Updates from the Government Relations team are sent periodically during the legislative session.                                                  
Legislative Update - April 20, 2017

Higher Education Conference Committee reviews bills

The ten-member Higher Education Conference Committee met Wednesday evening to review the House and Senate bills. Research and Fiscal staff presented the similarities and differences in the two bills. The committee will meet again early next week to hear public testimony.

The documents listed below were used by committee members:

What is a Conference Committee?

Because language in the House version differs from the Senate version in each of these omnibus bills, a new panel with up to 10 legislators, usually representing both parties, must determine what a final bill will look like before each chamber approves it and sends it to the governor. In the next few weeks, the legislative calendar is likely to be brimming with conference committees.

A conference committee consists of three to five members from each chamber – often called “conferees” – tasked with reconciling differences between House and Senate proposed legislation. It’s another round of committee-like work, with additional chances for outside input as legislators head into the session’s homestretch.

Joint rules outline what the conference committees can and can’t do. For instance, conference committees can’t schedule meetings between midnight and 7 a.m., but can vote to extend their meetings past midnight; or chairs must rotate between representatives and senators every calendar day.

Mid-Session update on other bills

Below is a summary of other major bills the legislature is working on this session.

Taxes
The $1.35 billion tax bill passed by the Minnesota House of Representatives includes:
  • Reducing the tax on Social Security
  • Tax credits for student loan payments and families saving for college using 529 Savings Plans
  • Reducing the tax burden on farmers and agriculture land owners for school bond referendums
  • Eliminating the automatic increase on the cigarette tax
  • Modifying the child and dependent care credit
  • Reducing the business property tax burden
  • Conforming the estate tax with federal law
  • Lowering the property tax burden for homeowners and renters
  • Maintaining Local Government Aid and County Program Aid at current level

The $900 million tax bill passed by the Senate includes:

  • Cutting the lowest income tax rate
  • Phasing-out the tax on Social Security
  • A tax credit for donations made to entities that fund private school scholarships
  • Reducing the business property tax burden
  • A tax credit for student loan payments
  • Lowering the tax burden on farmers and agriculture land owners for school bond referendums
  • Changing the Section 179 depreciation schedule for small businesses purchasing new equipment
  • Conforming the estate tax with federal law

Governor Dayton has proposed a $300 million tax relief package with a focus on expanding the working family tax credit, property tax relief for farmers, and increasing Local Government Aid and County Program Aid. Department of Revenue Commissioner Cynthia Bauerly has expressed disappointment that the governor's top tax initiatives were not sufficiently addressed in either bill.

E-12
Both the House and Senate have budgeted for increased education spending in the next biennium - $273 million and $300 million respectively, the largest portion of which will fund an increase in the per pupil funding formula.

The House has proposed an increase of 1.25% and the Senate has increased the formula by 1.5%. While the governor has criticized these increases as being inadequate toward meeting school district needs, an increase to the formula is nevertheless a shared priority among all stakeholders at the Capitol. Governor Dayton proposed more than $700 million in new education spending including $371 to support a 2% formula increase.

Prekindergarten funding has long been a point of contention between Republicans and the Governor. This year, the House proposal reallocates funding from voluntary public pre-k programs in favor of more funding for early learning scholarships. Governor Dayton has said he would veto the House bill in its current form based on this provision.

It was clear during Senate floor debate that the senators know this bill is likely to change substantially throughout negotiations. Senate Majority Leader Paul Gazelka (R-Nisswa) wrapped up discussion with a strong signal toward compromise. He said members who have raised concerns should be pleased with the final product when it is returned to the floor.

House Education Chair Representative Jenifer Loon has also said she thinks the House Republicans can come to an agreement with the governor on education spending.

Department of Education Commissioner Brenda Cassellius has cited increased student support services, a renewed commitment to supporting American Indian students, and prekindergarten as among the governor’s top priorities for negotiations.

Health & Human Services
Both the House and Senate have proposed substantial funding reductions to the state’s health and human services budget, which represents one of the largest pieces of the state budget. The House budget would cut $622 million from current spending and the Senate’s proposal would cut $335 million. However, the Senate budget cuts are largely shifts – pushing costs to the next fiscal year instead of reducing state spending. In contrast, the governor’s proposal includes more than $300 million in new spending on HHS.

