexibility included in the provision, and this year Republican legislators in the House, including Rep. Sarah Anderson (R-Plymouth), who chairs the State Government Finance Committee, gave it to them.

The issue has become a flashpoint between State Auditor Rebecca Otto and counties that want the flexibility. Dayton just signed the State Government funding bill, but says he wants legislators to repeal the new rule because it undermines the role of Otto’s office. Unlike most Minnesota cities, towns and school districts, counties are required to have the State Auditor’s office conduct annual audits unless they get an exemption from Otto’s office.


One of the priorities for Gov. Dayton in the soon-to-be-renegotiated Energy and Jobs bill is an increase in broadband funding.  The residents of Annandale, Minnesota are particularly interested in what that funding will look like. As vetoed, the bill included $10 million for rural broadband. That is half the amount allocated around the state in 2014, but 20 percent of it was earmarked for Annandale.

Dayton was critical of the legislation for not containing more money for rural broadband, but also objected to the special provision for Annandale. In his veto letter, he said it undermined the program’s competitive process and set a dangerous precedent.

Annandale residents complain that slow speeds and outages have caused businesses to leave their communities or to put up signs telling customers that credit card transactions were temporarily unavailable. In 2014, when the Legislature made $20 million available for projects in underserved and unserved areas around the state, Annandale put together a plan to build a network. The idea was for the city to build the network and then contract privately for its operation.

City officials were disappointed to not be included in the 17 awards made by the Office of Broadband Development.  The Department of Employment and Economic Development, which oversees the broadband office and which did not support the special earmark, says it’s trying to help Annandale create a stronger application for the next round of funding.

According to Sen. Matt Schmit (DFL-Red Wing), a champion of increased broadband funding, the notion that wireless technology will make hard-wired fiber networks unnecessary gained traction this year, but he believes wireless is going to be a supplement, incapable of providing the robust service needed for business and education.  Schmit thinks Annandale has perhaps the strongest case in the state for building a project, but would prefer to see it go through the competitive process again, rather than get an earmark.

Up In Smoke

The Legislature has taken steps to expand the availability of medical marijuana to Minnesota hospitals when it becomes legal in July. When state lawmakers approved the original law last session, authorizing health care providers to dispense the drug, they didn’t include liability limitations for hospitals.

The Legislature has added hospitals to the list of facilities that can control, dispense and manage the use of cannabis inside their systems without forcing criminal penalties. Hospitals said they were willing to continue the care regimen of those patients in their hospital setting, as long as the state gives them the same abilities and immunities that were afforded to nursing homes and assisted living facilities last session.

The registry for medical marijuana in Minnesota opens next week. Pill and liquid forms of marijuana will be legal in Minnesota. Raw leaf and smokable marijuana will remain illegal.

Week In Review

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Special Session

As promised, Governor Mark Dayton has vetoed the $17 billion education funding bill on Thursday, as passed by the Legislature at the close of the 2015 session. Gov. Dayton vetoed the bill because it targets most of its funding to increase per pupil funding. Dayton wanted $150 million more for education, with the money going to fund half day pre-kindergarten for four-year-olds in public schools.

Gov. Dayton’s letter to House Speaker Kurt Daudt (R-Crown) includes a number of other provisions he would like to see in the education bill, including funding for English as a second language programs, free breakfasts for pre-kindergarteners and first graders, and funding for the Northside Achievement Zone and St. Paul Promise Neighborhood.

The veto means the Legislature will have to meet in a special session, not likely to take place before the end of the month. House Republicans are expected to announce next week that they will demand corresponding tax reductions for each dollar of increased education spending.

Dayton said he repeatedly offered to drop his pre-kindergarten proposal until the final moments of the 2015 legislative session if Republicans would agree to more funding for education overall. Dayton said Republicans repeatedly disagreed although Speaker Daudt said that at the end of the session, House Republicans and the Governor were only $25 million apart on overall education funding.

Additionally, Gov. Dayton said that he’s concerned the legacy and bonding bills were not passed this session. Dayton said he considers both “essential.”

With Capitol construction well underway, it’s unclear where a special session would be held. Dayton said he was serious about a proposal he made over the weekend to hold the session in a tent on the Capitol lawn, but he said he would be willing to consider any option that is affordable for taxpayers.

Senate Majority Leader Tom Bakk (DFL-Cook) said he’s not going to be involved in the negotiations with House Republicans for the special session. Sen. Bakk said he’ll deliver the votes for Dayton’s plan unless Dayton agrees to a Republican demand for a massive tax cut.

