Welcome to week 15. I hope you had a good Passover/Easter week. There have been many conference committees meeting this week as there are major differences between the Senate, House, and Governor’s budget proposals that affect the next two years. Conference committees will need plenty of time with their budget targets to come to agreements. From there they still need to be voted on in each legislative body and then sent to Governor Mark Dayton. Governor Dayton has sent letters highlighting priorities and if these bills don’t match them. I would expect him to veto.
In terms of floor sessions, the week started off slowly, but picked up steam by Thursday. Lots of people filled the halls of the Capitol, leading chants against the preemption bill which limits the power of local units of government to set their own labor standards. Arguments for the bill are that differing standards from city to city will harm the ability of businesses to compete with one another if some are required to pay higher wages than others. The opposition argues what works in Minneapolis may not work in rural parts of Minnesota with lower costs of living. Another argument against the bill is that it is the state legislature’s job to set minimum standards, not maximum standards.
Sincerely,
John Hoffman
What is going in the Legislature?
Budget negotiations begin with Dayton weighing in
Since 2011, state government has been working better for the people of Minnesota. A projected $6 billion deficit was turned into eight-straight forecasted surpluses. Taxes were reduced for most Minnesotans, the state paid back all of the $2.8 billion debt owed to our schools, and our AAA bond rating was restored. I am proud to have been part of the Senate when we got structure and balance in our budget.
Our success has been recognized by numerous national experts. In February 2017, U.S. News and World Report named Minnesota the third-best state. Last year, USA Today reported that Minnesota was named the second-best run state in the nation. And in 2016, CNBC named Minnesota the fourth-best state for business, after ranking us number one for the first time ever in 2015. These national accolades, among others, demonstrate that we are doing many things right.
State commissioners are involved in the budget negotiations with the conference committees this week. Governor Dayton is requesting that the House and Senate set joint conference committee targets no later than Friday, April 28. That gives conferees two weeks after the Legislature returned from the Easter/Passover break and leaves more than three weeks to negotiate the details of the omnibus budgets before the May 22 adjournment date.
With a $1.5 billion remaining budget surplus projected for the next biennium, The Governor clearly outlined his concerns in each budget area. He also requested that agency budget cuts be clearly defined, rather than implementing vague across the board percentage cuts.
State budget proposals put forward in their current form may not be fiscally sustainable for Minnesota’s future. Instead of cutting spending, they push spending into future budgets. This puts Minnesotans on the hook for future debts when we can pay them now with our surplus – and pay them on time.
The Minnesota Management and Budget office agrees these decisions will seriously jeopardize the state’s long-term fiscal health.
The education budget bill invests less money in schools from previous budget cycles. Many school districts are concerned about making programing and teacher reductions in order to fit within their budgets. The higher education bill provides less funding for the University of Minnesota and state colleges. Students and faculty are concerned about program cuts and tuition increases. The tax bill’s investment in Local Government Aid (LGA), while it increases for one year, actually makes funding reductions to many communities in the future, reducing up to $13,000 worth of aid for individual cities in our region starting in 2019.
The transportation bill is funded largely through a one-time use of general fund dollars. It does not contain any increased investments in transit. The Minnesota Chamber of Commerce is pushing back because transit services, whether in the Twin Cities metro area or in Greater Minnesota, is a vital link in our state’s transportation system.
As we enter into the final weeks of the 2017 session, we are hopeful budget targets will be set on time – which is April 28 – and negotiate with the Governor to craft a budget which works for all Minnesotans.
The preemption bill passed the Senate floor this week, despite the objections of myself and many of my colleagues. The legislation will limit the ability of local governments to pass labor benefit policies such as earned sick time and higher minimum wages.
Local governments often take action in response to a challenge identified by community members.
Proponents of this proposal are concerned that individual cities across the state will establish their own benefit policies which will result in differences across the state making it difficult for businesses to compete with one another.
Labor, social justice, and local government organizations are in opposition to the proposal, arguing that local elected officials are capable of determining what is best for their residents. Beyond the local government argument, some of the opponents argue that there is moral obligation to families who do not have access to leave benefits. For many families in these cities and across the state, it is a choice between putting food on the table or taking their child or parent to the hospital.(HF600/SF580)
If you would like to read more on this, the Governor provided a letter explaining his positions here: http://mn.gov/gov-stat/pdf/2017_04_17_GMD_LGS_Omnibus_Bills_Letter_to_Leaders.pdf
He also attached 55 letters, totaling 190 pages sent by state agency Commissioners which can be read here: http://mn.gov/gov-stat/pdf/2017_04_10_Commissioner_Letters.pdf
Some Minnesotans may be in line for another tax refund this year
Tuesday marked the last day to file or apply for an extension on state and federal income taxes. The date was three days later than the typical April 15 deadline due to Monday’s holiday in Washington, D.C.
