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

The State Legislature finalized three major bills—the tax bill, bonding bill, and the stadium bill—this week after long floor debates and dozens of amendments. Lawmakers ultimately put their stamp of approval on the three major bills which still need to be signed by Governor Dayton.

Bonding Bill

House Members brought HF 1752, the 2012 Capital Investment bill, to the floor for a vote Monday. After a vote to suspend the rules, the House voted 97-33 to approve the borrowing bill. The legislation was sent over to the Senate where it was considered immediately, and two amendments were adopted,  increasing the size of the overall bill: $500,000 for a South Saint Paul Floodwall Extension and $2,000,000 for the Tubman Center in Maplewood, a facility for women and children escaping domestic violence. Senate members voted 45-22 on the borrowing bill. The House concurred with the Senate amendments, rather than appoint a conference committee to work out the differences. Projects included in the bill are:

• $64 million to the University of Minnesota for asset preservation projects
•  $132 million for Minnesota State Colleges and Universities asset preservation and replacement projects
• $49.4 million for various Department of Transportation costs
• $30 million for flood mitigation
• $78.5 million to the Department of Employment and Economic Development (DEED). $47.50 million is for projects of the agency’s choosing.

Tax Bill

Lawmakers moved quickly after Governor Dayton’s speedy veto of the Omnibus Tax Bill last week. Tax Chairs Rep. Greg Davids (R-Preston) and Sen. Julianne Ortman (R-Chanhassen) went to work on a compromised version, HF 247, after expressing their disappointment in the veto. Omnibus Tax Bill #2’s Conference Committee Report passed in the House by a 73-56 vote and in the Senate, 41-24. Omnibus Tax Bill #1, had the same number of votes in both chambers.

In his veto letter of HF 2337, Dayton reiterated his refusal to sign any legislation that increases the State’s deficit in future years, a message he has conveyed to the Legislature all year. The second Tax Bill, though scaled down, is projected to increase the deficit by $46 million in the 2012-2013 biennium and over $70 million for the 2014-2015 biennium. The bill’s authors are hopeful it will see Dayton’s signature.

Stadium Bill

The issue that dominated the media this Legislative Session, a new stadium for the Minnesota Vikings, was finally put to a rest this week. HF 2958, authored by Rep. Morrie Lanning (R-Moorhead) and Sen. Julie Rosen (R-Fairmount) was approved in the House and the Senate. Approval of the new stadium came after long floor debates and consideration of over six dozen amendments. Lawmakers voted 73-58 late Monday night in the House and 38-28 after midnight Tuesday night in the Senate.

The final plan is for a $975 million stadium with a seating capacity of 65,000, to be constructed downtown Minneapolis at the current Metrodome location. The new stadium will have a fixed-roof though the team’s owners may decide to put on a retractable roof—an expense they would have to cover. The Vikings will sign a 30-year lease, receive the revenue from the field’s naming rights, and is responsible for any cost over-runs. The Vikings will cover $477 million of construction costs, the City of Minneapolis will pay $150 million, and the State will spend $348 million. Vikings’ officials affirmed all along that $427 million would be the absolute most they are able to contribute. Negotiations in conference committee drove the number up and the team ultimately signed off on the cost. The State’s contribution will come from a modernization of lawful, charitable gambling by implementing electronic pulltabs and bingo around the State. No General Fund money will be used and no new taxes will be implemented. A conference committee was appointed to settle the discrepancies between the House and Senate bills and the committee’s report was made available late Wednesday evening. Final approval of the stadium came after 4:00 a.m. Thursday morning in the House (71-60) and Thursday afternoon in the Senate (36-30). Immediately following the final votes on the Stadium the 87^th Legislature adjourned sine die.

Legislator Retirements

Retirement speeches followed the  stadium vote and despite rumors, there were no surprise announcements. Rep. Ron Shimanski (R-Silver Lake) lost his endorsement bid to Rep. Glenn Gruenhagen (R-Glencoe) and, though he hadn't said anything official, had indicated that he would abide by the endorsement. Rep. Tom Rukavina, a 26-year veteran of the Minnesota House of Representatives announced Friday he would not be seeking re-election. Rukavina said in his tenure, he has tried to make life better for the people of Minnesota, in particular on the Iron Range and Northeastern Minnesota. He cited a changing atmosphere at the Capitol as one reason for his retirement. “I recall a kinder and gentler time here,” he said in a letter addressed to his colleagues and friends. Rep. Rukavina’s announcement was the 37th this year.

Nine members of the House are running for seats in the Senate: Rep. Bruce Anderson (R-Buffalo Township), Rep. Bobby Joe Champion (DFL-Minneapolis), Rep. Connie Doepke (R-Orono), Rep. Keith Downey (R-Edina), Rep. Kent Eken (DFL-Twin Valley), Rep. Mary Kiffmeyer (R-Big Lake), Rep. Branden Petersen (R-Andover), Rep. Bev Scalze (DFL-Little Canada), and Rep. Torrey Westrom (R-Elbow Lake). Twelve additional House members retiring are: Rep. Mark Buesgens (R-Savage), Rep. Denise Dittrich (DFL-Champlin), Rep. Marion Greene (DFL-Minneapolis), Rep. Mindy Greiling (DFL-Roseville), Rep. Bill Hilty (DFL-Finlayson), Rep. Larry Hosch (DFL-St. Joseph), Rep. Kate Knuth (DFL-New Brighton), Rep. John Kriesel (R-Cottage Grove), Rep. Mike LeMieur (R-Little Falls), Rep. Pat Mazorol (R-Bloomington), Rep. Mark Murdock, (R-Ottertail), and Rep. Nora Slawik (DFL-Maplewood). Rep. Carol McFarlane (R-White Bear Lake) and Rep. Tom Tillberry, (DFL-Fridley) both lost their endorsement bids but haven’t officially announced their retirements. McFarlane was matched up with House Majority Leader Matt Dean (R-Dellwood) after redistricting. Tillberry’s constituents chose to endorse former House Representative Connie Bernardy at the district convention.

