Inside the Minnesota Capitol

Inside the Minnesota Capitol

Minnesota politics, regulatory agencies and state government news updates

Session Closing Chaos: Special Session in the Wings

Posted in Uncategorized

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.

Transportation/Bonding

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.

Transportation

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.

Bonding

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.

Taxes

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.

Taxes
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.

Miles Apart

Posted in Uncategorized

Supplemental Budget Bills

Divergent legislative priorities are reflected in the House and Senate budget bills. With respect to the projected $900 million surplus in the General Fund, House Republicans allocate the full amount to tax relief and transportation investment. Senate DFLers recommend $300 million for the tax bill (some of that will be spending for local government aid), $489 million in new spending, and leave $111 million unspent. Governor Dayton proposes $117 million for tax relief, $591 million in new spending, and leaves $202 million unspent. A conference committee has been called to try to seek middle ground between the Senate and House supplemental budget proposals.

Omnibus Transportation

House and Senate lawmakers last Friday got back to the task of finding agreement on a comprehensive transportation funding bill, meeting for the first time since March.  Senate Transportation Committee Chair Scott Dibble (DFL-Minneapolis) announced that the committee would meet again this week as it tries to tie up one of the three major pieces of legislation still outstanding from last year — along with tax and bonding bills.

The Committee didn’t tackle the bigger funding questions Friday, focusing instead on an amendment Dibble offered to alter language in the bill dealing with a proposed public-private partnership pilot program that would have the Department of Transportation and the Metropolitan Council team up with private design and construction companies on major infrastructure projects. House Transportation Committee Chair Tim Kelly (R-Red Wing) noted that the two sides are in agreement on this language.

The conference committee met again Wednesday to take up the rail grade crossings/emergency managers hazmat data sharing proposals. First responders and railroad companies have been meeting to iron out an acceptable plan for sharing oil and hazardous rail transport information, railroad contributions to construction of crossings, training of emergency responders, and additional rail inspectors. The conference committee members also discussed differences in the Senate and House funding plans. They will hear initial offers today.

The Republican plan passed last spring in the House would raise an additional $7 billion for roads and bridges over the next decade in part by redirecting motor vehicle-related tax revenue away from the state’s General Fund, identifying efficiencies in the MnDOT budget, and utilizing some of the state’s projected $900 billion budget surplus.

In contrast, the DFL-backed Senate bill proposes to raise roughly $11 billion for roads and bridges, as well as transit by instituting a new gas tax and expanding a metro area transit-dedicated sales tax from one-quarter to three-quarters of a cent.

Bonding Bill

The $1.5 billion Senate bonding plan was unveiled Monday in a Senate Capital Investment Committee hearing. It’s far bigger than the $600 million in general borrowing recommendations the House Republican majority is expected to put forth, and exceeds the $1.4 billion proposal that DFL Gov. Mark Dayton recommended.

Senate Capital Investment Committee Chair LeRoy Stumpf (DFL-Plummer) said the projects in the bill are drawn from more than $5.2 billion in requests. He remarked that many publicly-owned assets are in disrepair and others have failed to keep up with population growth or shifting needs.

The Senate proposal contains financing for more than 300 individual projects. There would be $80 million put into a fund to improve wastewater plants or focus on drinking water supplies. Additionally, there would be $150 million for local road and bridge rehabilitation projects and another $65 million for changes to road crossings along oil rail lines.

Other allocations include more than $131 million for the University of Minnesota and the Minnesota State Colleges and Universities System to refurbish existing buildings. Each college system would also get more money for new research labs and classroom buildings. The state Department of Public Safety would gain its top priority with $33 million for a new state emergency operations center. The Department of Natural Resources would receive $19.7 million to improve state recreation areas and trails. The state Capitol, currently undergoing a $300 million restoration, would have another $22 million in security upgrades.

House Speaker Kurt Daudt (R-Crown) told reporters last week that his side was waiting to approve its general budget bills before laying out a bonding proposal. During a news conference on Wednesday, Gov. Dayton urged Republicans to come forward with their proposal now given the impending May 23 adjournment date.

The Senate Finance Committee approved the bill on Wednesday. Finance Chair Richard Cohen (DFL-St. Paul) noted that Chair Stumpf has met his targets for General Obligation bonds and cash. There is no extra cash available. Stumpf acknowledged that there are a lot of moving parts in a bonding bill.

A big share of the Senate bill, $390 million, is for transportation projects. Stumpf explained that they usually try not to address transportation projects in the bonding bill, but this year they heard a great deal about the need on their listening tour around the state.

Bonding bills are unique in that they require three-fifths majorities to pass, necessitating votes from the other party for approval. The Senate bill failed on the floor by one vote short of needed super majority on Thursday, with Sen. Carla Nelson (R-Rochester) being the lone Republican to vote in favor. Sen. David Senjem (R-Rochester) offered a compromise Republican proposal in the form of an amendment which he said would cut the bill in half and make it more palatable for House Republicans.  The amendment elicited a lengthy defense of the projects in the bill from Democrats.  Majority Leader Tom Bakk (DFL-Cook) warned that there may not be a bonding bill this year, and House Speaker Daudt countered that Senate Republicans rejected an excessive bill.

Taxes

A year ago today the House Omnibus Tax bill passed off the House Floor; it languished at the end of session in conference committee. The Tax Conference Committee has not begun its end of session meetings yet. House Taxes Committee Chair Rep. Greg Davids (R-Preston) is waiting for spending targets before reconvening the conference committee. He is realistic that some things currently in the bill will have to go and is left to manage expectations.  The tax bill this year may be about federal conformity, Department of Revenue policy, and technical changes.

