Inside the Minnesota Capitol - Minnesota politics, regulatory agencies and state government news updates

On May 7, 2013, the Minnesota Campaign Finance and Public Disclosure Board (“Board”) will consider an advisory opinion request submitted on behalf of Democracy Ventures, Inc., d/b/a Democracy.com. The organization is seeking guidance from the Board on issues related to fee-based online contributions to state candidates.

In the request, Democracy Ventures, Inc., a nonpartisan, for-profit corporation, based in New York, indicates that it plans to operate a website that will serve as an online directory of federal, state and local candidates to assist voters in identifying elected officials and candidates for public office. The website will include publicly available information about each candidate and the candidates will be allowed, for a fee, to expand their webpage with customized content. The organization will also allow users to make online contributions to candidates. The contributions will be subject to the applicable contribution limits and will require donors to provide all information that is required under Minnesota law including the contributor’s name, address, employer and lobbyist registration status. Each contributor will be asked to certify that he or she is of legal age, is a United States citizen or permanent resident alien, and that the contribution is being made from personal funds. The organization intends to deduct a transaction and processing fee from each contribution before the money is transmitted to the candidate’s treasurer.

Democracy Ventures is seeking guidance from the Board to ensure that it will not be required to register with the Board as a political committee, that it will not violate any bundling or earmarking restrictions and that it will be allowed to deduct processing and transaction fees from each contribution.

A draft opinion, included in the Board materials for Tuesday’s meeting, concludes that the model proposed by Democracy Ventures complies with Minnesota law and does not trigger any registration or reporting requirements. The draft opinion notes that “[b]ecause there is no business relationship between Democracy.com and the recipient candidate, the amount of the contribution to the candidate is the net amount actually received by the candidate [and] [t]he fees paid by the contributor are the costs of a business transaction between the contributor and the Democracy.com and do not involve the candidate.”

The Board is expected to act on this request at its meeting on May 7. The Board will also consider several late fee waiver requests, as well as a resolution to clarify whether the Executive Director has authority to administratively resolve compliance issues involving the inadvertent deposit of funds in a state committee or fund that were intended for a federal fund. The Board meeting is scheduled for 9AM in Room 225 of the Minnesota Judicial Center.

Both the House and Senate Tax bills have begun to take shape at the Capitol this week. The House Omnibus Tax Bill passed out of the Tax Committee on Wednesday, April 17 and Ways and Means on Friday, April 19. The reform provisions of the Omnibus Senate Tax Bill, SF 1617. passed out of the Reform Division of the Senate Tax Committee on Tuesday, April 16.

House
The House Omnibus Tax Bill, HF 677, is authored by Tax Chair Ann Lenczewski. More detail on this bill can be found at the Minnesota House website at: https://www.revisor.mn.gov/bills/bill.php?b=House&f=HF677&ssn=0&y=2013 In particular, the text of the bill, along with the House Research Summary, can be located at this link. The next stop for the bill is the House floor.

Senate
The reform provisions of the Omnibus Senate Tax Bill, packaged in SF 1617, are authored by Senator Ann Rest. Property tax, income tax, and other miscellaneous provisions will be added in the full Senate Tax Committee. The first draft of the entire Omnibus Tax Bill, which will include the provisions in SF 1617, are expected to be made public on Tuesday, April 23. Consideration and final action by the committee should occur by Friday, April 26.

More detail on SF 1617 can be found at the Minnesota Senate website at: https://www.revisor.mn.gov/bills/bill.php?b=Senate&f=SF1617&ssn=0&y=2013

With the 2013 Minnesota legislative session moving into the home stretch, virtually all of the “heavy lifting” of the session remains. While the calendar indicates the session is two-thirds complete, the numbers tell a different story.

The House has seen over 1700 bills introduced to date, the Senate over 1500. Ten bills have made it to the Governor’s desk. Of those ten, only the health insurance exchange (HF5/SF1, now codified as 2013 Session Laws, Chapter 9) was previously identified as a critical issue for this session. On all of the other key issues, huge and likely contentious debates lie ahead, with no consensus on the horizon for several, even between the DFL majorities and the Governor’s office.

So between now and the May 20 adjournment date, expect lively debates on:

Taxes: After meeting huge resistance, Governor Dayton dropped his proposal to significantly expand the sales tax base, including extending sales taxes to “business-to-business” transactions. However, other proposals continue to draw fierce opposition, including increasing the top tier of the State’s income tax and a House DFL proposal to add a surcharge on top of that increase, gasoline, alcohol and cigarette tax increase proposals and more. Property tax relief too continues to be debated, with consensus proving elusive.