Taxpayers are able to check on the status of their state income tax refund by contacting the Minnesota Department of Revenue at “Where’s My Refund?” or 1-800-657-3676. For those that were unable to pay all taxes owed by the April 18 deadline, the Department of Revenue may be able to work out a payment plan. Visit the website or call 1-800-657-3909 during business hours.
The timing of this year’s filing deadline comes just as the legislature prepares to negotiate a tax budget with Governor Dayton. The House Republican budget commits about $1.35 billion of the state’s $1.6 billion budget surplus to tax cuts. The Senate Republican budget commits about $900 million, while the Governor invests about $285 million in direct tax relief. A less obvious, but very important difference is that the Republican budgets spend significantly more in future years. For instance, the cost of an estate tax cut for about 1,000 heirs inheriting more than $2 million balloons to more than $116 million by 2020. Finding balance among the three proposals while saving enough to invest in education, health care, and other state obligations will be the key to ending session by the May 22 deadline.
If passed, this tax bill would be the second tax-relief package approved in 2017. The legislature worked quickly to approve a tax conformity bill in January that updated Minnesota’s tax code to federal changes adopted since Jan. 1, 2015. As a result, some taxpayers may have an additional state tax refund coming later this year. Once all 2016 taxes are processed, the Department of Revenue will begin revising 2015 tax documents and identifying any taxpayers that may be owed additional refunds based on these updates. No taxpayer will owe additional money, but some may see checks in the mail before the end of the year. Taxpayers should not file amended returns unless they are contacted by the Department; in most cases, taxpayers do not have to take any action and refunds will be automatically issued. Minnesotans most likely to be impacted by these changes include teachers with classroom expenses, those with higher education tuition payments, homeowners paying mortgage insurance or who experienced foreclosure or short-sale, and small business owners.
Teacher licensure bill advances in Senate, concerns about teacher quality raised
A bill to revamp the state’s Board of Teaching and create a tiered educator licensing system was debated and passed by the state Senate on April 20. The Senate language was included in the E-12 education finance bill that passed in late March and will replace the House licensure language on House File 140.
The bill also seriously changes the alternative teacher preparation provider requirements, making it easier for an alternative program, such as Teach for America, to be established in Minnesota. These changes could threaten teacher preparation quality. Concerns include elimination of student teaching requirement for alternative preparation candidates, mandatory teacher prep program approval with minimum educator standards, and removal of higher education partnership requirement.
Four tiered licensure areas are designed with licensure qualifications, duration, and renewal set up. The bill provides parameters for design and implementation of the Professional Educator Licensing and Standards Board (PELSB) and removes the MDE licensing function and places it all with a new board – a change which has bipartisan support. The Board of School Administrators will remain a separate entity to license school administrators. The PELSB will shrink from 11 to nine members and include two administrative members. Teachers will make up the majority of the board membership. The higher education member is eliminated, even though the board is tasked with approving teacher prep programs. No current Board of Teaching member can be a member of the new board. No teacher member may hold a position with the union.
Several concerns are cited with the tiered system in this bill. The bill allows for unlimited renewals for Tier 1 licenses, with no incentives to move on to higher levels of licensure. The licensure board is also required to grant a Tier 1 license at the request of the school or charter board. Furthermore, years served in Tier 1 cannot be counted towards continuing contract rights. This sets up a process for individuals with no teacher training or pedagogy to teach for as long as they want in a Minnesota school.
The bill also requires licensure candidates to participate in school district’s mentorship or teacher evaluation programs, which is a positive requirement. However, many districts don’t have mentorship programs and they would need money to implement one.
Changing the alternative teacher preparation program requirements threaten program and teacher quality. (SF4)
Students need better investment to afford college
Three competing proposals under discussion at the legislature would dramatically affect college affordability for students across Minnesota.
Governor Dayton proposed investing $62 million additional dollars into the state grant program that helps Minnesota students pay for college without incurring more debt. The additional investment would help make college more affordable for more than 85,600 students, with an additional 8,829 students qualifying for financial aid.
On the other hand, the Senate’s higher education budget includes only $10.8 million for the state grant program, meaning only 1,192 additional students would be served. The House higher education budget invests $15 million, providing grant funds to 3,262 more Minnesota students.
The average Minnesota student leaves four years of college or career training with $27,000 in student loan debt—this is the fifth highest in the nation. The price of tuition doubled between 2000 and 2012; between 2013 and 2015, Governor Dayton and the DFL legislature reversed the cuts of the previous decade, increasing higher investments by 20%.