The Senate Tax Committee heard the proposed tax on employers and employees to fund a new paid-leave mandate that would apply to businesses with 21 or more employees. The bill was laid on the table as they are waiting for additional fiscal analysis of the proposal, but it is expected they will resolve fiscal issues and pass the bill to the floor. The Senate tax bill is expected to be taken up on the floor next Wednesday or Thursday.

Body Cameras

State lawmakers have been engaged in an ongoing debate about possible rules for the use of police body cameras and access to the footage they capture. The Senate voted Monday on a body camera bill.

Later this month, the Minneapolis Police Department will begin deploying the first of the 600 small cameras. It will add Minneapolis to a list of about 40 law enforcement agencies around Minnesota where the cameras have been introduced to increase transparency and accountability.

Sen. Ron Latz (DFL-St. Louis Park) said it is about time lawmakers provide clarity about when the cameras must be on, about who gets to access the footage and about how to maintain the videos. Local officials are looking for a law that balances privacy and one that will foster trust between police and the communities they serve. The Senate bill that Latz is sponsoring would declare much of the footage private unless the recordings were made in a public place. People who are subjects of the videos, including the officers wearing the camera, could get access. There’s also an exception making more data public when substantial force or weapons are used by officers.

Some have argued that putting too much of the video off limits would defeat the accountability purpose and turn the devices merely into surveillance tools. Rep. Peggy Scott (R-Andover) is pushing for a requirement for police to gain consent before recording in a home in non-emergency situations. There was an attempt to tack a body camera provision into the House budget bill last week, but it was ruled out of order.

MNsure

This legislative session, House Republicans have passed measures to slice MNsure’s operating allowances, alter its leadership structure and phase out the state exchange altogether. Their goal is to put Minnesota into a federally run marketplace beginning in 2018.

As lawmakers get ready to negotiate a possible end-of-session deal, both sides agree the three-year-old health insurance exchange needs fixing, but they have radically different approaches.

Many states opted against creating their own systems and instead had their residents enroll through the federal system. Several states like Minnesota that did build an exchange have struggled through one technological flaw after another, leading some to give up.

Senate Health and Human Services Finance Committee Chair Tony Lourey (DFL-Kerrick) said a health care task force convened last year opposed scrapping MNsure. He said there are points of common ground for reform, such as instituting a new steering committee to oversee and prioritize technology changes to the program, Lourey added. There’s also a joint push to undo liens on estates against people accessing subsidized coverage since MNsure took effect.

Real ID

The House Transportation Committee held a hearing Thursday and approved a one track Real ID bill. It goes to State and Local Government Committee on Friday. Applicants for a Real ID would need to provide source documents upon initial application and then going forward would not need to do so for renewal. The Senate bill allows for a dual track system, one for Real ID and one for a traditional driver’s license.

Fantasy Sports

The Senate Finance Committee today approved Sen. Sandy Pappas’s (DFL-St. Paul) bill authorizing Fantasy Sports. The bill was amended to add an annual registration fee of $500 to cover administrative costs, and clarification that it is limited to sporting events. There was some pushback about whether it is a game of skill, but Pappas explained that over one million Minnesotans are already participating, and she is seeking to add consumer protections. The bill’s next stop is the Senate Taxes Committee. The companion bill passed in the House in April. House Sponsor Tim Sanders (R-Blaine) said his bill would clarify that the games are legal. He insists that fantasy sports are not gambling, but based on performances of real-life athletes. The House bill also includes many consumer protections.

Competing Budgets

Posted in Uncategorized

Lengthy floor sessions ensued this week as House and Senate lawmakers took up supplemental budget bills in their respective chambers. The Republican House had three bills to debate over the course of the week. The DFL Senate had all of its proposals for spending the $900 million budget surplus in a single bill, which was scheduled for a vote Thursday. In addition, lawmakers found time for some potentially contentious committee hearings this week on Real ID and guns.

Education Omnibus Budget Bill

First out of the gate was the House Education budget bill, taken up on the floor Monday afternoon.

The GOP proposed budget for schools and state colleges and universities does not spend any new money in the current two-year budget cycle. Instead, spending on some new proposals is expected to be paid for with $55 million from faster repayment of state loans by some school districts.  House Republicans this year have proposed largely holding the line on the current $42 billion two-year budget.

Among new programs are proposals to recruit and retain teachers of color in Minnesota, where statewide only 4 percent of teachers are minorities. Also, the bill would offer loan forgiveness and tuition incentives for educators. There is also grant money for para-professionals in education who are interested in becoming licensed teachers. The teacher workforce effort had bipartisan support.

Rep. Jenifer Loon (R-Eden Prairie), Chair of the House Education Finance Committee, highlighted a measure she sponsored that would form a working group to examine school discipline problems, following several high-profile assaults on teachers. Teachers would be notified if students with past incidents of violence are placed in their classrooms.

House DFLers largely criticized the budget proposal, arguing that with a $900 million projected budget surplus, legislators should spend more on higher education and tuition relief.  A provision requiring additional oversight of fetal tissue research at the University of Minnesota also generated some heated debate.

Agriculture/Environment/Energy/Jobs Budget Bill

The House passed a supplemental budget bill Wednesday that includes new spending to expand rural broadband, promote tourism, and tackle racial economic disparities.

