Inside the Minnesota Capitol

Inside the Minnesota Capitol

Minnesota politics, regulatory agencies and state government news updates

Goodbye, Hello

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Readers, we have news!

As we leave 2016 behind, so too will we end publication of the Inside the Minnesota Capitol blog in its current format. We have loved sharing updates with you on the blog, and keeping you up to date on all developments at the Minnesota Capitol, but as the speed of information has increased, we find that the blog format has slowed us down.

To better keep pace and get news to you more quickly, we will be migrating to Twitter, where we will continue to share information about all the goings-on at the Capitol, in a compact, as-it-happens format.

We would like to extend our sincere thanks for your continued readership, and hope to see you on Twitter in 2017. Find us at @InsideMNCap!

Happy New Year,

John Knapp
David Aafedt
Tami Diehm
Pamela Gokemeijer
Tom Hanson
John Reich
Eric Swanson

Minnesota 2016 Election Summary

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The Donald Trump wave that swept the Midwest certainly had an impact in Minnesota.  As of Wednesday morning, Hillary Clinton led Donald Trump in Minnesota by 46.4% to 45%, a margin of only 43,000 votes in what had been considered a reliably Democratic state.    Comparisons of the 2016 Presidential Race to the 2012 Presidential Race are revealing.  In 2016, Trump exceeded Mitt Romney’s 2012 Minnesota vote total by only 990 votes while Clinton received 182,278 votes less then President Obama did in 2012.

Minnesota Legislature.   The Republican momentum assured the Minnesota House of Representatives will stay in Republican hands.  Prior to the election, Republicans held a 73 to 61 majority.  After Tuesday’s election, the Republican majority will be 76 to 57 with one vacant seat to be filled in a February Special Election.

House DFL Representatives John Persell (5A), Tom Anzelc (5B), Ron Erhardt (49A), and Barb Yarusso (42A) lost reelection bids.  The DFL also lost House District 54A left open by the retirement of Representative Joe Atkins and House District 54B left open by Representative Dan Schoen running for the State Senate.  The lone House Republican incumbent to lose is Chad Anderson (50B).  Republicans also lost House District 57A, left open by retiring Representative Tara Mack.   House District 32B will be filled by a Special Election in February 2017.

More remarkably, the Minnesota Senate has flipped from Democratic to Republican.  Democrats had held a ten seat advantage by a margin of 38 to 28 with one vacancy.  However, as of Wednesday morning, it appears that Republicans will control the Senate by a slim 34 to 33 margin.  However, the Senate Republican Leader, David Hann (SD 48) of Eden Prairie, was defeated by DFLer Steve Cwodzinski.  In addition to losing the Hann seat, Republicans lost the seat of retiring Senator Dave Thompson (SD 58).  The new Senate Republican Majority will meet on Thursday, November 10 to elect their Majority Leader.  Potential candidates include Senators Bill Ingebrigtsen, David Senjem and Michelle Benson.

Republican pick-ups in the Senate were most pronounced in rural Minnesota.  In western and northwestern Minnesota, Republicans defeated incumbent DFLers Rod Skoe (SD 2), Tom Saxhaug (SD 5) and Lyle Koenen (SD 17) and picked up the seat of retiring DFL Senator LeRoy Stumpf (SD 1).  In southeastern Minnesota, Republicans picked up the Red Wing seat held by Senator Matt Schmit (SD 21), the Northfield seat of Senator Kevin Dahle (SD 20), and the Owatonna seat held by Senator Vicki Jensen (SD 24).  Republicans also picked up Senate District 44 left open by retiring Senator Terri Bonoff.

Congressional Races.  Minnesota races for Congress in the Second, Third and Fifth Districts were heavily contested and were ranked among the 30 most contested House races in the country.  Independent expenditure contributions flowed into the State and the advertising barrage continued until the closing moments of the election.  In the end, Congressman Erik Paulsen in the Third District comfortably defeated State Senator Terri Bonoff and incumbent Representative Rick Nolan in the Eighth District survived a rematch with businessman Stewart Mills.  In the Second Congressional District, which has been held by retiring Congressman John Kline, radio talk show host Jason Lewis defeated businesswoman Angie Craig by a vote of 47.11% to 45%.

Republican wave impacts were also felt in the First Congressional District in southern Minnesota where incumbent DFL Congressman Tim Walz survived a challenge from Republican Jim Hagedorn by only 2,500 votes.  This had been expected to be a very safe Democratic seat.

