Welcome to week seventeen. With just over two weeks left to negotiate a more than $40 billion budget for the next two years, there is a wide gulf between House and Senate Republicans and DFLers. Caucus leaders from both parties met behind closed doors with Governor Dayton this week to outline a framework to begin budget negotiations.
Before numbers can be agreed to, Governor Dayton has made it clear Republicans must remove the more than 600 policy provisions currently in the budget bills. These provisions run the gamut from halting any future light rail projects to limiting the department of agriculture from governing the use of harmful pesticides to eliminating 40-years’ worth of campaign finance reforms.
The leaders and Governor have announced they will begin working on the higher education and agriculture bills first, hoping to come to some agreements at least early on in the process. I have serious concerns about the higher education bill – a $125 million bill that underfunds both the MNstate and U of M systems. It also imposes tuition freezes without providing the funding to do so – meaning cuts are on the horizon for colleges and universities across the state.
DFLers held several press conferences this week highlighting small but hugely effective policy provisions. Earlier in the week a group of supporters met to denounce Republican attempts to shut down the 30-year-old Perpich Center for Arts Education in Golden Valley. Later in the week several senators were joined by the bipartisan Minnesota League of Women Voters to call out the elimination of campaign finance reforms. They went into depth about the changes to our campaign finance laws and how it serves as an attack on clean elections.
In nearly every budget category, experts in the field are decrying the underfunding, the shifts to cover up questionable budgeting in future years, and in some cases the elimination of popular programs like pre-k.
Much of the surplus money has either already been spent – like the $900 million given to health insurance companies and buying down premiums for Minnesotans purchasing their health insurance on the individual market or putting leftover money into a tax bill, currently sitting at $1.13 billion.
All of this means the negotiations that will happen over the next few weeks will likely be animated and tense, to say the least. Session is constitutionally mandated to end on May 22.
Sincerely,
John Hoffman
What is happening in the legislature?
E-12 bill short-changes schools, cuts pre-K funding
The E-12 education funding and policy agreement proposed by the House and Senate went through conference committee this week. The $300 million budget target lacks the necessary funding to increase by 2% the basic education formula, cuts voluntary free pre-kindergarten funding, and closes the Perpich Center for Arts Education.
Even though the Senate’s E-12 education chair strongly supported a larger budget proposal to fund schools over the next two years, she fell short, providing about $100 million less for the per student funding formula than the Governor. The basic formula provides the bulk of the funding districts use to provide classroom programs for students. The current proposal provides about $30 less per student than the Governor recommended in January.
The bill also cuts the Governor’s signature voluntary pre-K program, although the program has provided pre-k opportunities for more than 3,300 students since the appropriation passed in 2016. If more funding had been available, 6,800 four-year-old children across Minnesota would have had the opportunity to attend pre-k programs.
The Perpich Center for Arts Education would also close in 2018 if this bill were to become law. Instead, arts education outreach programs would be funded through the Department of Education. The Perpich Center was supported by former Gov. Rudy Perpich. The school has served art students from all parts of Minnesota and provides residence options for those who live outside the metro area.
Environment and Natural Resources Finance conferees find agreement on controversial bill
The Environment and Natural Resources Conference Committee agreement released this week makes substantial cuts in environment and natural resources budgets and includes many policy changes that environmental advocates say will push the state significantly backward in its ability to protect air, land, and water. Some of these provisions include:
- EQB – Changes the makeup of the state’s Environmental Quality Board and eliminates responsibilities, removing jurisdiction to consider and investigate environmental issues of community interest.
- Environmental Review – Allows project proposers to draft Environmental Impact State (EIS) date.
- Buffers – Imposes a two-year delay for buffer implementation and imposes other limitations.Governor Dayton has said he will veto legislation that includes a roll-back of his buffer initiative.
- Clean Air Act Settlement – Directs that the Clean Air Act settlement money be deposited into a state account and cannot be spent until it is appropriated by law.