The measure adds $12 million in new spending overall. House Democrats criticized the GOP bill as another missed opportunity to make key investments with the state’s $900 million budget surplus. House Republicans want to use that surplus for transportation projects and tax cuts. The bill includes $6 million for proposals aimed at reducing racial economic disparities. DFL Gov. Mark Dayton, however, is seeking $100 million for similar efforts and Senate Democrats want $91 million. Democrats also took aim at the bill’s broadband investment of $15 million in 2017, as it is just a fraction of what the Governor and Senate are seeking.  House Republicans countered that their plan also comes with a pledge to make another $25 million broadband investment in 2018. Committee Chair Pat Garofalo (R-Farmington) said the money will help the state leverage additional federal money and private sector matches.

The House bill includes a repeal of the 2014 law allowing unionization of child care workers, money to complete the Lewis & Clark Regional Water System project in southwestern Minnesota and money for anticipated lawsuits related to the PolyMet mining project. It also includes cuts to the Minnesota Investment Fund, Job Creation Fund, and eliminates money for the Minnesota Film Board (an incentive program used to lure moviemakers to the state). Garofalo said those government subsidies and perks have primarily benefited the Twin Cities metro area, and thinks a better strategy is to get investment in infrastructure, primarily in Greater Minnesota.

Health and Human Services/State Department/Public Safety

The last of three budget bills in the House, HHS/state government/public safety, was approved in the wee-hours Friday morning following a twelve hour debate.

The budget bill would clamp down on state agency travel and cut salaries for commissioners. On the health care side, it would start the process of shifting Minnesota into a federal health care exchange and out of MNSURE, the state based exchange. It includes programs for integrating substance abuse and mental health care, reductions to counties’ share of chemical dependency payments, public health program eligibility verification, and increased funding for training physicians serving Greater Minnesota. The bill would require licensing of facilities that perform abortions, and imposes a prohibition on facilities that perform abortions from receiving Title X and federal family planning grants.

Under the Public Safety article, the bill increases penalties for driving unlicensed and failing to stop for a school bus. It would also prohibit use of a drone within one mile of a public safety helicopter.  For state department spending, the bill delivers a one-time $500,000 appropriation for MN.IT Services to perform a study of cybersecurity across state government.

Gov. Mark Dayton warned that the combination of zero funding for areas where he proposed funding combined with troubling policy measures would make it unlikely for him to sign off on the bill in its current form. House Speaker Kurt Daudt (R-Crown) defended the House budget approach, which he said is aimed at preserving the surplus for use on road construction and tax cuts.

Senate Omnibus Supplemental

In the Senate, majority Democrats used a single budget bill that would carve up much of the surplus for new or expanded programs. The Senate supplemental spending plan is similar to what Gov. Dayton is seeking.

The DFL bill includes spending increases for education, rural broadband expansion, and programs to tackle racial economic disparities. It also funds a freight rail director position, improves emergency response for oil trains, and hires additional rail inspectors.

Senate Republicans argued that the money should go toward road and bridge funding, which was an unresolved issue from last session. Senate Minority Leader David Hann (R-Eden Prairie) said last year’s unfinished work is the reason there is a surplus. Senate Transportation Chair Scott Dibble (DFL-Minneapolis) opposed the effort to use one-time spending rather than continue to work on a long-range funding measure for roads, bridges and transit. Senate Democrats favor a gas tax increase, while House Republicans insist on using only existing revenues. Conference committee negotiations on last year’s transportation bill began today.

The last amendment of the evening, offered by Senate Taxes Vice Chair Ann Rest (DFL-New Hope), created a hostile work environment. She offered a provision reallocating Republican Senate office space inside the State Office Building to the Revisor of Statutes. DFL lawmakers moved into the new $90 million Minnesota Senate Building that they supported before the start of the 2016 session. GOP lawmakers who opposed the project refused to move in until after the 2016 elections. The controversial amendment cancels the current lease and significantly reduces the amount of space available for lawmakers. Republicans expressed outrage. Sen. Carla Nelson (R-Rochester) said “This is the first time in my life that I’ve been embarrassed to be a Minnesota senator.”

The competing supplemental budget plans in the Senate and House will need to go to conference to be resolved.

Bonding

The House Capital Investment Committee Chair Paul Torkelson (R-Hanska) said Tuesday the fate of a House bonding bill is closely linked to the outcome of lawmakers’ negotiations over comprehensive tax and transportation legislation.

Even-year legislative sessions are generally regarded as “bonding years,” when lawmakers pass a large-scale borrowing package that helps fund infrastructure projects across the state.  Gov. Mark Dayton has proposed a $1.4 billion package — it would be the largest in state history — and Senate DFLers said they would like to see a similarly sized bill, although no proposal has yet been unveiled.

House Republican leadership earlier this month released budget targets that call for a $600 million bonding bill. Bonding bills require a sixty percent supermajority to pass. Torkelson described the bonding bill as “dessert” – something that comes at the end of session.

House lawmakers on the bonding committee heard dozens of bills that laid out the capital investment needs of state agencies and local governments across the state. Torkelson said lawmakers are evaluating and prioritizing projects now so they are ready when the time comes.

The Senate Capital Investment Committee also met Tuesday, hearing county transportation requests. Transportation Chair Scott Dibble (DFL-Minneapolis) testified that he did not want to advocate for bonding requests as they are one time funding and he strongly believes a long-term funding plan is imperative. The Committee heard about the Moorhead rail grade separation project and the I-35-Lake Street Station projects, among others. Hennepin County Commissioner Peter McLaughlin made a strong pitch for a half-cent sales tax increase to replace the need for future bonding requests. Senate Capital Investment Committee Chair LeRoy Stumpf (DFL-Plummer) concluded that he hopes to have a transportation package this session. He announced that he plans to unveil an omnibus bonding bill Monday morning.