Constitutional Amendment.  A proposed Constitutional Amendment providing for a Commission to set legislative salaries passed by a comfortable margin.

Supreme Court.  Incumbent Supreme Court Justice Natalie Hudson survived a challenge from Republican Michelle MacDonald.

Special Session Tabled

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After meeting with legislative leaders, Governor Dayton announced yesterday that he is abandoning his efforts to forge an agreement on an agenda for a special legislative session.  There appears to be general agreement on the two primary topics for the special session, an Omnibus Tax Bill the Governor had vetoed after the regular session and a Capital Bonding Bill which failed to pass during the regular session.  However, House Speaker Kurt Daudt refused to consider legislation funding the Southwest Light Rail Line and Governor Dayton proclaimed there would not be a special session without funding for that project.

With all the members of the House and the Senate up for election this year, it has become increasingly difficult to focus legislative attention as the November elections approach.  Governor Dayton and leaders left open the door to passing the tax and bonding bills early in the 2017 session.  However, the outcome of the legislative elections will certainly dictate the 2017 legislative agenda.  While passage of a bonding bill early in the session may be possible, it is less likely that agreement can be reached around a tax bill early in the session.

Primary Election Results

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The Minnesota Primary Election held on August 9 contained a few surprises.  Legislatively, the biggest change was the defeat of one of Minnesota’s longest serving House members, Representative Phyllis Kahn.  In a sign of the changing demographics of her District, Kahn was defeated by Ilhan Omar, who will likely become the first Somali-American legislator in the United States.  The District she will represent is the Cedar-Riverside neighborhood of Minneapolis which has a large Somali-American population.

In other legislative primaries, Representatives Tom Hackbarth and Joe Mullery and Senator Sean Nienow were all defeated by challengers.  Speaker of the House Kurt Daudt comfortably won his primary challenge over Alan Duff with 72% of the vote.

There were four Republican candidates to succeed Congressman John Kline in Minnesota’s Second Congressional District.  Former radio talk show host Jason Lewis won the race with 49% of the vote followed by businesswoman Darlene Miller with 30.8% of the vote.  Lewis will face DFLer Angie Craig in the General Election.

Special Session Update

Governor Dayton and legislative leaders continue to discuss the possibility of a special legislative session to pass an omnibus tax bill and a bonding bill which were left unfinished from the 2016 legislative session.  Dayton is pressing legislative leaders for a decision soon warning that if discussions extend past August, there is little chance of a special session.  Dayton will be meeting on Friday, August 12 with all four legislative leaders to try to hammer out details for the special session.  Rank and file Republican legislators are not anxious to return to St. Paul for a special session.

State Campaign Finance Reports Due in June

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June is a busy month for state campaign finance reporting!

On June 14, 2016, all political committees, political funds, independent expenditure committees and independent expenditure funds are required to file a Report of Receipts and Expenditures for the period covering January 1 through May 31, 2016.

State reports must be filed electronically.  The Board will consider exceptions to the electronic filing requirements if you can show that your committee or fund has a good reason for not filing electronically.  If granted, a waiver of the electronic filing requirements is valid for two (2) years.  A committee or fund that fails to file the annual report by the due date is subject to a late filing fee of $50 per day, not to exceed $1,000.  Additional  information about state reporting requirements can be found at:

On June 15, 2016, all Minnesota lobbyists are required to file a lobbyist disbursement report, covering the period of January 1 through May 31, 2016.  Reports can be filed electronically at  In order to file the report, lobbyists should use the username and password provided by the Campaign Finance and Public Disclosure Board.

At the time of registration, each lobbyist designates whether he or she is a “self-reporting lobbyist,” an “authorizing lobbyist” or a “reporting lobbyist.”  A self-reporting lobbyist reports his or her own expenditures to the Board.  A lobbyist that reports distributions for another lobbyist on behalf of the same client is referred to as a reporting lobbyist.  A lobbyist who allows someone to report expenditures on his or her behalf is an authorizing lobbyist.  In addition, Minnesota Rules require all lobbyist principals to appoint one lobbyist as a “designated lobbyist” who is responsible for reporting the disbursements of the entity.  Lobbyists must retain records related to lobbyist expenses for a period of four (4) years.

All self-reporting, reporting and designated lobbyists must file a Lobbyist Disbursement Report no later than June 15, 2016.  The report must disclose the following information for expenditures between January 1 and May 31, 2016:

  • Total lobbying disbursements (not including lobbyist compensation);
  • Gifts to public officials; and
  • Other sources of funds used for lobbying purposes.