Thirteen retiring state senators are: Sen. Chris Gerlach (R-Apple Valley), Sen. Linda Higgins (DFL-Minneapolis), Sen. Gretchen Hoffman (R-Vergas), Sen. Mike Jungbauer (R-East Bethel), Sen. Ken Kelash (DFL-Minneapolis), Sen. Amy Koch (R-Buffalo), Sen. Keith Langseth (DFL-Glyndon), and Sen. Doug Magnus (R-Slayton), Sen. Mary Jo McGuire (DFL-Falcon Heights) Sen. Geoff Michel (R-Edina), Sen. Gen Olson (R-Minnetrista), Sen. Claire Robling (R-Jordan), and Sen. Mike Parry (R-Waseca) who is running for U.S. Congress in Minnesota’s first Congressional District. After redistricting matched Sen. Al DeKruif (R-Madison Lake) and Sen. Julie Rosen, DeKruif said he would not seek re-election and he is now rumored to be reconsidering.

Lawmakers missed their self-imposed deadline of Monday, April 30 in order to continue negotiations on three key bills: an omnibus tax bill, a capital bonding bill, and a bill for a new Vikings stadium.  House Majority Leader Matt Dean (R-Dellwood) said Tuesday if House Republicans wanted to meet the deadline they could have but they are looking out for what is in the best interest of Minnesotans.  The Republican-led Legislature decided to take a break Wednesday in hopes of reaching a deal with Governor Dayton on the three remaining items of legislative business.  The House will reconvene Thursday at noon and the Senate, Thursday at 3:00 p.m.  The last day the Legislature can meet in 2012 is May 21 or sooner if it exhausts its six remaining legislative days.

After months of negotiations, Republicans came forward Tuesday with an alternative plan to fund the construction of a new Vikings stadium through the bonding bill.  GOP leaders said the previous proposal, a bill authored by Rep. Morrie Lanning (R-Moorhead) and Sen. Julie Rosen (R-Fairmount), did not have enough support from legislators.  The lack of support was mostly due to its funding plan that would use proceeds from expanding lawful gambling to cover the State’s share of the stadium’s cost.  Deputy Senate Majority Leader Julianne Ortman (R-Chanhassen) said Tuesday that this plan makes perfect sense and that funding the stadium through the bonding bill would be advantageous because it reduces the overall cost and is not paid for with gambling revenue. “Bonding for State infrastructure is what the State Legislature does,” she said.

Republican and DFL leadership met with Governor Dayton Wednesday to discuss the feasibility of the new plan.  Speaker of the House Kurt Zellers (R-Maple Grove) characterized the meeting as “fruitful, direct, and outcome-based.”  Senate Minority Leader Tom Bakk (DFL-Cook) said figuring out if general obligation bonds are appropriate will require a great deal of vetting. “General obligation bonds require a public purpose. There is a serious question whether a private tenant can enter into an exclusive 40-year lease of a public building and have that still meet the general purpose requirements under the Constitution,” the Minority Leader said.  Bakk called on Senate Majority Leader David Senjem (R-Rochester) to let the Senate vote on the plan that has been sitting on the floor of the Senate.  He said it has already been vetted, having passed through five Senate committees and received bipartisan votes in each committee.  House Minority Leader Paul Thissen (DFL-Minneapolis) agreed, describing the previous plan as the only legitimate plan, having been through the committee process. “That is still a plan we need to move forward on,” Thissen said.  Governor Dayton was slightly more optimistic and pronounced the new plan “absolutely worth pursuing.”  However, much work needs to be done to flush out the details of the new stadium funding proposal.

Republicans admitted there were a lot of unanswered questions and even called the new plan “embryonic.” At this time, the proposal is not supported by the Vikings, the City of Minneapolis, or Governor Dayton.  The Governor has been a long-time supporter of building a new stadium for the Vikings and included it as a key component of his jobs plan prior to the 2012 session.

The Minnesota Legislature had another busy week in St. Paul with hours-long floor sessions that included the passage of many omnibus bills and approval of conference committee reports. Lawmakers are now headed home for their annual Easter/Passover break. Both bodies will reconvene on Monday, April 16 at Noon.

The Omnibus Game and Fish Bill, approved by the House Tuesday, includes the “Mother’s Day Amendment” successfully offered by Rep. David Dill (DFL-Crane Lake). The Amendment changes the State’s fishing opener from May 12 (Mother’s Day) to May 5. The change is only effective for 2012. The legislation authored by Rep. Tom Hackbarth (R-Cedar) also establishes a $26 wolf hunting fee to fund a wolf management and monitoring account, sanctions electronic sales of hunting and fishing licenses during a government shutdown, and incorporates the recruitment of new anglers and hunters, including women and minorities, into the Department of Natural Resources’ mission.

On Wednesday, the House passed a provision to move the primary election date from August to June after members voted 66-65 on an amendment offered by Rep. Kurt Daudt (R-Crown) to HF 2545. If approved by the Senate, the new primary election date will be the first Tuesday following the third Monday in June. Passage of the amendment was close—Rep. Mary Franson (R-Alexandria) changed her vote at the last second, allowing the amendment to prevail. The August primary election date is one of the latest in the country.

The House approved the Omnibus Legacy Bill sponsored by Rep. Dean Urdahl (R-Grove City), providing a total appropriation of $97,420,000 for heritage funds in the fiscal year 2013. The nearly $100 million bill contains $2,900,000 for the Department of Natural Resources to acquire wildlife management areas, $900,000 for the Minnesota Historical Society, $80,000 for public broadcasting programming that commemorates the sesquicentennial of the American Civil War and the Dakota Conflict of 1862, and $600,000 for a new film production incentive program administered by the Department of Administration reimbursing eligible producers for production costs incurred to produce a documentary or film in Minnesota.

The controversial Voter ID constitutional amendment is now up to the voters to decide in the November election. The amendment saw its final approval after both bodies approved the Conference Committee Report, which cleared up the differences in the House and Senate bill language. Voters will see this question on the ballots: "Shall the Minnesota Constitution be amended to require all voters to present valid photo identification to vote and to require the state to provide free identification to eligible voters, effective July 1, 2013?”

House members voted 74-52 to pass the Omnibus Environment Bill authored by Rep. Denny McNamara (R-Hastings). The bill includes $32.2 million for environmental enforcement; $11.3 million for lands and minerals management; and $3.4 million for renewable energy projects, measures to allow state parks and recreation areas and the Minnesota Zoo to remain open during a government shutdown, and several provisions to stop the spread of aquatic invasive species in Minnesota.