The House proposal also eliminates MNsure, the state’s healthcare exchange, and transitions to the federal system. The Senate proposal keeps MNsure in place.

Despite the budget targets, both bodies were able to invest in some new programs like school-linked mental health grants and nurse home visiting.

The proposals that were omitted from the bill, however, have been most criticized. Neither proposal includes funding for Minnesota's Security Hospital in St. Peter which requested $25 million this year to hire more staff and ensure worker and client safety. An operating adjustment for the Department of Human Services was also left out of both bills, with the Senate going a step beyond to include a 7% reduction for the Central Office and Direct Care and Treatment Operations.

Commissioner of Health Ed Ehlinger and Commissioner of Human Services Emily Piper have raised their concerns with the bills going into conference committee. In a letter to legislative leaders, Governor Dayton said he will not negotiate on cuts to agency operating budgets until legislators name the programs or services they propose that the agency stop providing. 

Public Safety & Judiciary
The Minnesota House passed a $2.3 billion public safety bill to fund the budgets of the public safety and corrections departments as well as the judicial branch. The bill allocates new money to local law enforcement agencies to help them pay for officers’ training costs, to help officers in dealing with suicidal and mentally disturbed individuals, and allows the Bureau of Criminal Apprehension to replace an outdated predatory offender registry.

The most notable policy provision within the bill, which was largely opposed by Democrats, is increased penalties for those who choose to participate in unlawful assemblies. Governor Dayton has expressed openness to supporting increased penalties for those who participate in unlawful assemblies on freeways.

The Minnesota Senate passed a $2.23 billion public safety bill. New funding in the bill includes measures to strengthen supervision of offenders on probation and more analysts for the Bureau of Criminal Apprehension to assist in complex narcotics and homicide investigations.

Corrections Commissioner Tom Roy has expressed concern about inadequate funding levels for the Department of Corrections and about a provision in the House bill that asks the state to purchase or lease the Prairie Correctional Facility, a privately-owned prison building in Appleton.

State Government Finance & Veterans
The Minnesota House passed a $944 million package to fund state government agencies and offices. The legislation calls for a $430 reduction in state spending.

It provides “lights on” funding in case a statement budget isn’t in place before July 1, requires the Office of Management and Budget to reduce spending of executive agencies and constitutional offices by $4.3 million, establishes a non-partisan Legislative Budget Office, eliminates public funding subsidies for campaigns for state office, and repeals the State Auditor Enterprise Fund.

The bill also provides housing for homeless veterans, allocates funding for training for court officials dealing with veterans suffering from PTSD, and expands the GI Bill to include apprenticeships and on-the-jobs training.

The Minnesota Senate passed an $802 million package for state government operations. It contains language that prevents state agencies from bypassing the legislature on rule-making, creates an advisory taskforce to make recommendations for improving the fiscal note process, and re-directs revenue from the State Auditor Enterprise fund to the general fund.

The legislation also funds the Department of Military Affairs and the Department of Veterans Affairs and increases funding for the Minnesota National Guard’s enlistment incentive program to provide college tuition reimbursement for enlistees.

Revenue Commissioner Cynthia Bauerly has been critical of both chambers’ plans. She has said publicly that departments would be forced to reduce services and eliminate positions. Bauerly also opposes a provision in the House bill that would require the Department of Revenue to develop a free online filing system because it doesn’t have sufficient funding.

Environment & Natural Resources
The House and Senate passed their environment bills out of their respective bodies earlier this month. Both bills contain several provisions that may trigger a gubernatorial veto including language to delay and change a buffer law passed several years ago – considered one of Governor Dayton’s signature achievements. The governor has already warned that he may veto the final bill if the buffer language remains in the bill after conference committee.

The bills also contain less funding than requested for the Department of Natural Resources, the Minnesota Pollution Control Agency, and the Board of Soil and Water Resources. The DNR asked for fee increases for hunting and fishing licenses, which have recently stagnated, but both bodies opted to keep fee increases out of their bills. The Environmental Quality Board’s future also at stake this session as the House and Senate omnibus bills contain language to reshape the board’s composition and remove a significant portion of its authority.

Jobs
The House and Senate have roughly similar budget targets in this area with the House allowing for a $10.8 million base increase and the Senate a $9.4 million increase.