- Agency Rules – Imposes new rulemaking requirements that critics say will create redundancy, bogs down decision-making, take the science out of agency work, and hobble the Minnesota Pollution Control Agency and the Department of Natural Resources from being able to carry out their duties.
- Merchant Bags – Prohibits local governments from banning or placing fees on plastic bags.Opponents say this pre-emption erodes local control and overrides the will of citizens.
- Lead Shot Rules – Prevents the DNR from adopting rules that further restrict the use of lead shot.Lead-shot foes argue that steel shot is readily available, performs similarly, costs the same or less, and is non-toxic to birds and wildlife that ingest it.
HHS conference committee agreement made up of budget shifts and gimmicks
This week the Health and Human Services Conference Committee approved a budget agreement for the Departments of Human Services and Health. The budget agreement, put together behind closed doors then approved in three hours with no public testimony, is based on over $500 million in savings that cannot be accounted for. The agreement removes access to affordable health insurance by eliminating MinnesotaCare and assumes that health care costs won’t increase.
Key provisions of the agreement include:
- Eliminates MinnesotaCare: The agreement eliminates MNsure and transitions the state to a federal exchange. Moving to a federal exchange would cost Minnesota taxpayers millions of dollars, eliminate MinnesotaCare, and give all control to the federal government.
- HMO Conversions to for-profit: Today our HMOs are sitting on reserves of taxpayer dollars, funds they are tasked with carefully managing under the state law that prohibits for-profit insurance companies from selling insurance in Minnesota. But the Legislature has decided to allow for-profit insurance companies to join Minnesota’s health insurance marketplace. This change will allow nonprofit HMOs to keep our taxpayer dollars if they decide to convert to for-profit HMOs. That money should be returned to us, not quietly transferred to a for-profit insurance company. There was a bipartisan solution worked out that would have created a process for non-profits to become for-profits and protected our taxpayer dollars, but that provision has been replaced by language that benefits insurance company CEOs and shareholders.
Higher Education budget proposal could increase tuition
The House and Senate higher education budget agreement unveiled on Monday ignores not only the Governor’s recommendations, but also the requests from the MnState and University of Minnesota systems. The $125 million target is $193 million less or only 40% of the Governor’s request.
The state grant program, which helps low-and middle-income students afford college tuition, will receive $18.5 million, about $43 million less than the Governor’s request.
Both the MnState and U of M systems could face serious budget cuts and tuition increases if the bill were to become law. The University fared the worst under the proposal, receiving only $18.6 million – $78.2 million less than the Governor requested and $128.6 million less than the U’s ask. MnState will receive $77.7 million – $73 million less than the Governor’s proposal and $101 million less than they requested.
A tuition freeze will be in place at MnState, but with no funding to backfill the lack of state investment, there will likely be system wide cuts which could mean fewer course offerings, staff reductions, and increased class sizes.
Republican agreement for Jobs, Commerce, and Energy Conference Committee released
As Governor Dayton requested, the conference committees began attempting to find a unified position on the budget bills so negotiations could begin with the administration. An agreement was reached between the House and Senate Republican chairs for the Jobs and Energy Conference Committee on Monday. There was no discussion on the proposal or public testimony; instead nonpartisan staff went through the spreadsheet and bill language. Testimony, amendments, and legislators’ discussion were put off for another day. Once all of the budget bills are negotiated between the House and Senate, Governor Dayton and his administration will start actively negotiating bills with the legislature.
Below are a few notable provisions that were agreed to by the House and Senate conferees.
Jobs, Labor, and Housing Provisions
- Consumer internet privacy language deleted – In the first hundred days of President Trump’s presidency he eliminated rules that would have prohibited internet service providers from collecting and selling their customers’ browsing history and personal information. In response to actions at the federal level, DFL members of the Minnesota Senate and House authored an amendment that would have protected users’ data. Despite it passing the Senate with only one no vote, the provision was mysteriously removed from the bill in private meetings held by Republicans.
- Border to Border broadband – $15 million – The legislative agreement was $5 million less than the Senate position and $8 million more than the House position. Governor Dayton had appropriated $60 million in his budget for this grant program.
