Government Relations and Lobbying Insight: 2012 Election Preview.

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[authors: Paul Cassidy and Amber Backhaus]

Though the top two elections on the ballot are not particularly dramatic, with both President Obama and Sen. Amy Klobuchar holding significant statewide leads, 2012 still brings an intriguing election to Minnesota. The race in the 8th Congressional District has grown into a real fight between Rick Nolan and incumbent Rep. Chip Cravaack, and we're again seeing effort from Democratic groups to try and unseat Rep. Michele Bachmann in the 6th Congressional District. With Minnesota's other federal races relatively devoid of drama, we have not seen as much outside money flowing into the state from either the national parties or outside interest groups compared to some neighboring states. As pleasant as that may make your evening television watching, it does introduce an interesting dynamic into the 201 down-ticket state legislative elections.

Voters will likely judge candidates seeking election to the Minnesota Senate or House in a more local and individual way given the lack of national party spending and relative stability at the top of the ticket. The recent redistricting process should also play a role in that. Minnesota redrew its legislative boundaries to reflect the 2010 census numbers, resulting in many voters seeing familiar names running for new offices, or even two unfamiliar names on their ballot. The impact can most easily be seen in areas of western and northern Minnesota, where some districts have doubled in size, and along major transit corridors between regional population centers, where districts have been condensed due to rapidly growing populations.

There is ongoing debate over what effect the voter ID and gay marriage constitutional amendments will have on voters' choices come Election Day. Democratic operatives continue to state that they feel this will drive turnout among the more liberal and progressive-minded voters, leading to a DFL windfall. Republicans have said that they simply haven't seen much emotion in the field, and voters will focus on issues like jobs and the economy. The jury is out on how many individual races could be affected, but the amendments have to be acknowledged as possible factors in suburban districts and college towns.

What does this all mean for candidates? At the end of the day, it means that in any given contest the candidate who does the best job getting to know his or her constituency by attending forums, getting out in the community and knocking on doors is likely to win. Advertisements, lawn signs and mailers help, but a handshake or two is still the best way to persuade an undecided voter. With all this in mind, it could mean more "split tickets," or voters supporting candidates from both political parties in different races.

With two weeks to go anything could happen, but right now it does not appear that 2012 will be a "wave" election similar to what Democrats saw in 2006 or Republicans experienced in 2010. The state Senate, elected at four-year intervals, remained under DFL control from the mid-1970s until 2010, when Republicans took over. Interestingly, the Minnesota House, elected at two-year intervals, has experienced watershed years only in non-presidential election years during the last few decades.

  • After Reagan's reelection in 1984, the House switched from Republican to DFL control in 1986.
  • After Clinton's reelection in 1996, it switched from DFL to Republican control in 1998.
  • After George W. Bush's reelection in 2004, it switched from Republican to DFL control in 2006.
  • After Obama's election in 2008, it switched from DFL to Republican control in 2010.

That seems to suggest Minnesota voters, unencumbered with presidential propaganda from outside sources, react to political trends rather than start them.

Minnesotans are used to the idea of being a purple state. While reliably blue in presidential races, we have sent both parties to Washington and have seen both parties control our state legislature. Local pundits believe that the Senate stands a greater chance of a power change than does the House. If majority control of the Senate does change, it will only be by one or two seats.

Late Election Night Viewing: Races To Watch

A handful of seats each election cycle decide who obtains the majority in each body of the Minnesota Legislature. Republicans hold a 72-61 seat majority in the House and a 37-29 seat majority in the Senate. Therefore, Democrats need only pick up six seats in the House and only four seats in the Senate.

Redistricting has created numerous fascinating matchups for the 2012 election. There are too many to list here. However, for simple fun—if not outright drama—we have assembled a short list of races to track as we march toward election night. The best place to follow real-time results is at the Minnesota Secretary of State's website. Otherwise, check out your local news source or county government websites for up-to-the-minute information. And if you are interested in results and insight from the presidential election or other races across the country, the two web sites listed below are worth keeping an eye on:

The New York Times FiveThirtyEight blog

Real Clear Politics

Races to Watch

Senate District 44: State Senator Terri Bonoff (DFL) vs. Former State Senator David Gaither (R)
One of the most closely watched—and possibly most expensive—races in this election. Bonoff won this seat in a special election in 2005 in a district considered a Republican safehold. Republicans want it back. Neither candidate will lack resources.

Senate District 49: Rep. Keith Downey vs. Melisa Franzen (DFL)
Edina going to a Democrat? Redistricting has made this ever-changing inner suburb competitive turf for the right Democrat. DFLers think Franzen, a business executive, has the right pedigree. Downey is well known in his home community and has the financial resources and a well-oiled political machine.

Senate District 4: Rep. Kent Eken (DFL) vs. Phil Hansen (R)
Eken has represented a portion of this rural north central district, which leans slightly Democratic, for 10 years. Hansen is a popular Detroit Lakes businessman who starred in the NFL for 11 years. He has proven to be a formidable candidate, putting together an impressive campaign and fund-raising operation.

Senate District 5: State Senator Tom Saxhaug (DFL) vs. State Senator John Carlson (R)
Two incumbents paired against one another in a fickle district—part lakes country, part Iron Range territory. Both candidates are well known in their home communities—Saxhaug in Grand Rapids and Carlson in Bemidji. Both candidates have strong legislative records. The numbers favor the DFL, but Carlson is making this a race. DFL can't afford to lose this one if they have any chance of recapturing the majority.