Broadband funding is an essential and often contentious point of debate in the jobs bill. Governor Dayton proposed a $60 million investment in the state’s border-to-border broadband grant program while the Senate spends $20 million and the House proposed $7 million.

The House increased funding for DEED and the Minnesota Housing Finance Agency, but cut funding for the Department of Commerce and the Public Utilities Commission. The House companion is not without controversial provisions. During floor debate, an amendment was adopted to ease the process for Enbridge to build a pipeline in Northern Minnesota. Governor Dayton has already said he would veto the final bill if it had any language that would allow Enbridge to bypass current regulations.

Transportation
While there continues to be a shared recognition of the substantial and ongoing need for additional transportation funding, the source of the revenue remains a major point of disagreement. As he has done in the past, Governor Dayton proposed a 16 cents-per-gallon increase in the state’s gas tax and an increase in vehicle registration fees. The legislature, however, is focused on using current revenue.

The House and Senate transportation bills both redirect automobile-related fees and taxes from the general fund into transportation funding.One place of agreement is the opportunity for efficiencies within the Department of Transportation. All three proposals call on the agency to find 15% savings within its budget.

Perhaps one of the largest points of contention comes from the House proposal to cut the Metropolitan Council’s base funding for transit by $53 million, which Met Council officials have said could lead to a 40% reduction in service. If this language makes it into the conference report, it may lead to a veto from Governor Dayton.

Agriculture
In an uncharacteristic move this session, the House split its agriculture omnibus initiatives into separate finance and policy bills. The finance bill, which appropriates $118 million for the biennium, passed unanimously while the policy bill was approved 109-25.

The Senate has a similar bill concerning agriculture finance and policy and housing finance, dedicating about $200 million in spending over the biennium, about $100 million for agriculture incentives and $100 million to carry on housing programs. Housing finance funding is contained in the House Jobs Omnibus bill.

While not all of Dayton’s funding requests ended up in the finance bills, a fair amount of requests were included. The administration’s concerns are few, but include the bill’s lack of funding for the Department of Agriculture’s operating expenses and repurposing of funds from the Ag Emergency account. Dayton has not said whether or not he will veto the bill.

Legacy
In 2008, Minnesota voters passed a constitutional amendment that increased the sales tax by three-eighths of one percent and dedicated it to four funds: clean water, outdoor heritage, arts and cultural heritage, and parks and trails. The Legacy bill allocates these constitutionally dedicated funds. Since money allocated for the bill doesn’t compete for funding with other budget areas, the Legacy bill is often less contentious among legislators when it’s brought up on the floor.

The Legacy bill is the only finance bill that has not moved off of both floors. The Senate heard the bill on Wednesday in Senate Finance and will likely be taken up on the floor later in the week. 

The House passed their over $500 million bill unanimously before the legislative break. Some Democrats mentioned concerns around funding for clean water projects. Specifically, there are concerns over continued use of the Clean Water Fund to support implementation of the 2015 buffer regulations. While the governor has not taken a formal position on the bill, several commissioners have expressed their shared concerns regarding the Clean Water Fund.
This week at the Capitol .

Thursday, April 20

10:00 a.m.
House in Session

11:00 a.m.
Senate in Session

1:00 p.m.
Conference Committee on Omnibus Education Finance bill
200 State Office Building

1:00 p.m.
Conference Committee on Omnibus Environment and Natural Resources bill
5 State Office Building

2:00 p.m.
Conference Committee on Omnibus Public Safety and Security bill
G-3 State Capitol

2:30 p.m.
Conference Committee on Omnibus Transportation bill
120 State Capitol

Friday, April 21

10:00 a.m.
Conference Committee on Omnibus State Government bill
G-23 State Capitol

10:00 a.m.
Conference Committee on Omnibus Public Safety and Security bill
G-3 State Capitol

Important Links:

  • Most recent bill introductions related to higher education (compiled by Government Relations team) can be found HERE (updated 4/19/17)
  • Committee schedules can be found HERE
  • Many committee hearings and floor sessions are streamed live via the web or broadcast on television. More information and a schedule can be found HERE

Government Relations team:

Jaime Simonsen – Jaime.simonsen@minnstate,edu
Bernie Omann – Bernie.omann@minnstate,edu
Jim Grathwol – jim.grathwol@minnstate.edu