Energy and Telecommunications
- VoIP – Local phone service is deregulated if it is provided by Voice-over-Internet Protocol (VoIP) or Internet protocol-enabled services. The move is supported by AT&T, Comcast, and other cable companies, but opponents argue strenuously that these provisions will lead companies to invest in densely populated urban areas at the expense of rural, less profitable areas, and will remove consumer protections – especially for older Minnesotans, people with disabilities, those on fixed incomes, and rural Minnesotans who still rely on traditional land line phone service.
- RDF – The Renewable Development Fund is eliminated and replaced by a new Clean Energy Advancement Fund (C-LEAF). Under this bill, spending decisions from the new fund are to be made by the legislature based on recommendations from a new legislative council, without independent oversight by the Public Utilities Commission.The Renewable Development Fund was created over two decades ago to fund innovative energy programs and is financed by Xcel Energy based on the amount of nuclear waste the company stores on-site at its nuclear plants in Prairie Island and Monticello.
- Net metering – Cooperative electric associations are authorized to adopt rules to resolve disputes that include mediation by an independent third party. Proceedings pending at the Public Utilities Commission are terminated, with exceptions. Critics say this removes protections for families, businesses, and farmers served by these cooperatives who will have their ability to get an independent expert review from the Public Utilities Commission.
Commerce
- Auto theft prevention account redirected to the insurance fraud prevention account Of the revenue currently collected in the auto theft account, $1.3 million each year must be transferred to the general fund. The bill redirects the $1.3 million from the general fund and instead transfers the funds to the insurance fraud prevention account. The transfer to the general fund was a Pawlenty-era budget transfer, and there have been several attempts in recent years to return the funds to the insurance fraud prevention account.
- Merchant bags – prohibits local governments from adopting ordinances that would prohibit merchants from providing customers paper, plastic, or reusable bags.
Judiciary budget doesn’t reflect priorities
Minnesotans demand that our core government services, like access to our justice system, be funded and this budget does not do that.
This proposal puts Minnesotans’ access to the justice system in jeopardy by underfunding our court system. Chief Justice Laurie Gildea broke tradition and testified in the Judiciary and Public Safety Conference Committee. Her message that “the Legislature’s failure to prioritize public safety and the justice system in this critical budget-setting process is deeply troubling,” did not sway the minds on the supporters of the conference committee’s proposal about the importance of funding our court system.
Along with the courts, the Guardian Ad Litem Board also will go underfunded. Under the current plan, the board will continue to fail to meet federal and state mandates without needed funding. This means more children will not have the representation they need looking out for their best interests in cases of abuse or neglect. This low funding will also mean the current waiting list for getting guardian ad litem will grow as child protection cases continue to increase.
The Department of Corrections (DOC) is also going underfunded which will lead to more recidivism. This bill underfunds Minnesota’s corrections system. Without needed investments, the corrections system will remain understaffed, and will necessitate layoffs. Further programs aimed at reducing recidivism could be cut as the DOC will no longer be able to afford offering them.
Lastly, this budget proposal is full of policy provisions that do not need to pass during a budget year. The conference committee bill contains many policies such as allowing law enforcement to carry firearms in private establishments despite an owner’s objection. The DOC commissioner would also be required to consider Appleton in any future prison bed expansion decisions.
Transportation bill bottoms out our roads and bridges
This bill hardly begins to scratch the surface of the needs of our transportation system. Republicans, DFLers, and the Governor all agree we need $600 million per year for the next 10 years to maintain our current roads and make strategic expansions, and $400 million per year just to maintain and modernize our current assets. This proposal falls far short – about $639 million dollars short for the biennium of what is needed just to maintain and modernize our current roads and bridges. This low amount leaves many Minnesotans and businesses in no better shape than they are in today.
The Republican proposal makes transit cuts that would hurt many Minnesotans. The budget proposal continues to neglect transit funding across Minnesota. Without additional funding, transit options for students and the elderly will be reduced by 10% leaving many Minnesotans without a way to get to work, school, or medical appointments. This flies in the face of the efforts of many area chambers of commerce who have been advocating to increase funding for transit since the original proposals were introduced.