The Senate passed the Omnibus Health and Human Services Bill (HF 2294) sponsored by Sen. David Hann (R-Eden Prairie) on Thursday afternoon. The legislation includes $22 million in new spending as a result of an announcement by Governor Dayton this week that health plans would repay $73 million to the government due to a cap on Health Maintenance Organization (HMO) profits. The bill partially restores the Emergency Medical Assistance program, temporarily restores pay for personal care attendants (PCAs) who attend to relatives, and provides dialysis and cancer treatments for non-citizens. The House companion bill was passed on March 29. The bills will eventually go to a conference committee to sort out any differences. Sen. Hann said Thursday that the bill won’t be perfect for everyone but it’s his intention to produce a bill with broad support from the Legislature that the Governor will sign into law.

Governor Dayton vetoed the Omnibus Education Finance bill which would use the State’s budget reserves to pay back the school aid shift, money borrowed during the 2011 State government shutdown. Dayton said he shares the Legislature’s desire to pay back the schools as quickly as possible but would prefer to do it by using revenues raised from closing corporate tax loopholes. Senate Majority Leader David Senjem (R-Rochester) and Speaker of the House Kurt Zellers (R-Maple Grove) both called the veto disappointing.

The Governor also vetoed SF 2014, sponsored by Sen. Benjamin Kruse (R-Brooklyn Park), a bill modifying the terms of Metropolitan Council members to staggered, four-year terms. Dayton quoted former Governor Pawlenty who vetoed similar legislation in 2008 saying the Council’s current structure “was the result of reforms intended to increase Metropolitan Council accountability.”  Dayton said this bill removes that accountability.

The Minnesota Legislature had a busy week at the Capitol, working to meet their first deadline. The deadline for committees to act favorably on bills in the house of origin is midnight on Friday. Committees must act favorably on bills that met the first deadline by next Friday, March 23. Major tax, appropriation and finance bills must be acted on favorably by Friday, March 30. If committees in either body approve legislation that does not meet these deadlines, the bill must then be approved by the House or Senate Rules Committee.

Weekly Highlights

• SF 2391, the Vikings Stadium bill, was heard in the Senate Local Government and Elections Committee Wednesday and was eventually laid over without a vote after two hours of discussion and testimony. Ted Mondale, Chair of the Metropolitan Sports Facilities Commission, appeared before the Committee to outline the proposal agreed upon by the State, the City of Minneapolis, and the Vikings. Mondale, who has been working closely with Governor Dayton and legislators, said he believes the plan is financially viable and does not include any new taxes or use of the State’s general fund.  The State would pay about 35% of the billion dollar cost by introducing electronic pull tabs. Opponents of the bill question whether the pull tabs would raise the $350 million that is needed.

• Sen. Roger Chamberlain (R-Lino Lakes) introduced an alternative bill in February that would fund construction of a football stadium with user fees. The bill was heard Friday morning in the Senate Commerce and Consumer Protection Committee. The bill was recommended to pass after a party-line vote and sent Senate Taxes Committee.

• The “Right to Work” constitutional amendment had its first hearing in the Senate on Monday. If passed, Minnesota voters will be determining whether the State Constitution should be amended to allow workers the freedom to choose whether or not to join and pay dues to a union. After passage on a party line vote, the bill was sent to the Senate Rules Committee although a hearing has yet to be scheduled. Senate Majority Leader David Senjem (R-Rochester) has said he doesn’t think the amendment has enough support to pass. The bill has not had a hearing in the House.

• House and Senate transportation committees approved omnibus bills this week without a Metro Transit fare increase as originally proposed by Republicans. DFLers said the plan for fare increases would unfairly burden urban transit riders.

• The House Jobs and Economic Development Committee released its bonding recommendations. The list includes a $25.2 million transportation bonding and economic development package, $15 million for a greater Minnesota business development infrastructure program, and $10 million for public housing rehabilitation.

• The House voted 74-59 Thursday evening to pay back a portion of the $770 million that was borrowed from State payments to local school districts.  The shift was part of the agreement to end last summer’s state government shutdown. Rep. Pat Garofalo (R-Farmington) said that tapping into the budget reserves is possible with the new surplus announced with the February budget forecast. DFLers opposed the move and advocated for the elimination of tax breaks for businesses to pay back the schools.

Senators Geoff Michel (R-Edina) and Doug Magnus (R-Slayton) joined the list of retiring Minnesota lawmakers this week. Michel, who was elected to the state Senate in 2002, says he hopes to spend more time with his family and to focus fulltime on his work at Securian Financial Group. He is currently Chair of the Senate Jobs and Economic Growth Committee and Vice Chair of the Senate Taxes Committee. Magnus, who was elected to the House in 2002 and to the Senate in 2010, says it is time for him to move on. He is the current Chair of the Senate Agriculture Budget and Policy Committee.

Michel and Magnus are the seventh and eighth senators to announce their retirements. The list also includes Al DeKruif (R-Madison Lake), Linda Higgins (DFL-Minneapolis), Gretchen Hoffman (R-Vergas), Amy Koch (R-Buffalo), Keith Langseth (DFL-Glyndon), and Gen Olson (R-Minnetrista). Sen. Gary Kubly (DFL-Granite Falls) passed away Friday evening after battling Lou Gehrig’s disease.  In order to allow members to attend Senator Kubly’s funeral, all House and Senate committee meetings for March 7 were cancelled.

Nine members of the House have announced their candidacy for Senate seats. They are Bruce Anderson (R-Buffalo Township), Bobby Joe Champion (DFL-Minneapolis), Connie Doepke (R-Orono), Kent Eken (DFL-Twin Valley), Mary Kiffmeyer (R-Big Lake), Lyle Koenen (DFL-Clara City), Branden Peterson (R-Andover), Bev Scalze (DFL-Little Canada), and Torrey Westrom (R-Elbow Lake). So far, four House members have announced their retirement: Mark Buesgens (R-Jordan), Mindy Greiling (DFL-Roseville), Kate Knuth (DFL-New Brighton), and Mark Murdock (R-Ottertail).

