After a dramatic November general election, the Minnesota Legislature convened the 2013 session this week with the DFL party firmly in control of state government for the first time in 22 years.
The Minnesota DFL Party now controls both bodies of the legislature. The DFL holds a 73-61 majority in the Minnesota House and a 39-28 majority in the Minnesota Senate. In addition to holding both bodies of the legislature, the DFL also controls all statewide constitutional offices, including governor.
The 2012 general election produced huge turnover in both the House and Senate. Sixty-two new legislators will arrive in St. Paul this week—42 in the House and 20 in the Senate. Since the 2010 general election that swept Republicans into the majority of both the House and the Senate, well over half of the legislature now consists of representatives and senators with two years or less of experience.
New majorities also will bring significant change to the makeup of both bodies of the legislature. The new majorities will be led by Representative Paul Thissen of Minneapolis, who will be the new Speaker of the House, and Senator Tom Bakk of Cook, the Majority Leader of the Senate. The entire committee structure (see link below) of both the House and the Senate has also been revamped, with DFLers taking over the gavels of each of the committees and most committees being repopulated with many new members.
The first few days of the legislative session will get off to a slow start as legislators get acclimated to their new roles and surroundings. Most committee time in the next two weeks will be taken up with informational hearings where legislators will be given primers on policies likely to be taken up by the committee and budget details.
Legislators will also be waiting for two important events to take place before they begin the important work of assembling the state's budget for the next biennium: the release of the state's next budget forecast and the release of Governor Dayton's proposed budget. The Governor is expected to release his budget on January 22. At that time, budget committees will get to work assembling their own budget proposals. We expect legislative leadership to announce a proposed committee deadline calendar in the coming days and that the first committee deadline could be as early as March 15.
Health Insurance Exchange
The DFL sweep of the House and Senate removed any doubt that Minnesota will move forward with development of a state-based Health Insurance Exchange. The Minnesota Management & Budget office is leading a coordinated effort with the Department of Human Services, Commerce and Health to design this new system, with legislation related to implementation expected early in the 2013 session.
While Minnesota's work on this project over the last year has made it a national leader, the remainder of the task is immense and the timetable aggressive. The state must show sufficient progress to the federal government by March, and then the Exchange must be operational by this coming October. The alternative is installation of a federal exchange, which may not offer the necessary flexibility for the state's unique environment.
In addition to numerous technical questions, which range from website design to development of public contact centers, several question marks surround the quantity and quality of potential insurance products within the Exchange. Decisions must also be made about how the Exchange will be governed and financed going forward. Minnesota has already taken in over $100 million in federal government grants that will cover development and operational costs through the end of 2013; the Exchange, however, must be self-sustaining in the future.
Given the number of vital components in flux and the sheer volume of impacted lives (early estimates are that almost 1 in 5 Minnesotans will utilize the Exchange), the new legislature will undoubtedly look to hit the ground running on this issue.
If you would like more information about Minnesota's Health Insurance Exchange, click here.
Despite passage of an historic transportation funding package in 2008, there still exists a gap in funding for roads, bridges and transit of at least $9 billion, based on estimates from the Minnesota Department of Transportation (MnDOT). Over the legislative interim, Governor Dayton has assembled the Transportation Finance Advisory Committee (TFAC) to examine how a lack of funding has inhibited MnDOT from realizing its strategic vision and to recommend new funding alternatives. Additionally, the Minnesota Transportation Alliance has launched an advocacy campaign called Progress in Motion to educate the public and policymakers about the state's lagging transportation funding. Local governments are also pushing for authorization of new revenue mechanisms, such as transportation improvement districts, to fund city streets. However, there appears to be some legislative resistance inside the Senate DFL caucus to Balkanizing transportation revenue.
Between the composition of the new legislature and the push from stakeholders, passing a significant transportation funding package is definitely on the table in 2013. As the legislature convenes this week, it appears that the focus will be on increasing traditional funding sources rather than implementing new forms of taxes or user fees.
Consumer protection issues will certainly move to the forefront with the new DFL majorities. Expect the trial bar to push an aggressive agenda and potentially work to overturn some of the tort reform efforts made over the years. Look for the following:
Overturning portions of the 2003 joint and several liability reforms. Prior to those changes, Minnesota's law was one of the harshest in the nation, attaching joint liability at just 15% fault.
Applicability of waivers of liability, or exculpatory clauses. Currently, Minnesota allows the use and enforceability of waivers for ordinary negligence and the trial attorneys would like to stop that practice.
Changes to workers' compensation dispute resolution.
Despite Deficit, Spending Proposals Rack Up
The recent news of another substantial deficit for the upcoming biennium has not dampened the appetite for new spending. After years of cuts, there is pent up demand for increased funding, particularly in the area of education. The new Democratic majorities are sympathetic to these requests, as many believe the lack of investments in critical areas will cost Minnesota in the long run.
Over the summer, Education Commissioner Brenda Casselius convened a working group on K-12 funding charged with developing recommendations for school finance reform. Comprised of school and community leaders, parents and legislators, the working group recently released its recommendations which call for a $633 million per year increase in funding for K-12 education. Beyond a $1,000 increase in the per-pupil funding formula, the additional dollars would go to funding all day kindergarten and supplementing special education, which the federal government never funded at the level promised when new mandates were enacted under the No Child Left Behind program. The report also recommends undoing the state tax reform of 2001, when the state eliminated its general education levy. The working group believes this has exacerbated regional funding disparities where local communities with a wealthy tax base have passed referenda to increase funding for education while less flush communities have rejected such measures and their schools have fallen behind. This last recommendation will be the most controversial, as realigning funding will create winners and losers and because it runs counter to efforts to reduce the state's reliance on property taxes for funding government.
Elementary and secondary schools are not the only parts of the education spectrum looking for an increase. MinneMinds, a coalition of business leaders and community foundations, is hoping interest will gain steam again with Democrats to put $150 million more per year toward early learners. The group's proposal would help prepare an additional 20,000 low-income 3- and 4-year-olds for school by giving their families about $6,000 per child to send them to qualified programs of their choice. And at the other end of the spectrum, the University of Minnesota is seeking an increase of $91.6 million from the state, with the promise it will provide a tuition freeze for its students.
Regardless of which of these initiatives gain traction, they will likely need new revenue to support them. Increasing taxes while the economy is still so fragile will be a tough pill to swallow, especially for newly elected DFLers from the suburban swing districts, where their constituents tend to be more fiscally moderate and less sympathetic to new taxes.
Committee Roster/Budget Links
State budget forecast