Many components of the proposal are aimed at stopping the expansion of LRT in the Metro, going so far as to limit the ability to raise local revenue and the ability to spend it on what their constituents want. The bill specifically cuts operations support for future LRT lines; prohibits cities, counties, and MnDOT or the Met Council from investing in light rail without legislative approval; and eliminates local Metro authorities’ ability to impose more than a ¼ cent transportation tax without a referendum, unlike other Minnesota counties. Despite Republican objections, LRT is one of the most efficient forms of transit and has been the impetus for billions of dollars of investment along the lines. If we do not build the LRT line the over $900 million in federal funding will go to another region, and they will get these construction jobs added to their local economies.
This bill shifts money away from other priorities in order to fix our failing infrastructure. The bill moves money away from children’s schools, the elderly, and public safety in order to fund Minnesota’s roads and bridges. The bill takes $372 million from the general fund in this biennium, and $566 million in the next. This leaves Minnesota’s roads and bridges vulnerable to budgetary conditions, meaning in the next budget crunch the legislature can raid these funds to make up for a future shortfall.
The transportation proposal has new language that reforms Met Council governance. This proposal was never vetted on the Senate or House floor, but it somehow appeared in the bill without public input. The Met Council reform proposal increases the size of the Met Council, changes the definition of the area under the council’s authority, and includes locally elected officials as Met Council officials. This bill creates many conflicts of interest as many of the new members would have two incompatible positions, the regulator and the regulated.
This bill added a new step and dissolves the Counties Transit Improvement Board (CTIB), rather than allowing the local governments in the board to make the decision themselves. This controversial provision that takes away local control was never even heard in a single committee in the House or Senate, which leaves the public and local stakeholders completely out of this decision. This provision would eliminate CTIB, the existing quarter cent sales tax in five metro counties, and then would restrict the former CTIB counties from using new local transportation revenues for a fixed guideway projects not already in operation. This would fly in the face of local control and allowing local communities to choose how their local tax dollars are spent.
Reductions to state government services
The state government omnibus budget agreement was rolled out Tuesday and includes deeper cuts than the original Senate proposal, slashing $43 million from an already lean state government budget. The reductions heavily target the Department of Revenue—which receives a $12 million cut—and will result in delayed income tax returns, an estimated loss of $30 million in uncollected revenue, and reduced capacity for the department to respond to tax fraud. This is of particular concern during tax season as criminals attempt to steal taxpayers’ income tax returns.
Other agencies that provide critical services to citizens and businesses across the state are not spared; the Department of Administration is reduced by $3 million, Minnesota Management and Budget is cut by $11 million, the state auditor’s budget is slashed by over 20%, and MN.IT Services is cut by $3 million. MN.IT provides information technology services for most state agencies and has requested over $26 million for cybersecurity efforts, none of which is provided. Cutting this agency has the potential to result in less secure data, increase the potential for hacks, and add to the wait time for responses from agencies.
The bill also repeals the campaign public subsidy, which provides public funding to candidates if they agree to campaign spending limits. By repealing the subsidy, candidates will no longer have this incentive to keep campaign spending low and avoid the influence of special interest money.
The ability for state agencies to interpret laws and create rules to protect the well-being of Minnesotans and have flexibility in enforcement is strongly curtailed in this legislation. Most proposed rules will be required to obtain legislative approval, which will become administratively burdensome, inefficient, and ignore the policy expertise of agency professionals. Furthermore, it exempts big businesses from complying with rules if it will cost them over $50,000, despite the negative consequences for other businesses, the public, or the environment.
Tax agreement overspends
The Tax Conference Committee met for about seven total hours during the past two weeks to discuss policy – not items that impacted the state’s budget – and did not accept public testimony on items included in the bills. Still, the committee approved $1.13 billion of spending in about an hour on Monday evening, including several provisions Governor Dayton has promised to veto.
