May 27, 2019
While Concerns With Process Remain, The Legislature Balanced Interests As Designed In Our System
From MnRA President Bruce Nustad

As the dust settles on the 2019 legislative session that wrapped up Saturday morning following a 21 hour marathon special session, Minnesotans will spend the next few weeks hearing about what passed and what didn't. At MnRA we will report session outcomes to retailers, beginning tomorrow with our Retail At The Capitol conference call at 10:00 a.m., followed by a Session Outcomes report and a legislative wrap up golf event June 6 (there is still time to register for Topgolf!).

The good news from the Legislature this year is their work to fund government for the next two years is done! It took a one day special session that most of us would call overtime, but it's done. To see what passed in the final budget bills impacting retailers and consumers in Minnesota take a look at our Retail At The Capitol e-mail that went out to members 45 minutes after special session wrapped up Saturday.

One of the criticisms of the Legislature this year relates to the process used near the end to get to compromise positions on the budget bills. With a new Governor and the Minnesota House having a DFL majority, and the Senate with a Republican majority, there were stark differences (admittedly an understatement) in the budget bills offered by the House and Senate. The process used to reconcile those differences included closed door, non-public meetings between Governor Tim Walz, House Speaker Melissa Hortman, and Senate Majority Leader Paul Gazelka. In the spirit of Game of Thrones, the three parties were referred to by some as "the tribunal" as select legislators met with the three to decide the most difficult budget and policy areas.

These closed door meeting were noticed by those expecting a more transparent process. While that is a legitimate observation, I was reminded of when I worked for the Senate in 1994. On my first day of work, then Secretary of the Senate Patrick Flahaven urged a largely young set of Senate staffers not to be frustrated by the law making process. He described a process that was built to be intentionally slow, deliberate, and designed to bring together all perspectives on proposed policies to produce a compromise. While I doubt he would have endorsed the closed door nature of the process used this session to deliver final outcomes, I can appreciate how the design of our system with different political parties and a separately functioning House, Senate and Governor works to bring compromise.

The end process aside, divided government did produce compromise this session. We ended with a state budget less than what the Governor and House proposed, but more than the Senate put forward. We ended with the enactment of some policy provisions that as representatives of the retail community we are concerned about, however many of the policies we thought went too far didn't become law. In the end, the process produced a compromise budget that balanced out the policy ideas of progressive and conservative legislators.

As we close out the 2019 legislative session and look ahead to 2020 (an election year!), I want to thank Savannah Sepic and Tom Freeman for being the core of our government relations team at the Capitol. This was Savannah's first year in the Minnesota Capitol and I appreciated the perspective she brought and the relationships she built. Tom brought experience and a deep understanding of the politics and process to our work representing retailers. And a special thank you to MnRA Board Chair Emily McGann and Government Relations Chair Tracey Hester for their guidance and review throughout the session. Emily and Tracey, along with our Board of Directors, legislative committee, retailers who testified on various issues, and members across the state are the most important asset for our work.

I look forward to discussing the results of the session with you at our June 6 golf event, and later this summer at our Retail+Policy Dinner! Keep your eye out for the Retail+Policy Dinner date and location in the coming weeks.

Thank you for the opportunity to be your voice during the 2019 legislative session!
Special Session Adjourns After Minnesota Legislature Passes $48.3 Billion Budget
From MinnPost, Peter Callaghan, May 25, 2019

One last day of speeches, one last day of votes, one last day of posturing and politics and even a bit of cynicism, and the 2019 session of the Minnesota Legislature was finished and adjourned in a day.

It was just shy of 7 a.m. when the two chambers finished their work, meeting their goal of getting the bill-passing done in a single day, after spending a week working final deals and negotiating details.

The budget will spend $48.3 billion over the next two years, up from the current biennium’s $45.5 billion budget. There will be no general tax increase but there will be a cut in the income tax rate that applies to middle-income earners as well as an enhanced working family tax credit. There will not be a gas tax hike, which had come off the table last week during closed-door talks between DFL Gov. Tim Walz, DFL House Speaker Melissa Hortman and GOP Senate Majority Leader Paul Gazelka.