Speaker Daudt has said that Dayton needs to build support for his plan, and that it’s his fault the pre-K funding proposal couldn’t get the necessary support to pass. He said that legislators, both Republicans and Democrats, prefer to put money on the formula and let school districts decide how to spend it. Gov. Dayton is starting a tour around the state to promote his initiative.

Daudt said he would prefer that the Governor call a special session soon to provide some certainty to school districts. A new education bill is needed by June 30 to keep the Minnesota Department of Education operating.

House Republicans are also calling on the Governor to apologize for remarking that some Republicans “hate public schools.”

Dayton and Daudt plan to meet on Tuesday to discuss the agenda for the special session.

Agriculture/Environment Omnibus Bill

With a Special Session in the cards, environmental advocates angered about a budget bill that includes several controversial policy provisions picketed the Governor’s residence to demand a veto of that bill. Gov. Dayton surprised them all by coming outside to greet them and said he is still looking at all the budget bills and hasn’t decided whether to veto the environment and agriculture budget bill. Dayton cautioned them that it is a dual party Legislature and the provisions have already been legislatively negotiated.

Dayton asked the crowd, if he did veto the bill, which issues to focus on getting out. The elimination of the MPCA Citizens’ Board rose to the top of the list, but the Minnesota Environmental Partnership has sent Dayton a veto request letter outlining many objections. The Governor has until Saturday to veto the bill.

Jobs and Energy Omnibus Bill

The Jobs and Energy Omnibus Bill that came to the House floor in the final minutes of the 2015 Legislative session appears to leave out a critical chunk of funding: money to support six positions in a division of the Department of Commerce that reviews health insurance rates. The six jobs have been funded by a federal grant until now, in part because of new filing requirements set out by the Affordable Care Act. Gov. Dayton requested a little more than $1.3 million for the biennium to continue staffing the positions when funding runs out in September. The Administration’s proposal wasn’t adopted, and there’s no line-item funding in the bill to keep the rate analysts on staff.

House bill sponsor Rep. Pat Garofalo (R-Farmington) said that the bill provides the Department the money it needs to fulfill its obligations under the law. The DOC Insurance Division overall is getting the same amount of funding it received in the last budget cycle. The Commerce Department said it will likely have to shift funds from another area to keep the health insurance rate analyst jobs.

Some Democrats are encouraging Gov. Dayton to veto the Jobs and Energy bill.

Soccer Stadium

Supporters of a proposed soccer stadium in Minneapolis are regrouping after the Legislature declined to authorize tax breaks for the facility during its regular session. The setback leaves an uncertain future for the Major League Soccer franchise. But Bill McGuire, the owner of the Minnesota United soccer team, is not giving up.

McGuire is still hopeful he’ll be able to build the stadium and win the property-tax exemption he said he’ll need to make it financially viable. But now that the Legislature has adjourned, his path just grew more difficult.

In contrast to other Minnesota sports teams, Minnesota United isn’t asking taxpayers to help cover its construction costs, but they have asked for a sales tax exemption on the building materials valued at about $3 million.

Southwest Light Rail

Ideas for lowering the $2 billion price tag of the proposed Southwest Corridor light rail project aren’t going over well with local officials from cities along the line.

Aiming to squeeze $341 million out of the budget, Metropolitan Council staff on Wednesday presented local leaders with about 50 possible cost-reduction measures.

Last month, the Metropolitan Council revealed it had drastically underestimated the cost of the planned 16-mile light rail line between Minneapolis and Eden Prairie. Gov. Dayton said the ballooning price tag called into question whether the project was still viable.

Since then, planners have been looking for ways to make the rail line stick to its original $1.65 billion budget.

Peter Wagenius, an advisor to Minneapolis Mayor Betsy Hodges, called the proposed cuts “extraordinary.” He made it clear that Hodges would not accept reductions that would diminish service on the city’s north side by cutting two of three planned stations there.

Cutting the Royalston Station would save up to $7 million and eliminating the Penn Station stop on the north side would save as much as $16 million. Other options for making small trims include cutting back on landscaping, pedestrian bridges and public art. Planners also could eliminate or scale back some suburban park and ride ramps that could cost as much as $25 million.

The big savings, however, would come from shortening the line by removing stations in Eden Prairie. Each station eliminated from the end of the line cuts between $70 million and $185 million.

The committee meets again in two weeks. Adam Duininck, the Chair of the Met Council, said Wednesday’s discussion shows how difficult the choices are. He expects the deliberations to grow more contentious as planners and policy makers narrow down the list of cost-cutting options.