While there are ideas in this bill that I support, the level of spending and inclusion of unnecessary policy provisions makes it difficult for me to see this proposal as an honest attempt to negotiate a final budget agreement. Spending $1.13 billion on tax changes leaves a fraction of the state’s $1.5 billion surplus for other priorities, such as education or transportation. It also burdens future state budgets by committing at least $1.45 billion in ongoing spending to tax cuts that most average Minnesotans will never see.
- Social Security spending: $8,250 tax subtraction ($6,500 single filers) for seniors earning between $32,000-$115,000/year. Cost: $265 million
- Doubled down on vouchers: Against the Governor’s recommendations, the bill includes $35 million/year for scholarship tax credits and allows tuition to be used as an eligible expense to claim the K-12 credit (this has previously been ruled unconstitutional).
- Estate tax: Full federal conformity beginning this tax year, which costs $161.7 million this biennium.
- Student loan debt tax credit and 529 college savings plan contributions: About $80 million for credits and subtractions related to these purposes. These provisions were crafted by the Senate DFL last session.
- Statewide business property tax: Freezes levy at 2018 levels and exempts the first $150,000 of value. This cost expands dramatically in the future. Cost: $125.98 million.
- Virtually nothing for property tax relief, aside from the School Building Bond Tax Credit for farmers. Only $6 million one-time for Local Government Aid and County Program Aid, each.
- Tobacco tax indexing repealed: Removing the annual inflation on the cigarette and tobacco taxes costs the state about $30 million by 2020-2021.
- Several restrictions on local governments, including a prohibition on local bag fees or taxes.
- The bill commits $1.45 billion of spending in 2020-2021.
House finally releases bonding bill
The House Republicans released their bonding proposal this week. The bill would appropriate $600 million in General Obligations (GO) bonds to fund the repair and replacement of government assets across the state. The House bill falls extremely short of what Senate Republicans and Governor Dayton have released in their bonding proposals. The House author acknowledges the release of the bill is just part of the process and will grow as it moves through the legislative process.
A large portion of the GO bonds are used to maintain the state’s current buildings so our assets’ lifespans are maximized and we get the most value for the dollars Minnesotans have invested. Important users of these dollars are our higher education institutions which have buildings across the state that need to be maintained and improved when necessary. While a substantial portion of the money allocated to our higher education institutions is for repair, we also need to ensure that they have the assets needed to attract, train, and retain Minnesotans to fuel our economy.
A residual impact of maintaining and investing in the state’s assets and infrastructure is people across the state are employed to do this important work. Private contractors will bid on the repair and replacement of the state’s assets which will result in additional employment opportunities for Minnesotans.
Legislators push back against elimination of Minnesota’s campaign finance reforms
DFL senators, alongside the Minnesota League of Women Voters and a former chair of the Minnesota Campaign Finance and Public Disclosure Board, raised serious concerns at a press conference this week about the proposal to eliminate Minnesota’s long-standing campaign finance reforms, including the public subsidy. The reforms in question were enacted 40 years ago in response to the Watergate scandal.
In 2016, virtually all candidates for legislature and constitutional offices agreed to abide by the spending limits in exchange for partial public funding. Repeal of these reforms will undermine Minnesota’s history of free and fair elections. The campaign finance reforms are scheduled for repeal in the Omnibus State Government Budget Bill.
Senators argue that spending limits keep our campaigns sane and allow for an even playing field that allows newcomers and the ordinary citizen to run for office. They also argue that without these limits, campaign spending will increase sharply, candidates who reject special interest money will have little chance of winning, and our political system will become even more beholden to the interests of the wealthy donors.
E-12 conference committee report shutters Perpich Center
Tying must-pass budget bills to unnecessary policy provisions has become common-place at the legislature. One disturbing provision in the E-12 bill closes the Perpich Center for Arts Education in Golden Valley after over 30 years of top-notch arts education for students all over the state.
Perpich alumni, parents, teachers, staff, and legislators disappointed by this attempt to disregard the immense value of this statewide arts magnet school gathered at the Capitol for a press conference this week to highlight the Republicans’ attempts to shutter the Perpich Center without any input from the public.