A judicial panel appointed by the Minnesota Supreme Court released the legislative redistricting maps on Tuesday afternoon and shortly thereafter, detailed lists of which House and Senate members will be most affected. Forty-six current legislators were placed in a district with another member. Sixteen of the paired incumbents are in the Senate: two DFL duos, four GOP, and two DFL vs. GOP. The House has 30 incumbent pairings: six DFL, six GOP, and three DFL vs. GOP. In addition, there are 8 open seats in the Senate and 15 in the House, an unusually large number of open seats.

Eight-term Sen. John Marty (DFL-Roseville) and freshman Sen. Mary Jo McGuire (DFL-Falcon Heights) were among those paired together. McGuire served in the House from 1989 until 2003. She made the decision to retire after the last redistricting when she and Rep. Alice Hausman (DFL-St. Paul) were put in the same district. Hausman was paired up again though she’ll get to keep her seat. She is coupled with Rep. Mindy Greiling (DFL-Roseville) who announced earlier this year that she would not seek re-election. Sen. Gary Kubly (DFL-Granite Falls), who was diagnosed with Lou Gehrig’s disease last year, joined the list of legislative retirements. Kubly and Sen. Joe Gimse (R-Willmar) were matched up though Kubly announced his retirement. Pairings in the House include Majority Leader Matt Dean (R-Dellwood) and Rep. Carol McFarlane (R-White Bear Lake), both serving their third term in the House.

In its final order, the judicial panel said that it established politically neutral principles to utilize during the redistricting process including: drawing districts with a maximum deviation of two percent from the ideal population, without the purpose of denying any citizen voting rights, with convenient and contiguous territory, respectful of political subdivisions, and without the purpose of protecting or defeating incumbents. A “least-change strategy” was used whenever possible to minimize voter confusion; however, the panel called attention to the, largely unavoidable, district renumbering.

Congressional district maps were also released yesterday. Two current members, Congresswomen Betty McCollum (D-MN) and Michelle Bachmann (R-MN) were paired together. McCollum’s district, mostly St. Paul and and first-ring suburbs, was extended eastward to the Wisconsin border. The district now includes Woodbury and Stillwater, areas more conservative than her current constituents. Bachmann, who had said she would seek re-election regardless of how the redistricting turned out, has said that she will not be vying for McCollum’s seat but will be running again in the redesigned 6th congressional district. She has not said if she will move into the district (and she is not required to), but noted her long term ties to the district. State law requires legislative candidates to establish residence in the district where they intend to run by May 6. June 6 is the candidate filing deadline. 

Minnesota Legislature Stands Adjourned – for now!

The Minnesota Legislature met its constitutional deadline for adjournment of midnight, May 23, and adjourned as required.  The final hours of the regular legislative session were anti-climactic, as the major appropriations bills for the State’s next fiscal year beginning July 1 awaited certain veto by Governor Dayton.  In this last week of the session, the gap between the Governor and the Legislature had narrowed, but never completely closed.  While the Republicans in the Legislature proposed a biennial budget of $33.9 billion, the Governor’s budget was stuck at $35.8 billion.  A focus of dispute was the Governor’s proposal for an income tax increase on high-income Minnesotans, which the Legislature has been unwilling to accept.

Negotiations between the Governor and the Legislature will resume on Friday, May 27.  Meanwhile, legislative leaders from both caucuses will be travelling around the state highlighting, depending on their perspectives, either the accomplishments or lack thereof in the 2011 regular session.  Governor Dayton has the power to call the Legislature back into Special Session at any time.  However, he has indicated he would not do so until there is budget agreement with legislative leaders.  The state faces a partial government shutdown if a balanced budget is not passed by July 1.

The 2012 Minnesota legislative session will convene on January 24, 2012.  The 2012 session is expected to last approximately 10 weeks.

Tort Reform Stymied

As the Minnesota House of Representatives convened yesterday, its first item of business was SF149, a comprehensive tort reform bill, which had passed the Minnesota Senate on May 16 on a 36 to 29 vote.  However, DFL legislators opposed to the bill began offering a series of amendments and threatened to continue talking on the bill until the midnight deadline for adjournment was reached.  After three hours of debate and faced with a continued mini-filibuster, Republican leaders chose to continue the bill on the calendar and move onto other business.

As amended on the floor of the House, the bill contained a number of substantive tort reform initiatives including:

• Interlocutory appeals of class action certification decisions would be allowed as a matter of right;
• The general statute of limitations would be reduced from six years to four years;
• The prejudgment interest rate for private litigants would be reduced from 10% per year to a rate based on the secondary market yield of one year United States Treasury bills, or 4%, whichever is greater;
• Attorney fee awards to a party recovering money damages is required to be “reasonable” in relation to the total amount of damages awarded to the prevailing party; and
• No attorneys fees would be awarded to a claimant if an offer of judgment is made to the party claiming damages and the actual award is less than the offer of judgment.

The tort reform legislation remains live for consideration at the 2012 session and need only pass the Minnesota House to be presented to the Governor.  House Majority Caucus leaders have indicated their intention of taking the bill up very early in the 2012 legislative session.  Governor Dayton has not publically indicated whether he would sign the measure.

Energy Bills Passed

Energy legislation was a topic of debate in the last weekend of the 2011 session.  On Friday evening, a conference committee on SF86 took up legislation, which as introduced, repealed the moratorium on construction of new coal fired power plants or the importation of electricity generated by coal fired power plants.  The Dayton Administration indicated that the Governor would likely veto the bill.  In an effort to address the Governor’s concerns, the bill was amended in conference committee to allow an exemption of 1500 megawatts in coal fired power.  The conference committee report was adopted and re-passed by the Legislature.  However, even with the concession to Governor Dayton, it is expected that he will veto the bill.

On Sunday, May 22, the House took up SF1197, the Omnibus Energy Policy bill.  The House amended the bill to include several different components, which had been negotiated with the Governor’s staff, including the following:

• Changes were made to the State’s Conservation Improvement Program, which allows large natural gas customers to opt out of the program and allows exemptions granted to large electric customers to become permanent;
• The authority for inverted block rate affordability programs for low-income residential ratepayers is repealed;
• Utilities regulated by the Minnesota Public Utilities Commission are allowed to file multi-year rate plans, although the plan can be no longer than three years in length and the first proposed plans cannot be filed for one year; and
• Utilities are required to file with the Public Utilities Commission and the Legislature reports analyzing the cost of compliance with the previously adopted State Renewable Energy Standards.