House District 17B: Rep. Bruce Vogel (R) vs. Mary Sawatzky (DFL)
Republicans were finally able to capture this coveted seat in 2010 when Bruce Vogel defeated 14-year incumbent DFLer Rep. Al Juhnke by a comfortable margin. Sawatzky is a public school teacher who is also the local president of Education Minnesota, the state's largest teacher's union. Redistricting has made this Willmar-area matchup a draw.

House District 5A: Rep. Larry Howes (R) vs. Rep. John Persell (DFL)
Another matchup of current incumbents possessing regional allegiances. Although Persell has represented more of the district the past four years, Howes has been representing the region for 14 years and has held numerous leadership positions within his caucus, most recently chairing the House Capital Investment Committee.

House District 51B: Rep. Doug Wardlow (R) vs. Laurie Halverson (DFL)
The suburb of Eagan seems to have become the bellwether for who takes control of the Minnesota legislature. Most redistricting indices show all of Eagan tilting slightly in the direction of the DFL. Although it would be wise to keep an eye on all of the Eagan races, this race might decide the outcome of the House majority.

House District 14B: Rep. King Banaian (R) vs. Zach Dorholt (DFL)
Banaian won this seat in 2010 by a margin of 13 votes. However, redistricting has made the district a little better for Republicans, but not by much. Dorholt is banking on a strong college voter turnout and dissatisfaction with property tax increases in the district. Independent expenditures from sources outside the district will have a huge impact on the outcome of this race.

Boost For Current Year's Budget, Bearish For the Next Biennium

Last week, Minnesota Management and Budget (MMB) released its October Economic Update, which showed the state received $145 million more than originally forecast for the first quarter of fiscal year 2013. Individual, corporate and sales taxes were all slightly higher than anticipated, accounting for the increase. With fiscal year 2012 closing with a positive variance of $299 million, the state could be showing a surplus of as much as $444 million when the November budget forecast is released on December 5.

Despite having money on the bottom line, policymakers will not be able to recommend these dollars for new spending. State statute requires that any positive budgetary balance announced in the November forecast be first used to repay the school shift that was used to balance the state's budget in 2011. More than $2.4 billion in school aid shifts remain to be repaid, leaving Minnesota with a possible $2 billion deficit going into the next biennium.

Furthermore, the MMB's October update also predicted a much slower rate of growth than one would hope for coming out of a recession. Additionally, any growth in the economy could be jeopardized if Congress and the President fail to reach agreement on the federal budget and significant cuts are instituted, spiraling the country back into recession. Let's keep our fingers crossed that this fiscal cliff can be avoided (as economists are only giving 20% odds that this scenario will be realized).

With so much uncertainty—in both the economic and political worlds—Governor Dayton has begun the process of assembling the fiscal year 2014-2015 budget by giving state agencies less formal instructions. He has asked that the agencies assume a 5% cut in their budgets and that they give him initial recommendations on how to absorb these cuts by November 15. Asking for the recommendations after the November 6 elections removes the opportunity that they can be used as fodder for legislative campaigns in their closing weeks. However, Dayton's continued support for an income tax increase on the wealthiest Minnesotans has still figured into campaign literature attacking some DFL candidates for the legislature.

Beyond advancing a budget proposal for 2013, Dayton has also indicated that he plans to propose a capital improvements package—or bonding bill—in 2013 as a way to stimulate the economy. Typically, bonding bills are the focus of even-year legislative sessions, not budget sessions. His success in securing a bonding package, and a budget that includes any tax increases, will depend largely on the composition of the legislature after Election Day.

Go here to view the MMB's October Economic Update in its entirety.

MN's Health Insurance Exchange

Minnesota's Health Insurance Exchange Task Force has been hard at work developing a framework for a new state-based Exchange in accordance with the federal health reform law. There are many moving parts in this effort, with two particular pieces leading the way:

Changes At the Top
In September, Governor Dayton officially moved responsibility for planning and development of the Health Insurance Exchange from the Department of Commerce (DOC) to MMB. There was significant concern leading up to this move about the state's primary insurance regulator, DOC, playing the lead role in creating what will be a substantial new insurance marketplace that could cover more than one million Minnesotans. While MMB will now lead the project's development, the departments of Commerce, Health and Human Services will continue to be directly involved in the task force process.

Blueprint Submission
By November 16, Minnesota must provide the federal department of Health and Human Services (HHS) with a declaration letter stating its intent to develop a state-based Exchange and a blueprint diagramming the completed and pending technical and policy requirements for 12 distinct policy areas. The state's blueprint will be posted online as it is completed. If you are interested, the most up-to-date materials will be posted here.

It is expected that Minnesota, along with most other states at this time, will be granted "conditional approval" by HHS. Put plainly, conditional approval would mean Minnesota has shown its Exchange is likely to be functional by the time of open enrollment in 2013.

A large number of policy decisions must be made over the next 12 months, including how the Exchange will be paid for, how it will be governed, how individuals will engage with and utilize the Exchange, and how the Exchange will coexist with the current insurance market. The imposed timeline is very aggressive, and the upcoming election could play a role in how this massive project comes together. Stay tuned, more changes and information are certain.