There will be a continuation of a tax on medical providers that was to expire at years end. That concession by Gazelka was the key to closing the wide gap between the DFL and GOP, and one that allowed the session to end peacefully and more-or-less on time. No lengthy special session was needed. No government shutdown will be triggered.

“This budget will improve the lives of Minnesotans in every corner of the state and I look forward to signing it into law in the coming days,” said Gov. Tim Walz in a statement just after adjournment. “We set out to make investments in education, health care, and community prosperity and that’s exactly what we achieved. Minnesota is showing the rest of the nation that Republicans and Democrats can still find compromise and work together to get things done.”
Slower Tax Refunds And Weather Affect April Retail Sales But Fundamentals 'Remain Positive'
From the National Retail Federation, May 15, 2019  

Retail sales were down 0.2 percent in April seasonally adjusted from March but up 5.2 percent unadjusted year-over-year, the National Retail Federation said today. The numbers exclude automobile dealers, gasoline stations and restaurants.

“Slower tax refunds and weather may have been key factors impacting April’s numbers, but the fundamentals remain positive, particularly in long-term comparisons,” NRF Chief Economic Jack Kleinhenz said, citing flooding in the middle of the country and blizzards and extreme temperature swings elsewhere along with a soft housing market that impacted sales of furniture, appliances and building materials. “Despite there being a lot of volatility in the data from month to month, the long-term comparisons look good and the three-month average in particular is getting stronger. We think we remain on track to meet our projections.”

The shift of Easter and Passover from March to April this year gave less of a month-over-month bump in spending than expected, but contributed to April’s strong year-over-year increase, Kleinhenz said.

As of April, the three-month moving average was up 2.9 percent over the same period a year ago, compared with 2.6 percent in March. April’s results build on gains of 1.1 percent month-over-month and 1 percent year-over-year seen in March.

NRF’s numbers are based on data from the U.S. Census Bureau, which said today that overall April sales – including auto dealers, gas stations and restaurants – were also down 0.2 percent seasonally adjusted from March but were up 3.1 percent unadjusted year-over-year.
Mobile Coupons Drive Customer Loyalty
From the Retail Dive, Lisa Rowan, May 24, 2019  

Forty-one percent of consumers plan to increase their phone or tablet shopping frequency in the next two years, according to BRP's report "The Mobilization of Retail." More than two-thirds (67%) of respondents to the company's online survey to 1,298 consumers said they're more likely to shop with a retailer that has mobile coupons available.

Sixty-four percent of consumers reported choosing a store based on the product information readily available via mobile devices. Item availability, product information topped the list of favorite features, followed customer service, and access to coupons and loyalty programs.

The survey also revealed that only 39% of respondents are comfortable with stores identifying them via their mobile phones when they enter a store. Meanwhile, 61% of retailers surveyed in BRP's recent Unified Commerce Survey reported making plans to use WiFi to identify customers by their mobile phones.
Plans To Charge Fee On Plastic Bags Underway In Minneapolis
From Minnesota Daily, Miguel Octavio, April 22, 2019

Minneapolis is moving ahead with efforts that would require residents pay a fee on paper and plastic bags after previous pushback from the state.

Ward 2 City Council member Cam Gordon announced plans earlier this month to amend the Bring Your Own Bag ordinance, which the city had adopted in 2016 to ban single-use plastic in Minneapolis retailers but was shot down by state lawmakers. To comply with state laws, Gordon will propose an ordinance requiring retailers to charge a 5-cent fee on paper and plastic bags instead.
“The idea is that we start chipping away at this plastic waste that seems to be mounting up so much,” Gordon said.

Minneapolis backed off from the Bring Your Own Bag Ordinance one day before it was expected to go into effect after former Gov. Mark Dayton signed a budget bill forbidding any city to enact a ban on carryout bags. Gordon said the Legislature passed the bill to make bagging policies more consistent statewide after some businesses and shoppers felt their choices should not be limited.
Gordon introduced a similar measure establishing a bag fee in 2017, but the ordinance was tabled and never voted upon.

The ordinance is meant to encourage the use of reusable bags and reduce waste and processing issues at recycling facilities, Gordon said. A survey is currently being distributed to gather resident input.
“Part of why it got tabled in 2017 was there was staff direction asking for more community engagement in the process,” said Gordon. “Early this year, I decided we should pick this up and do it again.”