Health and Human Services Budgets: The House DFL surprised everyone, including key DFL constituencies, in releasing a Health and Human Services target calling for a $150 million reduction in spending, as opposed to Governor Dayton’s $145 million increase.

Education: All the key issues remain, including Higher Education, K-12 and Early Childhood funding, proposals for all-day kindergarten, and paying back the school funding shift, a priority of the House DFL.

Jobs and Economic Development: This one broad topic can sweep in any number of “hot button” issues in addition to the Omnibus Jobs and Economic Development bill, including proposals to significantly raise the State’s minimum wage to unionization of child cared workers.

Energy Policy: After the Governor highlighted the issue in his State of the State address, both bodies have crafted legislation substantially increasing Minnesota’s already aggressive renewable energy standard, with particular focus on solar energy. The House and Senate bills reflect somewhat different visions and continue to draw strong opposition from both utilities and customers, concerned with the cost impact of such new requirements.

Bonding: Debate continues over bonding in this session, including for the Mayo Clinic’s Destination Medical Community proposal.

Same Sex Marriage: The debate took a new twist this week as Republicans introduced a “civil unions” alternative to DFL led proposals to legalize same sex marriage.

The bottom line: Expect some sleepless nights between now and adjournment on May 20.

“Omnibus Energy Bills” (HF956/SF901) that could dramatically reshape Minnesota’s energy future continue to move through the legislative process despite a lack of consensus among key stakeholders. While many observers anticipated movement this year to advance solar energy and distributed generation, the bills go farther than either the energy industry or its industrial and manufacturing customers anticipated or currently support. Also notable, the bills carry an unknown price tag for customers. While proponents argue the bills would save ratepayers money in the long run, opponents point to certain short term rate impacts that could significantly harm ratepayers, particularly business customers in energy intensive industries. Minnesota has never enacted significant energy policy legislation with such discord among the key players, so the bills will likely continue to evolve. As of today, here are some of the more controversial provisions.

In the House, HF956:

• Raises Minnesota’s renewable energy standard (RES) for public utilities to 40% by 2030, while not extending this higher mandate to cooperatives or municipal utilities;
• Creates a solar energy mandate in addition to the requirements of the RES, of 4% by 2025, with a “goal” of 10% by 2030, again exempting cooperatives and municipals from the mandate;
• Creates a solar energy production incentive, funded by public utilities and their ratepayers, of up to 1.33% of the utility’s gross annual revenues, while also creating a new “value of solar” rate to be paid to producers; and
• Raises Minnesota’s “net metering” threshold from 40 kW to 105 kW and prohibits a utility from limiting its total “net metered” generation to less than 5% of its total system sales.

In the Senate, SF901:

• Does not currently increase the RES, but calls for the Legislative Energy Commission to create an “energy framework” for the state to reduce carbon dioxide emissions by 80% by 2050;
• Creates a new solar mandate of 4% by 2025 for public utilities and 2% by that same year for cooperatives and municipal utilities; and
• Creates a solar energy production incentive to be paid to qualifying solar energy producers, with the incentive funded by each public utility and cooperative and municipal utility with 1 % of the utility’s gross annual revenues, while also creating a new “value of solar” rate to be paid to those producers.

With Governor Dayton scheduled to release his supplemental budget proposal next week, he announced today at a meeting of the Twin West Chamber of Commerce that he will drop the proposed expansion of the state sales tax to business to business services like legal, advertising and accounting services.  The sales tax on business services had been heavily criticized by members of the business community who said it threatened Minnesota jobs.

In announcing his decision, Dayton noted that some businesses had threatened to move their operations to low-tax states and "that's exactly the opposite of what I want to achieve, which is more jobs and better jobs for Minnesota."

The Administration's supplemental budget will also likely drop the Governor's proposed $500 per family property tax rebate which was partially funded by the sales tax on services.  The supplemental budget will also benefit from a reduction in the proposed budget deficit for the next biennium from $1.1 billion to $627 million, which was announced last week.

The Dayton proposal to expand the sales tax for services had received lukewarm support in the Legislature and outright opposition from a few DFL legislators.  Dayton is expected to maintain his proposal for a new fourth income tax tier on families earning more than $250,000 a year.