Real ID

Minnesotans could begin applying for federal Real ID Act-compliant driver’s licenses and ID cards by Oct. 1, 2016, under a bill a House committee advanced Monday.

Sponsored by Rep. Dennis Smith (R-Maple Grove), the bill would lay out new requirements for issuing the more secure state IDs, including new security features on the cards, added proof of residency requirements and extended data retention timelines.

The bill would bring Minnesota into compliance with the federal law to make state-issued IDs more secure in the face of terrorism concerns, and help the state beat a 2018 deadline requiring enhanced IDs to board domestic commercial flights.

Currently, Minnesotans cannot gain entrance to secure federal facilities and military bases using only standard state-issued IDs.  Gov. Mark Dayton requested a new Department of Homeland Security extension to allow Minnesota IDs to be used to enter those facilities while the state works toward satisfying federal requirements.

The House Civil Law and Data Practices and Government Operations Committees both approved the bill and referred it to the Transportation Committee. The Senate companion passed out of the Transportation Committee and was referred to the State and Local Government Committee.

Every state will be federal Real ID compliant by the 2020 deadline, when the Department of Homeland Security has said it will issue no more extensions to states that do not meet the new standards.

Background Checks for Firearms

The Senate Judiciary Committee held a well-attended, informational hearing on Tuesday on two gun bills. One bill would require criminal background checks on all gun sales. The other bill would allow law enforcement or family members to get court orders to prevent people who pose a danger to themselves or others from possessing a firearm.

Senate Judiciary Committee Chair Ron Latz (DFL-St. Louis Park) described his bills as common sense solutions that would help keep Minnesotans safer. Latz wants to expand the criminal background check requirement to gun shows, personal sales and online transactions. Supporters and opponents spent more than two hours testifying. Bill proponents told lawmakers of their personal stories and concerns over gun shows and online sales. Gun rights advocates spoke against the bill and disputed many of the statistics used by its supporters, saying most criminals obtain their guns from other criminals. They also warned that this bill would move the state closer to a gun owner registry.

Sen. Warren Limmer (R-Maple Grove) described the hearing as “political mumbo jumbo” to get an issue “spiked up” for the election. Latz said gun control is an unavoidable campaign issue that will shake out district by district this fall.

Finance Deadline Week/One Month and Counting

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Midnight Thursday marked the deadline for all finance bills to make their way through their respective chambers before today’s Passover Break.

Omnibus Budget Bills

By the end of the week, the House combined eight omnibus finance bills into three as laid out in a plan presented Monday to the House Ways and Means Committee by Chair Jim Knoblach (R-St. Cloud). Still to be reconciled are the 2015 omnibus taxes and omnibus transportation finance bills, which remain in conference committees.

The House omnibus bills were grouped as follows:

  • K-12 education and higher education;
  • jobs, agriculture and environment and natural resources; and
  • health and human services, public safety and state government.

Rep. Knoblach said that the Senate will have only one supplemental budget bill, but thinks it would be nice to have the bills somewhat narrower than just one big bill. In past supplemental budget years, it has been common for the House to end up with a single omnibus finance bill.

Though the House will have three omnibus bills, there will still be only one conference committee with the Senate. Knoblach said he will probably introduce a small “overarching” bill for conference committee in addition to the three omnibus bills.

In the Senate, Finance Chair Richard Cohen (DFL-St. Paul) also took up their respective articles throughout the week, and rolled them into one omnibus finance package late Thursday. The respective budget bills will now move to the Senate and House floors for consideration.

Water Quality

Hoping to rally public support for his clean water initiatives and pressure the Legislature to do more this session, Gov. Mark Dayton on Monday declared it “Water Action Week.”

Dayton said he wants to make Minnesotans more aware of the quality of their drinking water and get them involved in efforts to protect it. The Governor has been pushing hard for improvements since state studies found troubling levels of nitrates, phosphorus and other chemicals in some drinking water supplies.

Last session, he championed a buffer requirement to prevent runoff. This year, he hosted a statewide summit on water quality and proposed a $220 million state investment in water projects and programs.

Dayton said the House Republicans’ proposal for a $600 million bonding bill is “woefully inadequate” to make needed water infrastructure improvements. His bonding bill proposal totals $1.4 billion, including $167 million to help small communities replace aging drinking water and waste water facilities.

House Capital Investment Committee Chair Paul Torkelson (R-Hanska) said he shares the Governor’s interest in water quality projects, but isn’t ready to say how many of those projects might fit into the House bonding bill.

Fair Tax

In its last meeting, the House Taxes Committee held an informational hearing on implementation of a “Fair Tax.” The concept is being heard in several states, and Rep. Steve Drazkowski (R-Mazeppa) is the House sponsor of a bill that would put the framework in place for “Fair Tax” implementation in Minnesota. The bill’s companion, sponsored by Sen. Dave Thompson (R-Lakeville), has not had a hearing in the Senate Taxes Committee.

The bill would eliminate most taxes, including alcohol and tobacco taxes, and establish a framework for replacing them with a very broad state sales tax. Based on a formula, a monthly credit would be paid to people living at the poverty level based on household size. If implemented, sales taxes would not only be expanded to most consumer items, but also most services.

Supporters say a “Fair Tax” would do away with tax deductions and carve outs, including mortgage interest deductions. Drazkowski said it is a simple idea that would incentivize people to work and save.