Omnibus Legacy Bill sent to the floor, includes controversial funding for buffers
The Senate Finance Committee heard and approved the Omnibus Legacy Bill Thursday and forwarded it to the Senate floor. The bill appropriates biennial funding of $529 million from the four legacy funds established by the “Legacy Amendment” that was approved by Minnesota’s voters in 2008, as follows:
- Outdoor Heritage Fund — $104.6 million (FY 2019 funds will be appropriated next year)
- Clean Water Fund — $211.6 million
- Parks and Trails Fund — $89.8 million
- Arts and Cultural Heritage Fund — $123.4 million.
The bill maintains the recommendations of the Lessard-Sams Outdoor Heritage Council for appropriations from the outdoor heritage fund, retains a 40:40:20 distribution for parks and trails (40% to the DNR for state parks and trails, 40% to the Metropolitan Council for metro area parks and trails, and 20% to greater Minnesota parks and trails), and establishes an ongoing 5% fund balance in each of the four funds.
The bill faces strong opposition from a number of environmental groups and clean water advocates who are concerned about the clean water fund portion of the bill that shifts $22 million in grants to the state’s 90 soil and water conservation districts to help with buffer compliance. In 2015, legislators funded this work with clean water fund money, but said future funding, beginning in 2017, would come from the state’s general fund.
This bill continues to fund buffer compliance work from the clean water fund, which critics say violates the spirit of the Legacy Amendment and means deep cuts to several clean water programs that would otherwise be funded, including drinking water and groundwater protections. An amendment to reverse that position and instead fully fund the recommendations of the state’s Clean Water Council failed on a voice vote. The bill will be heard next on the Senate floor. (H.F. 707)
Preventing wage theft
A wage theft prevention initiative that was included as part of Governor Dayton’s budget recommendations was heard in committee this week. The Jobs and Economic Growth Finance and Policy Committee heard compelling testimony of workers being defrauded out of thousands of dollars they had worked for but never received. Despite this emotional testimony, the Minnesota Chamber of Commerce and other business groups testified in opposition to this proposal without bringing anything forward that would address their concerns with the bill and protect workers who have been or will be swindled out of millions of dollars.
Five people are currently responsible for the fair treatment of 2.9 million workers in Minnesota. The office receives 20,000 inquiries per year and processes 1,600 complaints. The Minnesota Department of Labor estimates 39,000 Minnesotans experience wage theft each year totaling $11.9 million in losses.
The bill language is aimed at limiting the impacts of wage theft in Minnesota by taking the following steps:
- Increased penalties for a business out of compliance
- Requiring notice to an employee about pay (when and how much), benefits, and expectations
- The employer must maintain payroll records of employees
- Creation ofa criminal penalty if the wage theft exceeds an established threshold
- Increased resources for DOLI for education and enforcement.
(SF 1329)
Proposal to restrict autonomy of state auditor moves forward
A bill was heard in the Senate Finance Committee this week to repeal the State Auditor Enterprise Fund, which is used by Auditor Rebecca Otto to charge counties for state audits. The auditor charges for the examination of the books, records, and accounts of counties, who are accountable for the costs and expenses of the audits. The bill requires receipts from these examinations to be credited to the general fund beginning July 1 of this year and the auditor will be appropriated $5 million for ongoing operations of the audit division. However, this appropriation is less than the amount of funding necessary to audit counties and is effectively a 32% cut to the audit division.
Additionally, this legislation is being proposed in the midst of the auditor’s lawsuit against Ramsey and Wright counties for opting to utilize private CPAs instead of the auditor’s office for auditing, which was authorized through the 2015 State Government Omnibus Bill.
Auditor Otto has argued the 2015 legislation is unconstitutional because it removes one of the core duties of the OSA. This proposal is a much broader attempt to restrict the autonomy of a constitutional office and prevent the auditor from managing her office’s finances. The enterprise fund allows for liquidity when the auditor charges local governments for services and any savings is transferred back to local governments in the form of lower future auditing charges. (S.F. 511)
Minnesota Zoo Day at the Capitol
Owls, snakes, volunteers, and staff from the Minnesota Zoo visited the Capitol this week to share information on the statewide impact of the zoo, which is home to more than 5,300 animals and supports 1,700 jobs.
The Minnesota Zoo is an international leader in conservation for rhinoceroses, tigers, horses, and many other species. With support from the Clean Water Land and Legacy Fund and the Natural Resources Trust Fund, the zoo breeds endangered butterflies and mussels, and is a partner in returning bison to Minnesota prairies. The zoo welcomed 1.3 million visitors last year and educated 70,000 students from more than 930 schools across Minnesota.
See photos from the event here: https://flic.kr/s/aHskTiqg9g.
If you have any questions or concerns feel free to call my office at 651-296-4154 or by e-mail at jhoffman@senate.mn