2016 Minnesota Legislative Wrap-Up

Minnesota 2016 Legislative Wrap-up

By Richard Forschler and Sonnie Elliott, Faegre Baker Daniels

This was the shortest Minnesota Legislative session in recent history, lasting a mere 77 days from March 8, 2016, to May 23, 2016. It produced a hectic pace which ended with mixed results. As lawmakers headed into the session, there were four generally recognized priorities to be completed:

·         Bonding (Capital Budget)

·         Supplemental spending

·         Omnibus Tax Bill

·         Comprehensive transportation and transit funding package

In 2015, the House and Senate could not reach an agreement on either an Omnibus Tax Bill or a comprehensive transportation and transit package. Legislative leaders left these conference committees open hoping an agreement could be reached this session.

Prior to adjournment, the Legislature adopted a supplemental appropriations bill and the Omnibus Tax Bill. No agreement was reached on transportation funding or bonding. Governor Mark Dayton is reviewing the Supplemental Appropriation and Omnibus Tax bills. He will decide whether to sign or veto these bills in the next few days. The Governor is also considering calling a special session to deal with unresolved issues.

Bonding

Capital investment bills are usually passed in the even year of a biennium, but not yet this year. Early in session, the Governor proposed $1.4 billion for bonding projects. The Senate plan, released in early May, totaled approximately $1.5 billion. The House did not release a bonding proposal until the last week of session, when it proposed a bill of $800 million. Both the House and Senate bills failed floor votes, lacking the needed 3/5th majority of members to pass. Regardless, a conference committee was established to negotiate a compromise based on the failed proposals.

During the final days of session, House and Senate leaders negotiated a $1.1 billion package which included almost $700 million in transportation projects. There were no transit projects authorized. This proposal was released to the public 30 minutes before the Legislature was constitutionally prohibited from passing legislation. The House passed this proposal with 15 minutes to spare. The Senate added an amendment allowing Hennepin County to fund the remaining local share of the Southwest Light Rail line. The House, whose majority has consistently opposed Southwest, adjourned sine die before the amended version was returned to it.

Unless Governor Dayton calls a special session, there will be no 2016 Bonding bill. The Governor is currently undecided on whether to do so.

Supplemental Budget

With a projected $900 million surplus, House and Senate leaders set targets for additional spending. The Senate DFL majority compiled a $454 million bill that included funding for the Governor's priority of a voluntary preschool program for four-year-olds. The House Republicans set a target of $0. The House used a projected surplus through accelerated loan repayments in the K.12 budget to allow for some additional spending.

The final bill (H.F. 2749) included $182 million in new spending. Of the total, $35 million funded the state's broadband initiatives; $35 million was appropriated for racial and economic equity programs; and $25 million was provided for a voluntary pre-kindergarten pilot program for four-year-olds.

Taxes

The Omnibus Tax Bill from 2015 was carried over into the 2016 session. Both the House and Senate tax committees took action on a few new provisions which were debated in the existing conference committee. After negotiations among the Governor, Senate Majority Leader Bakk and House Speaker Daudt, a $259 million bill was agreed to (H.F.848).

Provisions in the final tax bill included:

·         Federal tax conformity

·         A reduction in commercial/industrial property taxes paid to the state provided by exempting the first $100,000 of property value

·         A property tax exemption for a Major League Soccer Stadium in St. Paul

·         A Working Family Tax Credit program

·         A credit for student loan debt payments

·         Credits and exemptions for contributions to college savings plans

·         Amendments to the factors used to determine residency

Paid Family Leave

The Senate tax proposal included a Paid Family Leave program, authored by Sen. Katie Sieben (DFL-Newport). This provision was not included in the final tax bill. The program would have charged employers and employees to support a fund that would provide a partial wage replacement for up to 12 weeks annually for parents bonding with newborn children or caring for an ailing family member.

Transportation

Negotiations again failed to produce a comprehensive transportation and transit package this session. The Governor and the Senate DFL Majority continued to advocate for increases in registration fees and the gas tax in their proposals, as well as a sales tax increase in the Metropolitan area to fund transit. The House Republican majority continued to advocate using General Fund revenue in the form of existing sales tax revenue on auto parts and leased motor vehicles to fund roads and bridges. They did not propose any funding increases for transit.

In the final week of session, there was some movement toward a compromise on road and bridge funding. Governor Dayton proposed two options to legislative leadership, agreeing to use some of the General Fund revenue while House Republican leadership proposed a registration reform proposal that raised approximately $100 million.

However, because significant differences remained on road and bridge funding and there appeared to be no meaningful movement on transit funding, hopes for a comprehensive package died in the final 36 hours of the session.

As a last ditch effort to show progress on road and bridge funding, House Republican leadership proposed $300 million in one-time funding be included in the bonding bill. This had the effect of transferring the debate between House and Senate leadership over transportation and transit to the bonding bill, leading to the implosion of that bill in the session's final minutes.

Real ID

After work in both 2015 and 2016 to put together Real ID legislation that would allow compliance with federal driver's license requirements, agreement could not be reached between the House and Senate regarding the final bill, S.F.3589. Sticking points were data privacy concerns, especially among House Republicans, as well as driver's licenses for illegal immigrants.

Election Preview

This November, the entire Minnesota Legislature (201 seats) stands for election. Also on the ballot will be the eight seats in the U.S. House of Representatives and the Presidential election. This is the first election in several cycles where there are no statewide candidates on the ballot.

The Minnesota Republican Party held its state endorsing convention on May 20-21, 2016, the last weekend of the legislative session. The Democratic-Farmer-Labor Party is hosting its convention on June 4, 2016. The primary election will be on August 9, 2016, and the general election will be November 8, 2016.

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