Earlier versions of the Omnibus Energy Policy bill had included a requirement that electricity rates be designed primarily based on the actual cost of the service between and among customer classes.  This provision was intended to address an issue with some Minnesota utilities where residential rates are subsidized by business customers.  In the end, because of opposition from Governor Dayton’s office, the provision was not included in the final version of the bill.

Omnibus Tax Bill

The Omnibus Tax bill for the 2011 was today vetoed by Governor Dayton.  However, it contained several provisions of benefit to the business community, including:

• The statewide business property tax would be phased out by 2025;
• Adoption of sales-only apportionment for a corporate income tax would be completely phased-in in 2012; and
• The second tier of the research and development tax credit is increased from 2.5% to 4.7% beginning in tax year 2014.

In his veto message, the Governor expressed concern over the impact on property taxes from reductions in Local Government Aid.  However, he did indicate a willingness to consider the immediate phase-in of single sales apportionment.

Coal Moratorium Repeal

HF72/SF86, also known as the Coal Moratorium Repeal bill, passed out of the House, as amended, on a 76-54 vote. House author Rep. Mike Beard (R-Shakopee) amended the bill in the hopes the Governor will sign it into law. The bill as amended will now allow Minnesota utilities to import 2,500 megawatts from coal plants outside of Minnesota. However, the ban on building new coal fired plants in Minnesota remains intact. During concluding remarks Rep. Andrew Falk (DFL-Murdock) read a letter dated Mar. 11 from former Vice President Al Gore, who opposed the bill, saying that it takes the state a “step backward” and keeps Minnesota on a path to a “dirty energy economy.” Rep. Joe McDonald (R-Delano) responded by quoting President Obama from a Feb. 3, 2010, speech when he lauded new carbon capture and storage methods for coal fired electricity production. The bill now goes back to the Senate for its consideration of the House amendment.

Environmental Policy Omnibus

The state’s fishing opener this weekend provided momentum for the Senate to pass SF1115, focused on preventing the spread of aquatic invasive species. When the House took up the bill, however, it added a number of provisions, creating a much broader environmental policy bill. After adding 14 House bills in a delete all amendment offered by Rep. Denny McNamara (R-Hastings), the bill passed off the House floor 95-37. When reheard in the Senate this morning, an initial motion by author Sen. Ingebrigtsen (R- Alexandria) to concur with the House language met strong resistance. Sen. Ingebrigtsen noted that the hope had been the Senate would concur, giving the Governor the opportunity to sign the bill before tomorrow’s fishing opener.

However, due to the resistance to accepting the House language without lengthy debate, Sen. Ingebrigtsen accepted an amended motion to refuse to concur and the Senate unanimously agreed, sending the bill to conference committee.

Ellen Anderson Not Recommended

On a party line vote of 8-6, a Senate committee refused to recommend former DFL Sen. Ellen Anderson for confirmation as Chair of the Minnesota Public Utilities Commission. During the hearing, Republican members shared concerns that Anderson would not be able to be objective in her new role, while DFLers praised her experience and knowledge of the issues facing the Commission. The Committee forwarded Anderson’s nomination to the floor without recommendation. It is unclear if the full Senate will take up Anderson’s appointment before they adjourn on May 23.

Much like a big prize fight, football game, or some other sporting event, Governor Dayton and the Republican-controlled Legislature are now staring eyeball to eyeball in the high stakes game of setting the 2012-2013 biennial budget. Both sides have established a position they are comfortable with and are sure the other side will blink first. 

So what’s going to happen next? Well, the best way to figure out what is going to happen next is to break down and analyze the numbers that face the Governor and legislative leadership.

The Problem

The problem that has to be solved is the State’s $5 billion budget deficit. Minnesota has a deficit because expenditures are projected to be over $39 billion while revenue collections are expected to be in the $33 billion range. This $33 billion number increases to over $34 billion when you factor in surplus money left over from the 2010-2011 biennium and budget reserves.

The Solution

The State is required to have a balanced budget by the end of the 2012-2013 biennium. This occurs when revenues collected match the expenditures that go out the door. To accomplish this goal for 2012-2103, the State can raise revenues to equal the $39 billion figure, decrease expenditures to equal the $34 billion figure, or pick some number in between which would require revenues to be raised and expenditures to be cut.

Governor Dayton’s number is $37.3. He spends less than the $39 billion in the forecast but more then the $34 billion revenue figure outlined in the forecast. He makes up this gap by increasing taxes by $3.3 billion.

The House’s number is $34.3 and the Senate’s $34.5, which is less then the $39 billion number projected in the forecast. Both of these numbers, however, represent a significant increase in spending for the State over the amount spent in 2010-2011. The House and the Senate are able to do this because State revenues increased from 2010-2011 to 2012-2013 and, thus, no tax increases are in needed in their budget solutions.

Conclusion

The Governor, House, and Senate will have to agree on a spending number and, subsequently, a revenue number. The higher the spending number is above the House and the Senate’s $34 billion range, the greater the likelihood that taxes or other revenues will have to be increased. If the final spending number ends up close to the $37.3 figure supported by the Governor, taxes or other revenues will have to be raised significantly. Conversely, if the final spending number is in the $34 billion range supported by the House and Senate, then it is very likely that taxes will not be raised.

In my next posting, I will breakdown and analyze the Governor, House, and Senate positions by spending categories and how each position will affect the related programs.

Marathon Floor Sessions

Many of the 2011 session Omnibus Tax and Appropriations bills were taken up on the House and Senate floors this week. Some moved quickly, such as the agriculture bill, while others with more controversy like taxes, required hours of debate, multiple amendments and even more monologues on the most contentious points. The Senate has taken up and passed omnibus K-12 education, higher education, environment, jobs, state government innovations, health and human services, agriculture, and public safety. The House has passed off the floor omnibus environment, K-12 education, higher education, state government finance, taxes, public safety and transportation bills. After days of over six hour debates, both the House and Senate are taking Friday off from floor sessions and will take up the remaining omnibus bills on Monday.

Omnibus Bills Still to Go

Still to go next week for the Senate are the transportation and tax omnibus bills, while the House still has to tackle health and human services and jobs. All omnibus bills will require conference committees to iron out the differences between the Senate and House versions of the bills. While none of these omnibus bills are expected to be signed by Governor Dayton, they establish a critical starting point for legislators with the Governor’s office. The Governor has stated, once an overall budget agreement has been reached, he would like to be presented with a comprehensive omnibus budget bill.