In general, an expense is a lobbying disbursement if it is incurred (1) to communicate with officials for the purpose of influencing official action; (2) to urge others to communicate with officials for the purpose of influencing official action; or (3) for any activity that directly supports either of these types of communication.  Lobbyist disbursements do not include lobbyist compensation.  Lobbyist compensation is reported by the principal on the principal report that is filed in March.  If an actual cost of a lobbying activity is not available, the lobbyist must use a reasonable approximation of the cost.

Designated lobbyists must also provide a current list of officers and directors for the associations that the lobbyist represents.  A report must be filed even if no disbursements were made during the reporting period.

The report may be filed with the Board by facsimile at 651.539.1196 or 800.357.4114 or by e-mail to Alternatively, the report may be filed electronically at  To access the electronic filing system, each lobbyist will need a user name and password that is provided by the Board.   All reports are available for viewing by the public.

A lobbyist who fails to file a required report by the due date is subject to a late filing fee of $25 per day, not to exceed $1,000.

If you have any questions about either of these reports, please contact either John Knapp at 612.604.6404 or Tami Diehm at 612.604.6658.

June Special Session?

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Gov. Mark Dayton rejected a $259 million tax cut bill at midnight Tuesday by declining to sign it (pocket veto). The Omnibus Tax Bill would have delivered new credits, exemptions and deductions for farmers, businesses and college graduates. The plan also included a property tax provision sought by the developers of a new professional soccer stadium in St. Paul.

The Governor convened a meeting of top Republican and Democratic lawmakers Tuesday afternoon to discuss what it would take to revive the tax measure and other items in a possible special session. In a press conference Tuesday morning, Dayton said he is willing to resurrect the tax bill and meet half way on a bonding bill at a price of $1.1 billion.

Dayton has said he supported the tax bill and would have signed it if not for a wording error. The error was in a section dealing with tax rates for bingo halls. It has the potential to cost the state $101 million and threaten the funding stream for the new Vikings football stadium. He also wants lawmakers to restore a tax break the Minnesota High School League uses to fund sports programs for low-income students. The Governor warned of reopening the tax bill beyond those two changes, saying it would be a “free for all.”

Among Dayton’s conditions for a special session are that lawmakers complete work on a transportation finance proposal that contains funding for both roads and mass transit, that they pass a bonding plan with projects he endorses, and they revisit some budget items he says were left out of a bill he signed last week. He is also pushing to include money for repairs at Minnesota State Colleges and Universities institutions, as well as a new life sciences building for the University of Minnesota.

Republicans quickly agreed to fix the problem in the tax bill, and restore the High School League tax break. However, House Speaker Kurt Daudt (R-Crown) noted that their objection is that Dayton requires agreement on the entirety of his additional spending demands in order for that to happen.

The collapse of the bonding bill on the last night of session was brought on by a dispute over Southwest Light Rail funding. House Republicans remain firmly opposed to any funding for Southwest Light Rail, while Dayton and Senate Democrats still insist on funding for the project with a metro county sales tax option.

Daudt said he’d rather not take up Southwest in a special session, although he is open to a legislative hearing to vet the project.

House Transportation Chair Rep. Tim Kelly (R-Red Wing) spent the past two years trying to craft a bipartisan transportation spending package. By the closing days of session last month, Kelly and his Senate counterpart, Sen. Scott Dibble (DFL-Minneapolis) felt they had struck a workable compromise. It would have infused about $400 million more a year over the next decade into the transportation system and solved the light-rail funding problem. Kelly said he couldn’t get Daudt on board.

Republicans would like to take tax and transportation bills back to their districts to highlight the two biggest issues that they ran on in the last election. The Speaker said that he worries about a special session languishing as the plate gets too crowded and lawmakers move too far into campaign season.

House and Senate negotiators are meeting June 14 to begin reviewing projects for a new bonding bill. The governor and legislative leaders plant to meet next Wednesday to continue their special session negotiations.

Special Session?

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Minnesota Governor Mark Dayton spent the Memorial Day holiday weekend reviewing the details of the spending and tax bills the Legislature delivered for his signature at the conclusion of the 2016 session.

