May 4 - 2018

Legislators made some significantly notable progress this week as we move closer and closer to the end of session: the  Senate passed their Tax Bill; the  House passed and combined their budget bills into one and they also  released their Bonding bill.  However, there is still much to accomplish in the remaining 15 days of session, with few clear paths to agreement. 

Continue reading to learn where things sit right now and what may or may not still get done. The next two weeks will determine whether this session ends with a successful compromise or blows up .
Tax Bill
As we've been saying all session, the Tax bill is likely going to be the most significant piece of the legislative agenda. As a result of the Federal Tax overhaul last December, there is motivation an all sides to pass a bill that puts the Minnesota tax system more in line with the feds. If nothing is done about this, many Minnesotans will see significant tax increases and the process for filing next year will extremely cumbersome ... at best.  

The House, Senate and Governor have all now released their tax proposals and the Senate bill passed off the floor on Thursday. One of the most contentious pieces was a provision that would trigger automatic income tax reductions if a surplus were to be forecast in November. DFL Legislators and the took aim at the provision which was, authored by Tax Chair Sen Chamberlain, saying it could create unintended budget shortfalls in the future. Chamberlain was efficient in his defense of the bill during debate. 

For a more comprehensive overview of the three proposals check out this Minnpost article written by Briana Biersbach:   Tax Plans Compared
Last week the Senate passed their full budget proposal in one, combined omnibus bill. The house took up various smaller spending bills over the course of this week, but then yesterday they debated the final sections and combined them into one omnibus spending bill to match up with the Senate bill. 

The House and Senate bills - not surprisingly - contain significant differences on how to spend the projected $329 million surplus. Additionally, both bills have a significant number of policy provisions the Governor has already said he will not accept.

In addition to the legislative bodies finalizing their budget plans, the Governor also interjected a new budget proposal; with reports that many schools districts are facing significant layoffs, Governor Dayton is calling for additional money for schools, over and above what was in his original funding proposal. Education Finance chairs in both bodies questioned the need for these funds and cited their spending bills had already bees passed when Dayton's proposal was released.  

Typically in odd-numbered years the legislature passes a state budget and in even- numbered years they pass a boding bill for building infrastructure projects across the state. Earlier this year the Governor released his list of projects, which totaled $1.5 Billion. This week t he House released their bonding proposal for significantly less money at $825 million. The Senate has not released their bill yet but the speculation is that it will come out early next week and will have a similar price tag to that of the House, which would put a significant gap between the legislature and the Governor.  

It is unclear if there are enough votes in either body to pass these bills. Bonding bills need a 3/5 majority to pass which means 41 votes in the Senate and 82 in the house. Democrats typically support larger bonding bills and I'm not sure there will be enough DFLers voting green ("yes") at the currently proposed spending level. 

What's Next?

With 15 days left in session, both the tax and spending  bills are ready for Conference Committee. T he Governor and House have released bonding bills with Senate's coming out next week.

So, next week will largely be spent comparing the House and Senate bills in Conference  Committee ... and don't be surprised  if we see informal working groups created for some of the more complicated budget areas (Health and Education, for example ).  Tax Conference Committee will also begin going over the differences in their legislative proposals.  

Given the short time frame ahead, I expect
there will be many  behind the scenes discussions  taking place to determine what the Governor  would be willing to sign, on all fronts.  I would not be surprised to see the rhetoric ramp up this week also. 

We have already blown past some of the Governor's self imposed deadlines and we could see more such deadlines declared next week, but  I will be surprised if any major concessions or agreements are reached by next Friday.  IF final compromise is to happen on any major provisions it will  likely happen next weekend and early that following week. 

I am sure the legislative leaders will try hard to reach a deal, but as a great philosopher once said, "Do ... or do not. There is no try."

Thank you for reading,

Cap O'Rourke

Cap O'Rourke
Lobbyist / President
O'Rourke Strategic Consulting

Cap O'Rourke | (612) 483-1863 | |
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