After a difficult legislative auditor report of the Perpich Center administration, the Legislature is attempting to defund the Perpich Center without including the thousands of students, teachers, and alumni in the discussion. The Perpich family also appears to be left out of the process. The recent audit report was meant to instruct the school and its board of directors on how to solve the administrative shortcomings to provide better transparency and accountability. Closing the school without a chance to address the auditor’s report denies the opportunity to learn to future students.
PTSD amendment added to workers’ comp proposal
An amendment was offered to the workers’ compensation bill that would protect public safety workers. The amendment would classify post-traumatic stress disorder (PTSD) as a presumptive illness for police, paramedics, firefighters, and others. Amendments are not typically added to the workers’ compensation bill because the details are worked out before they are taken up on the floor. However, this was an important issue to ensure public safety workers that are impacted by PTSD get the care they need. The amendment passed on a vote of 66 – 0.
Abandoning cybersecurity needs
The final agreement for the state government finance omnibus bill includes no new investment in cybersecurity funding. The Senate position originally provided $2 million in new money for MN.IT Services, which provides information technology services to most state agencies. The lack of funding has the potential to make Minnesotans’ data less secure, increase the chances of hacking, and ultimately make state government less efficient and responsive to citizens’ needs.
Additionally, the proposed Republican budget requires MN.IT to cut $3 million in the agency’s personnel budget, which will further limit the ability of Minnesota’s public technology experts to address ongoing cyber threats. The state government omnibus bill includes numerous unfunded mandates on MN.IT to consolidate data centers and incorporate additional state agencies without any resources.
Medical Assistance claims bill passes the Senate
On Monday, a bill modifying the provisions for Medical Assistance (MA) claims against estates passed the Senate floor by a vote of 64-0. The bill will bring state law into compliance with federal Centers for Medicare & Medicaid Services (CMS) regulations for recovering MA paid for long-term care services. Last session, the legislature approved a bill that would limit MA estate recoveries to long-term care services and non-long term care services received on or before January 1, 2014. CMS would not approve the original state plan amendment, so this year’s bill removes the January 1, 2014 date and authorizes DHS and county agencies to collect only the amount MA paid for only long term services and no other services, including those provided prior to January 1, 2014. The bill has had its second reading in the House and has been referred to the chief clerk for comparison with the Senate language.
Senate approves bill to regulate auto renewal of consumer contracts
The Senate approved a bipartisan bill this week to regulate landscape application contracts by removing the requirement that the contracts be in writing but requires the commercial application company to provide annual written notice to the customer of the customer’s ability to cancel or discontinue the agreement at any time.
An amendment was adopted to include regulations for automatic renewal of consumer contracts. The amendment provides guidelines for sellers to point out automatic renewal provisions in contracts and to provide consumers with written notice of the contract renewal date within 60 days of the cancellation deadline. The amendment also allows consumers to cancel the automatic renewal of the contract, with no penalty, at any point prior to the renewal date.
Notice: Road Closures
Residents of Senate District 36 please be aware of the following road construction. From May 8th to June 12th West bound I-94 to West bound I-394 will be reduced to a single lane. The I-394 high occupancy vehicle reversible Lane will be used for all motorists traveling from west bound I-94 to west bound I-394 or to Hwy 100.
During that time please also note that Minneapolis traffic to west bound I-394 will use the west bound I-394 general purpose lanes. During this time, the I-394 Reversible Lanes will be closed to east bound I-394 and Hwy 100 to east bound I-94 or to downtown Minneapolis traffic. All east bound I-394 and Hwy 100 traffic will be on the general purpose lanes.
Also please be aware that at 8 p.m. Fri, May 5th until 5 a.m. Mon, May 8th Hwy 252 will be reduced to a single lane between I-694 to I-94
If you want to learn more and see maps of the road construction. You can click the following link:http://www.dot.state.mn.us/metro/projects/i94brooklyncntr/
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