Senate District 66 Special Election

In somewhat of an upset, Mary Jo McGuire won the DFL primary special election held Tuesday in Senate District 66 over the current House District 66B Representative John Lesch.  McGuire is a former state Representative, holding office from 1988 until 2002, when she decided not to run again as redistricting would have forced her to run against a fellow long-time DFLer. The general election to replace Senator Ellen Anderson, who was appointed to the Public Utilities Commission, is scheduled for April 12.  McGuire’s opponent is Republican Greg Copeland, chair of St. Paul’s Republican Party.  Because it is a historically safe DFL district, McGuire is expected to win.

Governor Dayton Pens Budget Letter

Earlier this week, Governor Dayton wrote an open letter to Senate Majority Leader Amy Koch (R-Buffalo) and Speaker of the House Kurt Zellers (R-Maple Grove) discussing his expectations for budget negotiations moving forward.  He outlined a request for a complete balanced budget and stated he would not review a single budget bill unless it was part of the complete budget plan.  Governor Dayton also commented on his concerns regarding remarks Republican leaders made as to not trusting or using the fiscal notes provided by the Office of Minnesota Management and Budget (MMB) to determine the impacts of suggested cuts and reforms.  The Governor asserted it would be the MMB numbers that would be used in negotiating a final budget.  Governor Dayton also said he would not sign budget bills that included policy provisions with no-fiscal impact unless he had specifically agreed to them.  He stated “…I will not sign revenue or expenditure bills that include policies, to which I have not agreed, which I oppose, and which should be passed and presented to me as separate legislation.  If I reject those items, and therefore the bills containing them have to be returned for separate passage, those delays will be the Legislature’s responsibility, not mine.”

Special Election

Senate District 66 will hold a primary election next week to replace six-term Sen. Ellen Anderson (DFL), who was appointed to the Public Utilities Commission earlier this month. The favorite in the race is current 66A DFL Rep. John Lesch. Rep. Lesch is a prosecutor and is currently serving his fifth term. The general election will be April 12. If Rep. Lesch should win the race, there will have to be another special election to fill his seat.

Tensions High

As committees struggle to craft budget bills, tensions are increasing, and the rhetoric on all sides is getting more heated. When you add in the number of people interested in the issues being debated with the short window of time available for Committees to hear testimony, you have a recipe for conflict. For example, one omnibus bill sparked intense emotion this week as a testifier from greater Minnesota had to be removed from the committee by the Sergeant at Arms for his failure to abide by the Chair’s three-minute allowance time for testimony. 

Omnibus Bills

The deadline for omnibus bills to be referred to the Ways and Means Committee in the House and the Finance Committee in the Senate is tonight at midnight. Four bills remain to be heard in the Senate (Health and Human Services, Tax, Education, Transportation) and four (Jobs, Agriculture, Judiciary, Public Safety) in the House. Next week, all omnibus bills will be taken up during floor sessions that promise to be long and arduous.

If you’re interested in tracking any of the omnibus bills visit http://www.leg.state.mn.us/ and use the following bill numbers:

• Agriculture: SF 1016 – HF 1039
• Capital Investment: SF 40 – HF1232
• Education: SF 1030 - HF 934
• Environment and Energy: SF 1029 - HF 1010
• Health and Human Services: SF 760 – HF 927
• Higher Education: SF 924 - HF 1101
• Jobs and Economic Growth: SF 887 – HF 1049
• Judiciary: HF 440
• Public Safety: SF 958 - HF 853
• State Government Innovation and Veterans: SF 604 - HF 577
• Taxes: SF 27 – HF 42
• Transportation: SF 898 – HF 1140

 Governor Updates Budget

The Governor released a new budget this week, taking into account the February forecast that shows increased revenues and a reduction in the deficit to approximately $5 billion. His two major changes were to eliminate the proposed 3% surtax on incomes over $500,000 and to reinvest $170.3 million in health and human services spending. Gov. Dayton also added a proposal for a $21.8 million increase to the research and development tax credit.

Governor Gives Executive Order

Gov. Dayton issued an executive order this week that requires regular audits of health plans and ensures full public disclosure on health plan profits, reserves and administrative expenses for state contracted health care providers. The Commissioners of Health, Human Services and Commerce, along with Gov. Dayton, announced Minnesota will now have a competitive bidding process for those providing state health care. Payments for health care will now be focused on outcomes rather than procedure. This change is being described as a fundamental shift that will better serve taxpayers.

Bill Introductions of Note

HF 908: A bill for an act relating to natural resources; modifying Wetland Conservation Act; amending Minnesota Statutes 2010, sections 103G.005, by adding a subdivision; 103G.2212; 103G.222, subdivision 3; 103G.2242, subdivisions 2a, 6, 7, 9, 12, 14, by adding a subdivision; 103G.2251; proposing coding for new law in Minnesota Statutes, chapter 103G.

HF 931: A bill for an act relating to energy; requiring Legislative Energy Commission to examine issue of permanent storage of spent nuclear fuel produced by nuclear-powered electric generating plants.

HF 1025: A bill relating to utilities; requiring utility rates be based primarily on cost of service
between and among consumer classes.

Bills on the Move

Coal fired energy took center stage again this week, with the House Commerce and Regulatory Reform Committee hearing HF 72, authored by Rep. Michael Beard (R-Shakopee), on Tuesday. The Senate Energy, Utilities and Telecommunications Committee heard the second round of testimony on the companion bill, SF 86, authored by Sen. Julie Rosen (R-Fairmont), also on Tuesday. These bills would repeal the ban on new electric generation facilities or contracts with electric energy providers that would lead to increased carbon dioxide emissions. The ban was enacted as part of the 2007 Next Generation Energy Act.  Both Committees recommended approval by strong margins and the bills now await floor action. 

On Thursday, the Senate Energy, Utilities and Telecommunications Committee recommended approval of SF 548, a bill giving the Public Utilities Commission (PUC) authority to approve multiyear rate plans for utilities. Both Xcel Energy and Deputy Commissioner of Commerce Bill Grant testified in support of the bill, authored by Sen. Michelle Benson (R-Ham Lake). The Committee removed a portion of the bill also allowing rate riders as an alternative to the multiyear rate plan. However, there continue to be some concerns being raised that the bill does not mandate a yearly earnings review as part of the multiyear rate plan process.