Dayton signed the $182 million supplemental budget bill on Wednesday. The bill includes three of Dayton’s spending priorities. It provides $25 million to begin statewide, voluntary pre-kindergarten, $35 million to further expand rural broadband, and $35 million for initiatives aimed at addressing racial economic disparities. Workforce housing, school support staff and water infrastructure were also addressed.

In a press conference the same day, Dayton laid out a lengthy wish list to state lawmakers that he said must be met before he will agree to sign into law a $259 million tax cut package or call the Legislature into special session. The tax bill contains new tax credits for low-income people and for college graduates carrying loan debt. It also has a property tax exemption for a proposed soccer stadium in St. Paul and breaks to entice a wood siding manufacturer to the Iron Range.

Dayton’s five-page letter to House and Senate leadership included requested funding for metropolitan transit, additional higher education spending and specific additions to the $1 billion bonding bill crafted in the session’s final minutes. The Governor also wants lawmakers to fix a drafting error in a gambling provision included in the omnibus tax bill that would result in the loss of $102 million to the state’s Minnesota Vikings stadium fund, and to restore an $800,000 tax exemption for the Minnesota State High School League. Beginning this fall, low-income student-athletes would not have been able to receive grants to offset the cost of playing sports, because legislators did not reauthorize a sales tax exemption on tickets for high school sporting events.

House Speaker Kurt Daudt (R-Crown) responded that he is willing to be flexible as long as Dayton is equally reasonable in his demands. The Speaker pledged a tax-bill fix in an attempt to gain Dayton’s signature. Dayton says he’s holding out hope for a comprehensive deal that addresses all of his priorities.

House Minority Leader Paul Thissen (DFL-Minneapolis) said he is supportive of Dayton’s conditions for a special session. However, Senate Minority Leader David Hann (R-Eden Prairie) said Dayton should call a special session to pass a bonding/infrastructure bill alone. He added that he cannot agree to the Governor’s multi-page list of non-negotiable spending demands.

Dayton has until Monday to act on the remaining bills from the 2016 session. He indicated Thursday that he will veto the tax bill if a special session can’t be agreed to.

Other laws

Dayton signed a bill into law Tuesday that regulates the use of police body cameras. The measure, passed in the final weekend of the 2016 session, will make most of the video recordings inaccessible to the public. Lawmakers removed a provision to allow law enforcement officers to review recordings before writing incident reports. Dayton said he wouldn’t sign the bill unless that change was made.

In other action, Gov. Dayton vetoed the omnibus pension bill. Dayton explained in his veto message that the bill fell short on overall sustainability goals and would have held current retirees solely responsible for reducing plan liabilities.

Dayton signed the Legislative-Citizens Commission on Minnesota’s Resources appropriations bill but he line-item vetoed seven projects. He criticized the Legislature for not working more closely with the LCCMR Board on recommended projects.

Dayton also signed 19 smaller bills, including the ratification of state employee contracts, creation of a child care affordability task force, and increased penalties for interfering with the scene of a death.

Moose Tracks

The U.S. Fish and Wildlife Service announced Thursday that Minnesota’s struggling moose population may warrant protection under the Endangered Species Act.

The USFWS now will undertake a status review before deciding whether to formally request to list the moose as threatened or endangered under the law. Meanwhile researchers are trying to identify what is causing Minnesota’s moose to die at such an alarming rate. Some of the theories are infection, parasites, and climate change.

The Minnesota Department of Natural Resources has not taken an official position on the proposal.


Session Closing Chaos: Special Session in the Wings

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In the waning hours of the 2016 legislative session, lawmakers wrapped up a supplemental budget and a tax bill, but failed to pass a comprehensive transportation package, a bonding bill, and a plan for implementing federal Real ID requirements. The breakdown came after hours of negotiations and lengthy floor sessions.


House and Senate lawmakers negotiating a long-term transportation funding package outlined new offers on May 21 that appeared to move each side significantly off their initial positions in an effort to pass a comprehensive transportation package. In the end, however, they couldn’t get past their fundamental disagreements over where the money should come from and whether to include mass transit. Democrats preferred new revenue from taxes or fees and Republicans preferred to shift existing revenue from the General Fund.

In place of a comprehensive transportation funding package, lawmakers put together a nearly $1 billion public works bill that included $236 million in road and bridge bonding, $266 million in cash for transportation projects, and $181 million in trunk highway spending. In the closing minutes of the session, the House passed the compromise bonding bill and sent it to the Senate. Instead of voting on the House passed bill, the Senate Democrats amended it to add money for light rail transit. The House adjourned before the bill was returned from the Senate, making it impossible to reconsider the bill in the House. The Senate minority attempted to reconsider the amendment, but calls to adjourn won out.

