Legislative Update: Miles Apart

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

There’s less than two weeks to go in the 2016 legislative session and Monday looks to be a busy day in the House. The body is to meet in session at 4 p.m. with eight bills cued up for action, including the proposed appropriation of Outdoor Heritage Fund dollars. The day’s floor session will likely coincide with a break for the Supplemental Budget Bill Conference Committee, which is scheduled to convene at 1 p.m. to start reviewing the side by side comparisons available here: https://www.revisor.mn.gov/side_by_sides/ within the different areas of proposed state funding; that’s expected to continue in the evening.

Omnibus Transportation

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

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

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

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

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

Bonding Bill

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

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

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

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

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

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

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

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

Taxes

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

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

MNsure

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

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

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

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