Finally, the conference committee on SF 4, the nuclear moratorium repeal authored by Majority Leader Amy Koch (R-Buffalo), met for the first time Friday morning to begin discussion of the bill.  The Senate refused to concur with House language that added restrictions on reprocessing of nuclear waste.  To date, the Governor has indicated that such a restriction is just one of several additional provisions that should be added to the bill.

New PUC Chair Appointed

Six term DFL Senator and long-time renewable energy and environmental advocate Ellen Anderson has been named by Gov. Dayton as the new PUC Chair. The PUC regulates three cornerstone service industries in Minnesota's economy – electricity, natural gas and telephone. This appointment came as a surprise to some as Gov. Dayton had previously stated he would not use current legislators to fill appointments. Senator Anderson’s resignation will be effective March 20 and several prominent DFL names are already talking about seeking the seat.

This Week’s Floor Sessions

On Thursday, the Senate passed HF 130, authored by Senator Claire Robling (R-Jordan), as amended by conference committee, in a 37 – 28 vote.  This is the Phase One budget bill which was passed earlier by the House.  The bill was promptly vetoed by Governor Dayton.

The Senate also passed SF 56, authored by  Senator Dave Thompson (R-Lakeville), which provides school district budget relief by freezing public school employee pay for two years.  After multiple unsuccessful attempts to amend the bill, the bill passed on a 36-29 vote.

HF 1, authored by Representative Dan Fabian (R-Roseau), the environmental review and permit streamlining bill, passed off the House floor Thursday with a 82-42 vote.  The bill puts into effect initiatives ordered by Governor Dayton earlier this year but also adds legislature driven initiatives, including allowing appeals of environmental permits to skip district courts and go straight to the state Court of Appeals, and allowing third parties to conduct their own draft environmental reviews.  The companion bill, SF 42, awaits action in the Senate Finance Committee.  The bill is moving ahead of a report expected to be released February 21, 2011, from the Office of the Legislative Auditor.  That report will discuss current environmental review and permitting practices and offer suggestions for improvement.

Committee Deadlines

The three committee deadlines for the 2011 session were approved yesterday in the House.  The first deadline is March 25 when all finance bills must be out of their committees and be sent to the House Ways and Means Committee.  The second deadline is the first policy deadline and has been set as April 29 with a second policy deadline of May 6.  The February Budget Forecast is expected to be released during the week of Feb. 28, leaving legislators just over three weeks until the first committee deadline.

Renewable Development Fund

The Office of the Legislative Auditor (OLA) testified Tuesday before the  House Environment, Energy and Natural Resources Policy and Finance Committee on its October 2010 report on the Renewable Development Fund.  The fund was established in 1994 as part of negotiations that allowed nuclear waste storage at Prairie Island, the Xcel facility near Red Wing.  The idea was that the fund would be used to help generate renewable sources of electricity through solar, wind, hydro and biomass methods.  However, the report suggested the fund was not being used to support those efforts.  Joel Alter from the OLA stated, “The largest project funded by the RDF was something that the Legislature authorized — a coal-based power plant for clean coal energy that did not involve a form of renewable energy.” OLA suggested legislators spend this session answering a few key questions surrounding the administration of the fund, the recouping of administrative costs using the RDF, providing greater transparency and accountability, as well as whether the private fund held by Xcel should be brought under State supervision.  Chair Denny McNamara (R-Hastings) stated he felt, as a result of this report, it was likely there would be a bill introduced this session.

Liquor on Sundays?

If a bipartisan group of Senators gets their way, Sunday liquor sales are a possibility.  The movement to repeal the ban on liquor store sales on Sundays is heating up at the Capitol but the Minnesota Licensed Beverage Association (MLBA) is strongly opposed.  The MLBA believes the change would effectively force stores to open on Sundays but they claim resulting sales would not cover the additional business costs.  Not all store owners agree.  Stores located near the Wisconsin border, which allows liquor sales on Sunday, argue they lose thousands of dollars of revenue to the neighboring state.  Of the states surrounding Minnesota (Iowa, North Dakota, South Dakota, Iowa and Wisconsin), all offer liquor store sales on Sunday, as does Canada.  A 2009 Minnesota Department of Revenue analysis found the change would result in negligible new tax revenue for the state.  While the liquor store sales would increase, it would likely mean a decrease in bar sales, which are more heavily taxed.

A bill to repeal Minnesota's current prohibition on new electric energy from coal fired plants passed its first test today, sailing through the House Environment, Energy and Natural Resources Committee on an 11 - 6 vote. HF 72, authored by Rep. Mike Beard received the support of all 10 Committee Republicans, along with DFL Rep. David Dill. Rep. Beard acknowledged having voted for the original bill, but stated that he now regretted that vote. He indicated that current law does not pick "winning" technologies, but "politically popular" ones. Reps. Hilty and Knuth spoke against the bill calling it a step backwards in Minnesota's efforts to address greenhouse gas concerns. In the end, the Committee's new Republican majority once again showed its strong dislike of government mandates, preferring to let the market choose winners and losers. The bill now moves to the House Commerce Committee. The Senate companion (SF 86, authored by Sen. Rosen) has not yet been scheduled for hearing.

Dayton Transition Team Announced

Mark Dayton, unofficial winner of Minnesota's gubernatorial race, has announced his transition team. Dayton’s "unofficial transition" will begin work because of the strong possibility he will become Governor. Tina Smith and Lee Sheehy will serve as co-chairs of the transition. Smith served as Chief of Staff to Minneapolis Mayor R.T. Rybak and as Senior Advisor to the former Metropolitan Council Chair, Ted Mondale. Sheehy served as Chief of Staff to Senator Amy Klobuchar, head of economic development for the City of Minneapolis and as Chief Deputy Attorney General for Attorney General Hubert H. Humphrey.

Others on the transition team include Ruth Orrick, former DFL Party Chair and business consultant, and Michele Kelm-Helgen who most recently served as Chief of Staff for the Minnesota Senate Majority Leader. Dayton's campaign manager Dana Anderson will be the Chief of Staff for the transition team.