House Speaker Kurt Daudt (R-Crown) asked Governor Mark Dayton to call a meeting of leadership and a special session to address the unfinished bonding bill. Dayton said he is open to calling a special legislative session in early June if legislative leaders agree to his terms. Yet to lay out his requirements, Dayton has made it clear that any agreement must include a new health sciences building at University of Minnesota. He is also considering adding Light Rail funding – the issue that took the bonding bill down. Only Dayton can call a special session, but legislators decide when it ends. The Governor said he plans to send a letter to legislative leaders outlining his requirements for a special session early the week of May 30.

Supplemental Budget

House Republicans had originally proposed little supplemental spending, reserving the bulk of the State’s projected $900 million surplus for transportation projects and tax relief. The Senate DFL and Governor Dayton, in contrast, had proposed spending more than half of the surplus on supplemental budget items. One article at a time over the weekend, lawmakers began to reach compromises on the supplemental budget.

The budget bill conference committee approved an overall bottom line of $182 million in supplemental spending for the biennium. The House had previously proposed just $3.2 million in supplemental spending, compared to the Senate’s $454.8 million. The bill would provide funding for a wide range of programs, including $25 million for prekindergarten, $35 million for broadband expansion, and $35 million for equity programs – all of which were priorities for Dayton.

The overall budget impact of the proposal is:

  • Jobs, Energy and Equity: $75 million, including $35 million for broadband and $35 million for equity;
  • State Government: $45.23 million;
  • E-12 Education: $25 million;
  • Public Safety: $24.97 million;
  • Environment and Agriculture: $7.18 million;
  • Higher Education: $5 million; and
  • Health and Human Services: $0.

The bill also includes four tax provisions, which would cost $39 million in Fiscal Year 2018 and $29 million in Fiscal Year 2019. The provisions would:

  • Provide a one-year extension for the angel investment tax credit;
  • Exempt military pensions from state tax;
  • Provide a $2,000 tax credit for families who have a stillborn baby; and
  • Eliminate sales tax for modular homes.

Tax Cuts

The Legislature passed a comprehensive tax bill on Sunday with about $257 million a year in assorted tax breaks. The bill includes a mix of property tax relief for famers and businesses, a new credit for student loans, incentives for college savings, increased State aid for cities, expanded credits for veterans, and aid to parents with childcare expenses. It also contains tax breaks for the St. Paul professional soccer stadium and the 2018 Super Bowl. Another provision, which drew the Governor’s criticism, removes the automatic annual tax hike on cigarettes and other tobacco products that was approved in 2013.

Real ID

Legislators were also unable to reach final agreement on how to make Minnesota drivers licenses and identification cards compliant with tougher federal security standards laid out in the 2005 Real ID Act. This federal act was based on the 9/11 Commission’s recommendations that secure identification was needed to ensure that those with fraudulent documentation do not enter vulnerable facilities in the United States.

Both the House and Senate passed legislation that would lay out new requirements for state IDs, including new security features, added proof of residency requirements, and extended data retention timelines. The bills differed in a number of sections and the conference committee met three times in an attempt to iron out the differences.

Conferees had agreed to the Senate’s preferred implementation timeline of January 2018 and allowing rulemaking by the Department of Public Safety to implement the requirements. However, the discussions derailed on May 21 on Senate language that would allow rulemaking for undocumented persons to obtain a Minnesota driver’s license. It is possible REAL ID could be included in a potential Special Session to deal with the other unresolved issues of transportation funding and a capital investment bill.

In mid-May, the Department of Homeland Security (DHS) notified Governor Dayton that DHS was unable to grant a request for an extension to the State to comply with the 2005 federal law, meaning Minnesotan’s cannot gain access to secure federal facilities and military bases using only the State’s non-compliant ID’s. If the problem is still unaddressed by January 2018, Minnesotans also would not be able to board domestic commercial flights without an enhanced ID. Dayton said that timeline means there is still time for lawmakers to come to an agreement next year.

End of the Line-Almost….

Posted in Bills, Bonding, Budget, Tax, Transportation

In the waning days of the 2016 session, Gov. Mark Dayton and top lawmakers still haven’t reached agreements on the biggest outstanding issues.