Critics say implementation of the tax would create an inordinately high consumer tax that would most likely mean less revenue to the state’s General Fund. Rep. Greg Davids (R-Preston), the Taxes Committee Chair, said the concept “is most likely a federal issue. I’m not quite sure mechanically how it would work if one state did it and no other states did. This is a concept bill. We’re not laying it over; we’re not voting on it; this is certainly not the position of the House GOP.”

Racial Disparity

Rep. Rena Moran (DFL-St. Paul) sent a letter to Speaker Kurt Daudt (R-Crown) Tuesday asking him to target at least $50 million to the issue of racial disparities. Thirty of her DFL colleagues, including Minority Leader Paul Thissen (DFL-Minneapolis), co-signed the letter.

Moran, who is the only African American member of the House, noted that the median income of black Minnesotans fell by 14 percent between 2013 and 2014. Gov. Mark Dayton proposed $100 million this session to tackle racial disparities. The DFL-controlled state Senate proposed $90 million.

Moran is critical of House GOP leaders for not including a specific allocation for economic disparities in their budget targets. Daudt said the requests for more money do not do enough to address academic achievement gaps he believes are at the root of the economic disparities.

House Republicans included some funding initiatives related to economic disparities in their recently released finance bills. They point out 11 items totaling $6.4 million in this year’s jobs bill and 13 education bill provisions totaling $19.3 million. House Ways and Means Chair Jim Knoblach (R-St. Cloud) stressed that Republicans still want the disparity discussion to include an expansion of tax credits for private school tuition.

Patent Trolling

Minnesota legislators are trying to fix a growing problem hitting businesses around the country: “patent trolls.”

Legislation sponsored by Rep. Joe Hoppe (R-Chaska), would allow an attorney general to bring civil action against someone who has made a “bad faith claim” against another for infringement on any potentially patented product. A penalty of up to $50,000 per violation could be imposed on any individual or business. Currently, 27 states have passed legislation to help prevent patent trolling.

The bill has the intent of targeting patent assertion entities — businesses that acquire patents with no intention of using the technology itself, but rather suing for alleged infringement. Businesses have found the cost of fighting a frivolous claim in court prohibitive, forcing many businesses to simply settle.

The House approved the legislation unanimously, 129-0. It’s expected to be brought up for a vote on the Senate floor next week, where it is sponsored by Sen. Kari Dziedzic (DFL-Minneapolis).

The legislation has broad support from trade groups, including real estate agents, restaurants and insurance agents. Proponents say the bill would offer consumers and businesses stronger safeguards. Attorney General Swanson said she welcomed the legislation, partly because it could help curb legal costs.

REAL ID

The House and Senate have each held an informational hearing with Commissioner Mona Dohman, Department of Public Safety (DPS). Both hearings included a review of the report requested in the first REAL ID bill and many questions were raised by members.

There continues to be discussion of whether a second REAL ID bill, for implementation, is needed this session. DPS was not able to answer all the timing questions and indicated they will do more research and get back to the respective chairs.  The Governor has sent a letter to the federal Department of Homeland Security requesting an extension for Minnesota. The big question from legislators, whether Minnesota will obtain the extension from Homeland Security based solely on lifting the prohibition on DPS’s ability to prepare for implementation of Real ID (first bill), is not yet answerable.

The second House REAL ID bill was introduced Thursday, and is scheduled for a hearing in the House Civil Law and Data Practices for Monday.

Supplemental Budgets, Bonding and Tax Targets

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With the passage of policy committee deadlines, the Legislature has shifted its attention to supplemental budgets, bonding and tax targets. Finance bills have to be out of Senate Finance and House Ways and Means committees by April 21. In addition, lawmakers have six weeks left to reach compromises on transportation and taxes.

Budget Surplus Spending

Democrats in the Minnesota Senate released their General Fund budget targets this week for spending the State’s $900 million surplus. Not surprisingly, the plan contrasts sharply with the one House Republicans announced last week.

Senate Majority Leader Tom Bakk (DFL-Cook) said that they would spend the $900 million surplus among their spending divisions, and reserve some cash in the bonding bill. Bakk said the Senate plan includes some one-time spending to limit the impact on future budgets.

House Republicans rolled out a supplemental budget blueprint Thursday that proposes no net increase in State spending. The plan would divide the State’s $900 million budget surplus between the two leftover items from last session: transportation funding and tax cuts.

During a Wednesday press conference with Senate leadership, Majority Leader Bakk explained that the Senate Democrat’s budget is all inclusive, but a little incomplete. He highlighted three components – bonding, transportation, and family leave. Senate leadership said Pre-K will also be a part of the bill, something Gov. Mark Dayton pushed hard for last session. Bakk noted that their spending and the Governor’s are similar.

Senate Finance Chair Richard Cohen (DFL-St. Paul) said the budget forecast shows a leveling off. He said they won’t base the budget on the current forecast since there appears to be a downturn. New Senate Finance Equity Subcommittee Chair Jeff Hayden (DFL-Minneapolis) said that there is an absolute commitment from the Governor and Senate DFL on funding the equity issue.

Senate Tax Chair Rod Skoe (DFL-Clearbrook) noted that after the forecast, the tax bill was re-scored. He said they will try to fit some new priorities in the tax bill, including the disparity issue.

When asked about the Senate and House budget targets being far apart during the question and answer session, Bakk said he told the House Speaker he has to figure out if he wants a tax bill or a transportation bill; there is not enough money for both. He added that Speaker Daudt and Minority Leader Paul Thissen (DFL-Minneapolis) need to work together to get the votes to spend some money.