Recount Update
Mark Dayton leads Tom Emmer by 8,749 votes out of 2.1 million votes cast in the November 2 election. As canvassing continues around the state, Emmer has picked up more than 100 votes. Because the margin separating the two candidates is less than .5 percent of total votes cast, there will be an automatic recount. The canvassing board meets on November 23 to certify the vote. The recount itself will begin November 29 and is scheduled to conclude by December 14, 2010.

There will be recounts in three House races. In the open House District 15B seat in the Saint Cloud area, Republican King Banaian narrowly beat out DFLer Carol Lewis by 10 votes; House District 25B in Northfield, GOP challenger Kelby Woodard defeated incumbent DFLer David Bly by 30 votes; and in the Albert Lea area, District 27A, Rich Murray defeated second term DFL incumbent Robin Brown by 58 votes.

Other close races that fall outside of the automatic recount margin are in House District 1B where long time DFL incumbent Bernie Lieder lost to Republican challenger Deb Kiel by 134 votes. In the Minnetonka area newcomer and GOP candidate Kirk Stensrud defeated third term incumbent Maria Ruud by 107 votes.

House Leadership
In the House, the DFL members elected Paul Thissen (Mpls) as Minority Leader. Thissen ran for Governor and chaired the House Health Care and Humans Service Policy and Oversight Committee. He has served five terms. The GOP elected Kurt Zellers (Maple Grove) as Speaker-designate and Matt Dean (Stillwater) as Majority Leader. Zellers and Dean ran the campaign operation that brought the GOP into the Majority with 72 members. Zellers has served four terms; Dean has served three.

Senate Leadership
Senate DFL elected Tom Bakk (Cook) as Minority Leader. Bakk chaired the powerful Senate Tax Committee and made a run for the DFL endorsement for Governor this election cycle. The GOP elected Amy Koch (Monticello) as Majority Leader. Koch appointed Geoff Michel (Edina) as Deputy Majority Leader and David Senjem (Rochester) as Assistant Majority Leader. The caucus also elected Chris Gerlach (Apple Valley), David Hann (Eden Prairie), Senator-elect Doug Magnus (Slayton) and Senator-elect Dave Thompson (Lakeville) as Assistant Majority Leaders.

Committee Organization
The new House and Senate leaders are expected to announce the committee organization in the respective bodies by the end of this week. Committee chairs will be named beginning next week with full committee appointments likely by early December.

Special Session Set for Monday

Governor Tim Pawlenty is convening the Minnesota Legislature on Monday, October 18, 2010, at 1 p.m. for a special session.  Pawlenty waited for a federal disaster declaration regarding the flooding in southern Minnesota before calling the special session.  The Federal Emergency Management Agency made the declaration yesterday.  FEMA funds will be available to local and state government and some non-profit agencies.  The agency is still considering aid to individuals.

The Governor, along with House and Senate leadership, had previously set up a framework and a tentative agreement to spend up to $80 million in state money on disaster relief for recent flood damage in 21 counties and tornado damage in northern Minnesota from July.  The federal declaration provides the state with disaster relief funds to help cover the estimated $200 million in damages.  The framework of the draft bill includes $32.5 million from the state general fund and $26.7 million in general obligation bonds to meet the state portion of the emergency funding.

Pawlenty wants to limit the special session to a one day session dealing with disaster relief only; however some legislators have proposed anti-bullying legislation and have discussed including early enrollment for federal health care as well.

New Poll on the Governor's Race Released

A new KSTP/Survey USA poll was released today.  Mark Dayton (DFL) is in the lead with 42 percent, up 4 points from the last poll. Tom Emmer (Republican) came in with 37 percent, up one point.  The Independence Party candidate Tom Horner is a distant third with 14 percent, a drop of 4 percent from the last poll.  Additionally, 7 percent would support another candidate or remain undecided.

This poll was conducted October 11 - 13 with a pool of 1,000 likely voters of which 712 responded.  The margin of error is +/- 3.7 percent.

Off to the Races
The close of the candidate filing period on June 1 brings about some interesting match ups for the primary on August 10 and the general election on November 2.  Here are the highlights.

• Former state House Majority Leader Ted Winter is running for the House in District 22A in the southwestern part of the state.  Current incumbent Doug Magnus (R-Slayton) is running for the District 22 Senate seat.  Winter lost the House seat to Magnus in 2002.
• Former Republican Representative Paul Gazelka is challenging incumbent GOP Senator Paul Koering (R-Fort Ripley) in the primary for the Senate District 12 Senate seat.
• State Senator Satveer Chaudhary (DFL-Fridley) faces a primary challenge from former DFL Representative Barb Goodwin.  Chaudhary has been reprimanded by a bipartisan Senate ethics committee for “threatening public confidence” when he added language designed to improve the fishing in Fish Lake, a lake on which Chaudhary owns a cabin.  The local DFL Party is holding a meeting soon to discuss revocation of their endorsement of Chaudhary for re-election which will add fuel to the Goodwin primary challenge.
• Former one term state Senator Sean Nienow is challenging his successor, incumbent Rick Olseen (DFL-Harris), in Senate District 17.
• In the open Senate District 18 seat vacated by retiring GOP Senator Steve Dille, former House GOP member Scott Newman is running.
• In a re-match, incumbent state Representative Gail Kulick Jackson (DFL-Milaca) will defend her seat against former GOP state Representative Sondra Erickson.
• Former House and Senate member Linda Runbeck is running to unseat Representative Paul Gardner (DFL-Shoreview).

• Speaker Margaret Anderson Kelliher, the endorsed DFL candidate, is running with former state Finance Commissioner John Gunyou.
• Former U.S. Senator Mark Dayton chose state Senator Yvonne Prettner Solon as his running mate to challenge Kelliher and Entenza in the primary.
• Former House Minority Leader Matt Entenza selected outgoing Channel Nine news anchor Robyne Robinson.
• State Representative Tom Emmer and Annette Meeks are the endorsed GOP candidates for Governor and Lieutenant Governor.  They face no primary challengers.
• Endorsed Independence Party candidate Tom Horner chose retiring Association of Minnesota Counties Executive Director Jim Mulder for his ticket. There are three other Independence Party candidates running against Horner in the Primary.