Despite this week’s exchange of offers on transportation funding, negotiators have set that issue aside to focus instead on taxes, bonding, and how to spend the state’s $900 million budget surplus.

Dayton drew a new line in the sand with a list of spending requirements, telling Republicans that he won’t sign a tax bill unless he gets what he’s after in a supplemental budget. He pared back his original supplemental budget proposal, but his spending priorities haven’t changed. He wants money for universal preschool, rural broadband, and racial equity initiatives. On transportation funding, Dayton said he’ll leave that issue to House and Senate negotiators to try to figure out.

DFL Senate Majority Leader Tom Bakk (DFL-Cook) said he thinks an agreement on the size of a tax bill is within reach. He also thinks the governor’s spending requirements are doable. However, Bakk is not as optimistic about a transportation bill. With Republicans unwilling to support metro area transit projects, Bakk said transportation is no longer in play.

Supplemental Budget

The supplemental budget conference committee met Sunday evening to begin their adoption of “same and similar” language.  They continued Tuesday adopting policy language in the various articles, as they awaited joint budget targets. House Speaker Kurt Daudt (R-Crown), Senate Majority Leader Tom Bakk, and Governor Mark Dayton began discussing the budget framework Tuesday afternoon. House Republicans have proposed spending $65 million on the supplemental budget, Senate Democrats and Dayton have both proposed spending more than $450 million. The conference is awaiting joint targets to begin the real work.


According to legislative leaders on both sides of the aisle, everything hinged on finding common ground on a transportation package. Governor Mark Dayton unveiled two revised transportation funding packages on Monday. One plan included a 5 cent per gallon gas tax increase. Both plans would increase the license tab fees, use existing general fund revenues, raise the sales tax in the metro area by half a cent to fund mass transit, and generate $600 million per year for roads and bridges. Daudt said he was pleased to see the governor use general fund money and leave out the gas tax in one proposal, but criticized Dayton’s proposed tab fee increase as a different kind of tax increase. Dayton said he won’t accept less than $600 million per year in new transportation funding. He said boosting license tab fees is the only way to get to $600 million without raising the gas tax.

House Republicans countered on Tuesday with a compromise transportation counteroffer that ensures a $6 billion investment in road and bridge funding over the next 10 years.  The offer utilizes key components of Governor Dayton’s transportation plan, as well as the House Republican plan passed in 2015 that remains in conference committee to increase transportation funding by $600 million annually. One half, or $300 million, comes from the House Republican proposal to use existing funds to pay for road and bridge improvements. The remaining half comes from two sources identified by Governor Dayton; $200 million from trunk highway and general obligation bonds and $100 million from adjustments in license tab fees.

In addition, House Republicans announced a joint target compromise with $450 million of the state’s $900 million budget surplus toward middle-class tax relief including reducing the state tax on social security income and veterans benefits, a tax credit for contributions to college savings plans and student loan payments, property tax relief for farmers, and a dependent care tax credit supported by Governor Dayton. It uses $300 million a year in GF revenue, $200 million a year in bonding, and $100 million a year in license tab fees. The House offer does not include any money for transit. Daudt stated that he wants to see agreement on roads and bridges first. Bakk said transportation might have to be set aside this week so negotiations can focus on a supplemental budget bill, tax bill, and a bonding bill.


DFL leaders had been pressuring House Republicans to release their capital investment proposal so negotiations could begin. Gov. Dayton has a $1.4 billion bonding proposal, calling for huge investments in rail-grade crossing safety and water quality infrastructure. Senate DFLers failed to pass a $1.8 billion bonding bill by a single vote May 5.

House Republicans, Tuesday, announced their intention to introduce an $800 million bonding bill. Capital Investment Committee Chair Paul Torkelson (R-Hanska) said that it is the average size of the bonding bill in the past 10 even-numbered years and a $200 million increase from House Republicans initial bonding offer. He noted that the proposal prioritizes local road and bridge projects, water infrastructure supported by Governor Dayton, and asset preservation at Minnesota’s Higher Education institutions.

The proposal would authorize roughly $800 million in general-obligation borrowing repaid by state tax revenues, and another $70 million in trunk highway bonding. It includes $227 million for local road and bridge projects, $137 million for the University of Minnesota and Minnesota State Colleges and Universities system, and $130 million for water and sewer projects.

The bonding bill proposal from House Republicans is bigger than an earlier $600 million House GOP bonding price tag, but it’s significantly short of the $1.4 billion that Dayton wants.