Winkler Departure

Fifth-term Rep. Ryan Winkler (DFL-Golden Valley) is resigning from the Legislature to move to Belgium where his wife has a job. Winkler was a vocal partisan orator with an acerbic bent. He was a champion of campaign finance reform, raising of the minimum wage, and toxic-free kids legislation. House Minority Leader Paul Thissen (DFL-Minneapolis) said in a statement: “The Legislature will miss Ryan’s wit and intelligence, but most of all we will miss his impatience with injustice. He is always willing to take on the tough fights and not back down.”

A special election will be held to fill Winkler’s seat. Peggy Flanagan, who currently serves as executive director of the Children’s Defense Fund-Minnesota, said she’s seriously considering a run for Winkler’s seat. Flanagan, who lives in St. Louis Park, previously worked for Sen. Al Franken, Wellstone Action, and Minnesotans United for All Families, the main group working against a constitutional amendment to ban same-sex marriage.

It Ain’t Over Till It’s Over

Posted in Bills, Budget, Democrats, Energy, Environment, Health Care, House of Representatives, Legislation, Minnesota Government Update, Minnesota Governor, Republicans, Senate, Tax, Transportation

The Minnesota Legislature wrapped up its business late Monday night, meeting a constitutional deadline to finish its work for 2015 by midnight. Adding to the pressure to end on time, as part of the ongoing renovation of the State Capitol building, construction crews were scheduled to tear up the legislative chambers immediately after lawmakers left on Monday.  Workers began packing up the Chambers even as a few members lingered after adjournment.

After days of tense, secretive talks inside the Governor’s mansion, the week before adjournment deadline, legislative leaders Friday evening, May 15, said they had reached a state budget deal that included more funding for nursing homes, state colleges and universities and K-12 schools.  The lawmakers’ plan would have left $1 billion of the state’s projected $1.9 billion surplus unspent, allocating just under $900 million. Gov. Mark Dayton said the Legislature’s 2016-17 spending plans were inadequate.

After House Speaker Kurt Daudt (R-Crown) and Senate Majority Leader Tom Bakk (DFL-Cook) announced their plans, Gov. Dayton, feeling cut out of the negotiations, said he wanted the state to spend at least an additional $550 million over the next two years on early childhood through high school education. Lawmakers allocated only about $400 million in additional cash to E-12 education. Bakk and Daudt said they would stick to their additional $400 million in spending on education and were disappointed that the Governor was dissatisfied. Gov. Dayton has threatened repeatedly to veto the bill.

Lawmakers worked through the weekend and suspended their normal rules to meet through the night to get the budget passed on time.

Left behind in the legislative compromise: Any major transportation investment and the $2 billion in tax cuts the Republican-controlled House backed. Daudt and Bakk said the budget will leave significant unspent money on the bottom line, which could allow tax cuts or transportation spending next year.

Special Session

Governor Dayton held a press conference today, May 19, 2015. He will veto the E-12 bill and will call a special session. He is still waiting for most of the budget bills to be presented. He must sign or veto all bills within three days after they are presented to him or the bill will become law without his signature.

The Special Session will be called once there is agreement on the agenda and date with the four caucus leaders. He is willing to compromise with the Legislature and open to other items on the agenda such as transportation and taxes, provided there is a signed agreement. He also said he is serious about having special session in a tent on the Capitol lawn.

Dayton said his previous offer to sign all the bills except for education is now off the table.

Other Potential Special Session Triggers

With the waning minutes ticking, the $540 million omnibus legacy bill squeaked through the House, but was not able to be taken up by the Senate.  Additionally, a bill giving the Office of the Revisor of Statues permission to do necessary cleanup language to the 2015 laws and a bonding bill were not able to be acted upon before the midnight deadline.

A Quick Glimpse of What Passed

K-12 Education 

The legislative deal would give about $400 million in additional funding for early childhood through high school education in the next two years.  Gov. Dayton had maintained that he would only sign off on an education funding package that increased funding to $550 million and included $173 million for half-day pre-kindergarten in public schools across the state.

Under the legislative agreement, there would be enough money to increase K-12 schools’ general funding formula by 1.5 percent in 2016 and 2 percent in 2017, a top priority for school districts. The bill also includes $30 million more for an early learning scholarship program and $30 million for early learning grants.

Gov. Dayton is expected to veto the bill.