Bakk said he left $111 million unspent, and can use some of that for bonding. He expects the bonding proposal to be close to the $1.4 billion that the Governor wants, vs. the House $600 million proposal.

They hope to have the Senate Finance bill on the floor by Thursday of next week before the Passover break.

Legacy Funding

House Legacy Funding Finance Committee Chair Rep. Dean Urdahl (R-Grove City) called its first meeting of 2016 on Monday.

Urdahl told the committee that the only bill on the agenda, which was laid over and has no Senate companion – was “vehicle” legislation that would take its final form at the next meeting. But he then outlined the challenges facing the four funds created when voters approved the Legacy Amendment in 2008. Those funds are: Clean Water Fund, Arts and Cultural Heritage Fund, Outdoor Heritage, and Parks and Trails Fund.

Urdahl said that because sales tax revenue did not meet projections, we have a little bit of a deficit. Because the February forecast showed lower-than-expected revenues, three of the four Legacy Funds face a projected deficit. Only the Parks and Trails Fund shows a positive balance ($156,000). However, Urdahl said steps have already been taken to address these shortfalls.

While the contents of the Legacy bill are expected to be much different when the committee next takes up the bill, Urdahl said the language it currently contains may begin to resolve an ongoing question that must be answered each time funds are appropriated.

The law requires legacy dollars to “supplement” rather than “supplant” existing expenditures. The legislation would require those seeking money from the Parks and Trails or the Arts and Cultural Heritage funds to disclose whether a given program or project has been funded in the past (since 2006) and, if so, how it was funded. The other two funds were not included because it’s believed they are overseen by advisory boards that should already be considering this question.

Urdahl said this information would help legislators determine whether future Legacy appropriations would be going to efforts that had previously been funded.

Transportation Funding

The chair of the House Transportation Policy and Finance Committee Tim Kelly (R-Red Wing) expressed frustration with Gov. Mark Dayton’s supplemental transportation spending requests on Wednesday, dismissing the proposal as “not a serious plan.” He expressed annoyance at its similarity to the Administration’s original 2015 budget recommendations.

The Governor is calling for additional funds in Fiscal Year 2017 for highway construction, at-grade rail crossing improvements, more State rail inspectors, and registration and commercial licensing of drones. His plan also includes a proposed increase in the motor vehicle fuels tax and vehicle registration fee to fund road and bridge projects, and an expanded metro area sales tax dedicated to Twin Cities transitway expansion.

Legislative leaders on both sides of the aisle say striking a transportation funding deal remains a high priority this session, but little progress has been made in bridging the gap between the House and Senate plans.

The House Republican plan would raise an additional $7 billion for roads and bridges over the next decade, in part by redirecting motor vehicle-related tax revenue away from the State’s General Fund, identifying inefficiencies in the MnDOT budget, and utilizing some of the State’s projected budget surplus.

Meanwhile, the Senate DFL package proposes to raise roughly $11 billion for roads, bridges and transit by instituting a new gas tax and expanding a metro area transit-dedicated sales tax from one-quarter to three-quarters of a cent.

Real ID

In a report released Thursday, the Department of Public Safety estimated that it could cost up to $5 million to implement Real ID (security enhanced driver’s licenses) starting this fall.

The Minnesota Legislature ordered the study as it tries to respond to a deadline imposed by the federal government aimed at making identification cards harder to counterfeit. Unless Minnesota makes the change in the next couple of years, Minnesota travelers would have a tougher time boarding flights or getting on military bases.

Legislators are considering bills to usher in Real ID in October, so the cards that require more proof of identity and take more time to process can become uniform in time to meet federal enforcement timelines.

Minnesota faces a 2018 deadline to comply, but the State has applied for a waiver that could extend the deadline until 2020.

Gov. Mark Dayton said he is hopeful that the U.S. Department of Homeland Security will give the State some leeway, and is unsure whether he and lawmakers can get it resolved this year. House Speaker Kurt Daudt (R-Crown) said the Legislature still has time to tackle the topic during this legislative session and bring certainty to the traveling public.

Sen. Warren Limmer (R-Maple Grove) has been leery of the Real ID over worries about securing sensitive data. After the report’s release, he said there is ample time to think it through.

First-time applicants for a Real ID must present a valid passport, a certified birth certificate, a certificate of citizenship, or another recognized primary document. The corresponding documents or digital images are kept on file for seven to 10 years. Lawmakers said they will consider rules for data handling to safeguard applicant information.

Fantasy Sports

The Minnesota House voted Monday on legislation to legalize the rapidly growing recreational activity known as fantasy sports.

Rep. Tim Sanders (R-Blaine) said his bill would clarify that the games are legal. He insists that fantasy sports are not gambling. He said the competitions are based on performances of real-life athletes.

The bill moved quickly through the committee process with little opposition. The group Citizens Against Gambling Expansion has spoken against the legislation, arguing that daily fantasy sports games are a form of illegal online wagering.

The Sanders bill would codify the experience in State statute and provide a definition for fantasy sports with an entry fee, noting that it is not a lottery or other form of betting.

The House passed the bill 100-28 Monday. It now moves to the Senate where Sen. Sandy Pappas (DFL-St. Paul) is the sponsor. “The purpose of the bill is to take something that is so important to many Minnesotans — daily weekly, seasonal fantasy sports — and to codify it in statute that it is legal, that it is fun and helps build community,” Sanders said in a press conference earlier in the day.

Sanders said the consumer of fantasy sports will not be impacted in their game-play, but operators will face stricter regulations, describing it as one of the strongest bills in the country.