The bill was approved Wednesday by both the House Capital Investment and House Ways and Means committees and was taken up on the floor on Thursday where it failed to garner the DFL votes needed to reach the supermajority to pass. House Democrats criticized the Republican plan as regionally and politically biased, focusing on Republican and rural districts at the expense of the metro area.

A House and Senate bonding conference committee, headed by Torkelson and Senate bonding chair Sen. LeRoy Stumpf (DFL-Plummer), is meeting this morning to consider portions of the current plans put forward by the House, Senate and governor.


The Taxes conference committee met on Wednesday. The last time the group gathered, a year ago, they were looking at a House proposal of $2 billion in tax relief; however, this year, the House Republicans are looking to $450 million in relief.

With no compromise on spending targets there was little the group could do except adopt some noncontroversial items that don’t require dollars.

At a Tuesday press conference, Davids said he expects the House revised omnibus tax bill to contain provisions to reduce taxes on Social Security and veterans benefits; provide a tax credit for contributions to college savings plans and a dependent care tax credit.

The conference met again late Thursday evening and will continue working today.

Real ID

Minnesota has been denied an extension that would have given residents two extra years to get an upgraded driver’s license. The U.S. Department of Homeland Security told Dayton in a letter released Monday that it won’t approve a waiver until the state passes a law to overhaul its licenses pursuant to federal security standards.

The Senate has passed its version that would begin distribution of the new licenses in January 2018.  The House also passed their own version. The two bills differ and a conference committee was appointed. The conferees met yesterday and passed some similar language but the big sticking points are a requirement of citizenship for any compliant or non-compliant license/ID and the effective date. The House version requires an October 2016 enactment.

Home Stretch-Second to Last Week

Posted in Budget, Minnesota Government Update, Senate, Transportation

Closed-door talks aimed at striking a budget agreement began Monday with a consensus that the divide over transportation needs to be solved before lawmakers can make real progress. Gov. Mark Dayton proclaimed the initial discussions were “constructive” as he emerged from his 90-minute conversation with House Speaker Kurt Daudt (R-Crown), Senate Majority Leader Tom Bakk (DFL-Cook) and a few other senior legislators.

With less than two weeks until the Legislature heads home, the transportation plan is pivotal. If lawmakers decide to move forward, it will affect how much of the projected $900 million surplus they will have left to devote to other items like taxes and bonding. Democrats, including Dayton, have proposed raising the gasoline tax to provide a new stream of reliable road money, but Republicans call that a non-starter. Daudt added that transportation is a priority item for all sides.

Transportation Conference Committee 

Conferees met again last Friday to hear the Senate offer on the transportation budget package. House Transportation Chair Tim Kelly (R-Red Wing) admitted that they have heard that transit is important and should be part of long term planning. In light of new money for transit, he has some concerns about where the money comes from and which projects it goes to. Rep. Tony Albright (R-Prior Lake) presented a Republican proposal about governance reform of the Metropolitan Council. Senate Transportation Chair Scott Dibble (DFL-Minneapolis) said that they are waiting for the Senate bill to get off the floor, so it can be taken up in conference committee. Kelly noted that he can see overall that scope and size of the amount for a ten year plan is not far from one another. He said they feel strongly about not supporting a gas tax as they find it regressive.  They feel similarly about an increase in license tab fees. He said they would come back with a counter offer, which will emphasize that we are in surplus, and can prioritize transportation at this time. Dibble countered that twenty other states have imposed a gas tax with bipartisan leadership. He feels that not raising dollars in a sustained fashion has a regressive outcome.

The conference convened again on Wednesday to hear the counter Republican proposal. GOP lawmakers may entertain a DFL plan to fund transit projects through a metro area sales tax increase if that funding comes with reforms in the governance structure of the Metropolitan Council. Kelly said he’s holding off on putting transit support in an offer as long as Democrats continue to push for a gas tax increase. Dibble said he was disappointed by what he described as a repackaging of the $6 billion ten-year House offer and its failure to fund transit. The House plan relies on a shift of motor vehicle-related sales tax revenues from the General Fund to road and bridge projects, as well as using one-time dollars from the projected surplus.

Dayton announced yesterday that a compromise transportation plan is in the works for Monday.

