February 19, 2018

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Legislative Session        
Federal Tax Conformity, Possible Budget Surplus, and State Capital Projects Likely To Consume 2018 Minnesota Legislative Session
Minnesota's 2018 legislative session kicks off tomorrow, Tuesday, February 20. This year's short session of about 12 weeks is likely to be dominated with budget items, mainly federal tax conformity and dealing with a potential state budget surplus.

Some version of conformity to the recent federal tax changes will be important to Minnesota's consumers and retailers as a failure to act would result in tax increases and excess funds to the state budget.

While the state budget forecast will not be released until February 28, it is almost certain to be a surplus of hundreds of millions of dollars, creating opportunity for tax relief in a year where the Minnesota House of Representatives is up for election as are statewide officeholders, including the Governor. While both parties are likely to agree to some type of tax relief, there may be stark differences in their approach.

Typically, in the second year of the biennium, one of the regular items for the Legislature is a state bonding or capital projects bill. Building and construction projects of statewide significance will be considered for funding this year, with the amount to borrow to pay for the projects at issue.  The bill typically funds fixes and upgrades related to government facilities, including colleges and universities.

Mandatory adjournment of the Legislature is May 21.

In addition to working on several proactive bills this session, MnRA will monitor bills and help retailers engage with their elected officials.

For members seeking an insiders look at the legislative week, MnRA hosts a weekly 10:00 a.m. Monday conference call. See below for registration instructions.
Legislative Session        
Legislative Update Calls Begin February 26
The Minnesota legislative session kicks off on February 20. For members seeking an insiders look at the legislative week, MnRA hosts a weekly 10:00 a.m. Monday conference call.

This members-only activity takes place each week of legislative session through its conclusion and includes opportunities for retailers to get involved in the policy making process.

There is no cost for these calls and no advance RSVP is required.  Simply dial in for the calls that interest you and work with your schedule. Calls last approximately 30 minutes.

To obtain dial-in information for these calls, register now or contact MnRA at mnra@mnretail.org or call us at (651) 227-6631. Following registration we'll send you a calendar invite with dial-in information.

Session Dynamics          
Tax Changes Are Top Priority As Minnesota Legislature Convenes Tuesday
From the Star Tribune, Jessie Van Berkel, February 17, 2018  
"Minnesota lawmakers will return to St. Paul on Tuesday with a complex to-do list for the short legislative session, with three months to reconfigure the state tax code, decide how much to pay for infrastructure upkeep, and try to improve how sexual harassment is handled at the Capitol.

To check off some of those items, the Republican-led House and Senate will have to find common ground with DFL Gov. Mark Dayton amid election-year politics and following a bruising legal battle. Dayton and GOP leaders spent half of last year fighting in court after the governor vetoed the Legislature's budget. The Legislature sued but the Minnesota Supreme Court ultimately ruled it was within Dayton's power to do so.

That leaves legislators needing to immediately draft a new budget bill to allow them to keep operating. Dayton, in his final year in office, has said he's ready to sign off on a new legislative budget and move on. But in a signal that the process might not be so smooth, some DFLers are suggesting the new legislative budget should be linked with approving new contracts for state employees.

Despite the near certainty of complications, Dayton said he and lawmakers would have to figure out how to work together to adjust the state tax code.

"Everybody in Minnesota has a stake in what we can accomplish this session," Dayton said at an event with the four legislative leaders last week. "We're going to have to work together or we're going to have a stalemate, and Minnesotans will have extremely complicated tax forms to be filling out a year from now."

Senate Majority Leader Paul Gazelka said tax changes are his highest priority this session. Both he and House Speaker Kurt Daudt said they want to realign the state's tax code as closely as possible to the federal code so taxpayers aren't left with confusing paperwork. But simply conforming wholesale to the federal changes would dramatically raise some Minnesotans' taxes, meaning Dayton and lawmakers will have to get creative."

Give Lawmakers $1 Billion To Spend On Construction. Think It'll Be Enough? Too Much?

From the Pioneer Press, Dave Orrick, February 17, 2018

"Lawmakers and Gov. Mark Dayton will most likely take out a massive taxpayer-backed loan this year to fund a pile of construction projects. But how much should the loan be, and which projects should be funded? Spoiler alert: Democrats say it should be bigger than what Republicans say.

Support from both parties is needed to pass a construction spending plan. Both sides agree that money must be spent on infrastructure, ranging from crumbling state buildings to new water-treatment plants.

One wild card: How will President Donald Trump's infrastructure plan progress, and what effects might it have on local needs and wants? Here are some numbers. Watch them grow.

$800 million: This is what Republican leaders have indicated they see as a reasonable target in what will be known around the Capitol as "the bonding bill."

$1 billion: This is roughly the amount lawmakers and Dayton agreed to fund last year. (Normally, a big bonding bill is every other year, but they couldn't agree on one in 2016.) Also, $1 billion has traditionally been seen by both parties as a "limit" for a bonding bill. Dayton's budget commissioner, Myron Frans, says this number is arbitrary and dates back to the 1990s. Adjusted for inflation, it would be about $1.5 billion in today's dollars.

$1.5 billion: This is what Dayton has proposed. However, his proposal was limited to two classes of projects: roughly $1 billion for state projects and about $500 million for infrastructure owned by the University of Minnesota and the Minnesota State college system. Nothing from the wish lists of local governments."

Lawsuits Loom As Legislative Session Starts
From CBS Minnesota, February 13, 2018 
"Minnesota's legislative leaders are heading back to the Capitol soon and promise they've put months of contentious legal battles behind them.

But it's clear that lingering disputes could still snag a session already constrained by election-year politics when lawmakers return to St. Paul next week. Gov. Mark Dayton and the Legislature's top Republicans and Democrats discussed the upcoming session on Tuesday.

Another lawsuit against GOP Sen. Michelle Fischbach's dual role as lieutenant governor looms large. Fischbach is trying to maintain her Senate seat and the GOP's one-seat majority but Democrats argue she must leave the Senate.

A Ramsey County judge dismissed an earlier lawsuit Monday. But Republican Senate Majority Leader Paul Gazelka expects another legal challenge. He warns Fischbach's removal could hinder legislative activity."

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Minnesota Retailers Associaiton
400 Robert Street North, suite 1540
St. Paul, MN 55101
Tel. (651) 227-6631 - mnretail.org - mnra@mnretail.org