The bill, as successfully amended by Sanders on the House Floor, would provide many consumer protections. Among them, the operator must implement reasonable procedures to prevent a game operator from being a participant in a game that they offer and verify that a player is at least 18 years of age.

Rep. Joe Atkins (DFL-Inver Grove Heights) successfully added an amendment that would require a game operator to have an independent audit with the results submitted to the Commissioner of Public Safety by March 15 of each year.

State and Federal Campaign Finance Reports Due – April 14 and April 15

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While most of us are focused on getting our taxes finished, do not forget to file your campaign finance reports too!

All Minnesota political committees, political funds, independent expenditure committees and independent expenditure funds are required to file a quarterly report of receipts and expenditures no later than Thursday, April 14, 2016.   The period covered by this report is January 1 through March 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: http://www.cfboard.state.mn.us/index.html

Unless they elect to file monthly, all federally registered PACs and Super PACs are being required to file a quarterly report of receipts and expenditures no later than Friday, April 15, 2016. Like the state reports, the period covered is January 1 through March 31, 2016.

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.

Reports filed electronically must be received and validated by the FEC by 11:59 PM Eastern Time on the filing deadline. Paper filers must ensure that the FEC receives their report by the close of business on the date of the filing deadline. The filing deadline is not extended because the due date falls on a weekend. Additional information about federal filing requirements can be found at: http://www.fec.gov/info/filing.shtml

If you have any questions about either of these reports, or any other campaign finance or lobbying issues, please contact either John Knapp at (612) 604-6404 or Tami Diehm at (612) 604-6658.

Second Committee Deadline/Week 5

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The Minnesota Legislature wrapped up second committee deadline week, marking the last opportunity for committees to act favorably on bills, or companions of bills, that met the first deadline in the other house.

GOP Budget Targets

House Speaker Kurt Daudt (R-Crown), Majority Leader Joyce Peppin (R-Rogers) and House Ways and Means Chairman Jim Knoblach (R-St. Cloud) announced targets for budget adjustments on Thursday. In light of the Legislature establishing a two year budget last year, House Republicans are proposing no net increase in spending in the supplemental finance bills.

Speaker Daudt said that House Republicans will focus on tax relief for families and fixing Minnesota’s roads and bridges. The transportation and tax relief bills from last year currently remain in conference committees. The Republican transportation plan spends $7 billion on roads and bridges over the next 10 years without an increase in the gas tax. It would repair or replace more than 15,500 lane miles of road and 330 bridges statewide. Proposals in the Republican tax relief bill include phasing-out the tax on social security benefits and military pay, tax credits for families saving for college and students paying off their loans, expanded deductions for families with school-aged children, and property tax relief for farmers and small businesses.

Among the adjustments, House Republicans are proposing additional funding of $35 million for broadband in rural Minnesota. There is an equal amount of cuts in other budget areas. State government finance is reduced by $9.5 million, and there are also cuts in agriculture and public safety. Bonding is set at $600 million.

The House GOP targets contrast sharply with DFL Gov. Mark Dayton’s proposals. Dayton wants to spend $700 million of the surplus. His bonding bill proposal is $1.4 billion. Senate Democrats plan to release their competing budget outline next week. Senate Majority Leader Tom Bakk (DFL-Cook) said the Senate plan will include some one-time spending to limit the impact on future budgets.

Taxes

House Republicans are pushing for tax cuts with a renewed focus this session on phasing out the state tax on Social Security income. GOP leaders say the move is needed to keep retirees from leaving the state, although Senate Democrats and Gov. Mark Dayton warn that the loss of revenue from such a large cut would threaten future state budgets.

The tax bill House Republicans passed last year, when the state budget had a $1.9 billion projected surplus, would have cut the Social Security tax by 20 percent a year for five years. The proposal remains alive this session in a conference committee. This year, the estimated surplus dropped to $900 million. Cutting the Social Security tax, however, is still a top priority, said House Taxes Committee Chair Greg Davids (R-Preston). He wants Minnesota to be a friendly place for retirees.

The Minnesota Department of Revenue estimates the GOP phase-out plan would affect 381,000 returns in the current tax year, with an average reduction of $213. In Minnesota, Social Security benefits are fully exempt from state and federal taxes for married couples with annual incomes of less than $32,000. The full exemption applies to individuals with income of less than $25,000. There is a 50 percent exemption on slightly higher incomes.

Rep. Paul Marquart (DFL-Dilworth) and other Democrats want to raise the income thresholds, which haven’t changed since 1994. Dayton also supports an adjustment, but he did not include one in his supplemental budget plan.

Senate Taxes Committee Chair Rod Skoe (DFL-Clearbrook) said the state could spend about $15 million a year and exempt everyone who makes less than $60,000. Skoe said the full exemption favored by Republicans would primarily benefit people with the highest incomes. Skoe said Senate Democrats won’t support any tax cuts that put the budget at risk. Some Republicans see room to negotiate a phase-out schedule agreeable to Democrats. House and Senate negotiators will begin working again on a potential tax bill compromise later this month.

Gun Cell Phone Cases

Divided over proposed regulation of actual firearms, Minnesota lawmakers gave bipartisan support to a bill outlawing smartphone cases made to look like pistols or revolvers. Legislation making it a crime to buy, possess, manufacture or sell the gun-replica phone cases cleared committees Wednesday, and now awaits action on the House and Senate floors.