The Senate taxes committee met Monday to do a walk-through of their omnibus tax bill. Chair Rod Skoe (DFL-Clearbrook) remarked that the bill includes provisions we think are important from last year. He described it as a relatively small bill, which includes a minerals article dealing with IRRB, paid family leave, TIF provisions, a sales tax exemption for a siding facility, and federal conformity.  Tuesday they took public testimony, marked-up, and passed the bill. Members heard testimony from the Chamber and Minnesota Business Partnership opposing the paid family leave section of the bill, but a motion to remove the section failed along party lines. The bill passed on the Senate floor on Wednesday.

Supplemental Budget
The supplemental budget conference committee met Monday to begin presentations on the spreadsheets of the various House and Senate articles. The House is proposing just under $3.2 million in net supplemental spending for the biennium, the Senate proposal would spend an additional $456.7 million, just under Gov. Mark Dayton’s $494.5 million proposal.

The Senate proposal would increase spending across the board, but under the House proposal, spending would increase only in the areas of environment, transportation and jobs and energy. One major difference between the House and Senate supplemental budget bill comes via how to pay for the Border-to-Border Broadband Plan. The House version seeks a $15 million appropriation in Fiscal Year 2017 and $25 million in Fiscal Year 2018 to fund the program. As one-time appropriations, funds would work to provide high-speed Internet access to Greater Minnesota. The program would be required to reach underserved and unserved areas. Dayton has requested $100 million in his supplemental budget to expand broadband funding. The Senate broadband proposal would appropriate $85 million in Fiscal Year 2017.

The House proposal contains no net higher education spending, while the Senate is proposing $47.7 million. The House version contains policy provisions creating additional oversight of two types of research at the University of Minnesota: research using fetal tissue and psychiatric drug trials involving human subjects.

The House bill seeks to keep total health and human services appropriations flat. The bill would pay for new spending items by shifting MNsure appropriations before completely repealing the program and shifting enrollees onto the federal program in 2017. It would also implement a variety of new regulations for facilities that perform abortions and prohibit these facilities from being eligible for funds under certain federal family planning grants and state sponsored health care systems. The Senate bill doesn’t contain any of these provisions. The Senate bill would increase total appropriations by $50.7 million in Fiscal Year 2017 and $140 million in the subsequent biennium. Instead of repealing MNsure, it would increase funding to the program across a wide variety of items aimed at addressing issues with the program. Both bills contain a slate of items aimed at integrating mental health and chemical dependency treatments in the state.

With joint budget targets yet to be established. Conferees met for a second day on Tuesday to begin the walk-through of the side-by-sides of the various articles, and finished the review late Wednesday night. The real negotiation and selection of language has yet to occur.

Real ID
The Minnesota House is moving from requiring all Minnesotans to get federally compliant driver’s licenses and other identification to letting Minnesotans opt out of the Real ID requirements.

The Republican House had initially resisted the so-called “two track” option, which would allow Minnesotans to choose between a Real ID license and a standard one. The DFL Senate has a measure to offer Minnesotans a choice between the two.

The conflict between the two paths to adopt the federal Real ID requirements jeopardized a resolution to the identification questions this year. However, on Tuesday Rep. Dennis Smith (R-Maple Grove) author of the House Real ID measure, said he and his colleagues will now support offering Minnesotans a choice between a Real ID license and a standard license. The new measure was approved by the House Ways & Means committee on Wednesday and is now headed to the House floor.

The Senate bill was passed in the Judiciary Committee on Wednesday and passed Thursday on the Senate floor. The bills vary in that the House bill requires proof of citizenship; different implementation dates, and the House bill has rulemaking in the statute whereas the Senate gives rulemaking to DPS. The Driver and Vehicle Services Division is in the midst of replacing the computer system it uses to process licenses. Programming to allow the old system to implement Real ID would cost approximately $5 million and put programmers under a time crunch. The Senate bill addresses the agency’s concerns and implementation would wait until the new registration system is up and running. That would push the introduction of Real ID out to January 2018.

Fantasy Sports

Legalization of online fantasy sports, approved in the House, was stymied on Thursday in the Senate Taxes committee.  The distinction between daily and seasonal fantasy sports served as a catalyst for a contentious debate. Chair Rod Skoe (DFL-Clearbrook) said he thought it needed further analysis and would oppose the bill. Bill sponsor,  Sen. Sandy Pappas (DFL-St. Paul) pulled the bill, fearing she did not have the votes to pass it. The bill would have defined fantasy sports as a game of skill and included several consumer protection provisions. Pappas said she would try again next session and urged the public to weigh in if they think it is important to ensure legitimate businesses are operating in Minnesota.