Higher Ed

The Legislature passed a budget bill that increases higher education spending by $166 million. The bill provides $101 million more for the Minnesota State Colleges and University system and $53 million more for the University of Minnesota, including $30 million for the medical school. That is less than both systems requested and not enough to continue a tuition freeze for another two years. House Higher Education Committee Chair Bud Nornes (R-Fergus Falls) said the conference committee did not split the funding equally between the University and MnSCU systems this year because they felt MnSCU needed more.

Rep. Nornes said the bill would cut tuition over the next two years for two-year schools. There may be a tuition increase in the first year for MnSCU’s four year schools. The bill does not provide free tuition to students enrolled in the state’s technical schools as the DFL-controlled Senate had sought. Instead of full funding, Senate Higher Education Chair Bonoff (DFL-Minnetonka) said a $5 million pilot project will help prepare students for high demand jobs. The bill also adds $7 million to the state grant program for low-income students.


The Legislature also passed a bare bones transportation bill.  Legislative leaders ditched the gas tax increase to pay for road and bridge construction and dropped the long term transportation bill. There’s also no metro area sales tax increase to fund transit.

House Transportation Committee Chair Tim Kelly (R-Red Wing) said he thinks the increased attention on transportation will give the Legislature momentum to pass a bill next year.  Senate Chair Scott Dibble (DFL-Minneapolis) said they will use the provisions from the more comprehensive bill as a vehicle for future negotiations, but is concerned about passing transportation legislation in an election year.

Instead, legislators passed a “lights on” status quo transportation bill that includes increased fines for texting while driving. It also includes $5 million for transit in Greater Minnesota, and $5 million for rail grade crossing safety. More than $12 million will help small towns improve their roads.

Health and Human Services

Conferees tasked with dealing with health and human services were required to plug a $300 million budget gap. Instead of making cuts to programs, they used one-time money and payment shifts. Senate Health and Human Services Chair Tony Lourey (DFL-Kerrick) said the bill makes significant investments in mental health and child protection. The agreement also contains an increase of $138 million for nursing homes.

The plan also appoints a task force to study what to do with MinnesotaCare after its funding ends in 2019. Republicans dropped their plan to scrap the state subsidized insurance plan as a part of the budget deal. According to Republicans, the Department of Human Services may be able to realize $25 million in savings by verifying eligibility of recipients of public programs.

Even though legislators were weighing major changes to MNsure, the state’s health insurance exchange, many of those changes were abandoned. Instead, they opted to release premium rates for plans sold on the exchange earlier, and to require the State to request a federal waiver to allow anyone who qualifies for federal subsidies to be able to receive them even if they buy coverage on the exchange.

Agriculture and Environment

The budget deal includes a compromise on environmental “buffer zones” around waterways, which had been a key Dayton priority in his push to improve water quality. Lawmakers, agriculture groups and the Governor worked for months to find agreement on protecting water from runoff. Some farmers protested Dayton’s original proposal to require 50-foot buffers along all waterways. The agreement reached early Sunday morning called for rooted-vegetation buffers of 30 feet in width but an average of 50 feet along public waterways. The strips could be narrower, 16.5 feet wide, along drainage ditches.  Farmers have until 2017 for public waterways compliance and 2018 for ditches.

The conference committee on the Agriculture and Environment bill defeated an amendment to allow the state to issue driver’s licenses to immigrants who are in the country illegally. Supporters of the provision had been holding fort at the Capitol for weeks making their wishes known.

DFLers were disappointed that the bill dismantles a citizens’ board that has oversight of the Minnesota Pollution Control Agency. The bill also funds a University of Minnesota study of how avian flu is spread and contains money to respond to the outbreak.

State Government 

The $974 million funding bill for state offices includes nearly $15 million for the Senate and nearly $3 million for the House.  The higher level of Senate funding will help pay for construction of a new Senate office building north of the Capitol building.  The bill will also repeal the state’s political contribution fund for two years, and it will allow counties to outsource annual audits rather than use the State Auditor’s office, a provision State Auditor Rebecca Otto says should lead the Governor to veto the bill.

Judiciary and Public Safety 

This budget bill puts about $2 million additional funds into the state’s courts and prisons systems. That includes a 4 percent pay increase for judges and court staff, as well as more than $6 million for more public defenders. Another $11 million will go to the Bureau of Criminal Apprehension to hire more forensics specialists and to create a financial crimes unit to investigate crimes like identity theft and fraud.

The bill has one provision opposed by Dayton: It allows people to equip their guns with silencers.

A provision that would have restored the right to vote to felons as soon as they were released from prison did not make it into the final version.