Rep. Joe Atkins (DFL-Inver Grove Heights) and others first raised their concerns last year and hoped retailers would voluntarily pull them from the shelves. However, when some began filtering into the state through online sales, Atkins said a state ban became necessary. Maplewood Police Chief Paul Schnell, speaking on behalf of the Minnesota Chiefs of Police Association, described the cases as no win situations and recipes for disaster.

Under the bill, violations would be a petty misdemeanor punishable by a fine of up to $300.

First Committee Deadline – Week Four at the Capitol

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The universe of legislation in play will be significantly winnowed down this week as it is the first committee deadline. Committees must act favorably on bills in the house of origin. The focus will increasingly turn to the budget and tax bill as we move to the second half of session.

Real ID

The REAL ID bill, part 1, Senate File 1646 passed the House and Senate this week. This bill will repeal the prohibition that currently exists on the Department of Public Safety’s (DPS) ability to prepare for implementation of REAL ID. The bill will allow DPS to prepare a fiscal note on the cost of implementation of the federal regulation, as well as plan for needed technological infrastructure. The Legislature has asked for DPS to look at a dual track for a compliant and non-compliant driver’s license. The bill asks for an extension from the federal government to allow Minnesota drivers’ licenses to be accepted for access to federal and military facilities.

Currently, Minnesotans can use their drivers’ licenses for access to commercial aircraft, but if Minnesota is not compliant by 2018, we would need a separate extension.

The report from DPS is due back to the Legislature by April 14, 2016. DPS Commissioner Mona Dohman has indicated the Department can meet this deadline. The Governor signed the bill Thursday.

The bill authors, Sen. Scott Dibble (DFL-Minneapolis) and Rep. Dennis Smith (R-Maple Grove), will begin working on REAL ID part 2 as they await the report from DPS. The second part will be more difficult as this bill will need to deal with the concerns of privacy advocates and the specifics of the federal compliancy requirements.

Fantasy Sports

Legislation to explicitly authorize fantasy sports games in the state is on its way to a vote in the Minnesota House. The House Public Safety Committee approved the measure Tuesday. It won approval last week from the House Commerce Committee.

The bill would define fantasy sports, both daily and seasonal, as contests of skill, not gambling. Current state law doesn’t say anything about the legality of fantasy games.

Rep. Tim Sanders (R-Blaine) said he wants to clarify the issue in Minnesota and thinks now is the time to codify what is already accessible or lawful here in Minnesota, and officially make fantasy sports legal. Sean Ostrow, Manager of Government Affairs for the fantasy sports company FanDuel, said Sanders’ bill includes common sense consumer protections and regulations.

There has been no action yet on the Senate version of the bill.

North Star Rail Extension

Rep. Jim Knoblach (R-St. Cloud) and Sen. John Pederson (R-St. Cloud) wish to extend the Northstar Commuter Rail line to reach their city. They introduced bills requiring two daily round trips between Minneapolis and St. Cloud.

Knoblach said Monday that the extra 27 miles can run along existing tracks to an Amtrak station in St. Cloud. The state would have to negotiate track use with BNSF Railway. Knoblach said to keep operating costs down, the number of weekday round trip Minneapolis-to-Big Lake runs would be reduced from five to four, and there would be one fewer trip in the already reduced weekend schedule as well. The bill bars the state from increasing spending in the current operating budget.

The new bill had its first hearing Tuesday night before the House Transportation Committee. Two Democrats, Sen. Alice Johnson (DFL-Blaine) and Rep. Jerry Newton (DFL-Coon Rapids) are also seeking $1 million in state bonding to fund the line extension.

Metropolitan Council Chair Adam Duininck and Minnesota Department of Transportation Commission Charlie Zelle said in a joint statement: “We share the governor’s strong support for extending Northstar to St. Cloud. It’s not feasible to extend service, build additional track, serve more people, and have it cost the same as it does today. It is unlikely that BNSF railroad would allow the state to operate on its track at no additional cost. Any proposal to extend Northstar will take real funding solutions.”

Drones

A Senate bill to regulate drone usage made its way through the Senate Judiciary and Transportation committees this week. Sen. Ann Rest (DFL-New Hope) is carrying the bill for MnDOT. The agency sees a window for Minnesota to act in the absence of federal regulation. Senate File 3312 defines drones as a powered aircraft that are operated without the possibility of direct human intervention from within or on the aircraft. The legislation adds three misdemeanor violations: launching or recovering a drone from private property without consent; using a drone with intent to interfere with an aircraft in motion; and knowingly operating a drone within an emergency zone established by law enforcement/fire-emergency services or within one mile of a helicopter operated by such entities.

Rep. Jim Newberger (R-Becker) is carrying a similar bill in the House and worked its way through the House Government Operations committee on Thursday on its way to the Public Safety committee.

Universal Pre-K

In setting the stage for another showdown with legislators, Gov. Mark Dayton visited preschool classrooms at the Kaposia Education Center in South St. Paul Thursday to highlight his $25 million plan to start offering voluntary pre-kindergarten programs throughout Minnesota.

Dayton’s spending proposal, which is significantly lower than the $348 million he wanted last session, would benefit 3,700 children. The Governor told reporters that he’s hopeful about winning legislative approval of this year’s smaller request, and will seek additional money next session during a budget year.

Sen. Katie Sieben (DFL-Newport) said she believes preschool should be available to all families, not just those with low incomes. Sieben is sponsoring legislation to establish a universal pre-kindergarten option.

There is no House companion bill. House Republicans have favored early learning scholarships, which target low-income families, rather than universal pre-kindergarten. The issue pitted Republicans and Democrats against one another at the end of last session and contributed to the derailing of the transportation budget bill.