2015 Minnesota Legislative Session Preview

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With the 2014 elections in the rearview mirror, the focus has turned to the fast-approaching 2015 legislative session.  For the first time since 1985, Democrats control both the Governor’s Office and the Senate, while the Republicans control the House of Representatives.  Democrats pursued an aggressive agenda while controlling all of state government during the 2013 and 2014 sessions including balancing the budget through tax increases and budget cuts, additional education investments, MNsure legislation, all-day kindergarten, and a minimum wage increase.  Continuing such an agenda will not be possible with the Republican takeover of the House.  However, both Democratic and Republican legislative leaders have struck an optimistic tone that they will be able to find common ground, as long as the other party is willing to compromise.  Here is a preview of the hot topics that will take center stage during the 2015 legislative session. 

Biennial Budget – Passing a budget is the number-one job for state lawmakers during the 2015 session.  As a result, this issue will define the session.  Like most states, Minnesota operates on a biennial budget.  The state fiscal year runs from July 1- June 30.  The last six months of the fiscal year of the biennial budget take place during the session immediately following the elections, thereby providing the newly elected policymakers one full legislative session to craft a new two-year budget for the state.  If they aren’t successful in passing a budget, no law exists appropriating any money and the government shuts down. 

Minnesota’s finance agency, Minnesota Management and Budget, issues a revenue forecast in November and February of each year, which guides legislators in their budget decision-making.  The most recent budget forecast was released on December 4, which showed that Minnesota will have a $1.037 billion budget surplus for the upcoming biennium.  However, a portion of that money is directed to the rainy-day fund by law and the balance of leftover cash from the current budget will pay for inflationary increases in current spending.  This means there isn’t a lot of money left on the bottom line for legislators to spend without raising revenue.

The Governor will use the most recent forecast to build his budget, which he will submit to the legislature on January 27, 2015.  He has indicated that his budget will include investments in education, child care tax credits, and transportation funding.  The Governor has said that he does not believe there is a need for a general tax increase.  This should bode well for the Republican House.  The Speaker-designate, Kurt Daudt, has said that there is no appetite for a tax increase among his members and that they will focus on tax relief, long-term care and nursing homes, reducing the regulatory burden on individuals and businesses, and transportation investments. 

At the end of the day, there is not a huge budget windfall for legislators to spend.  However, the simple fact that there is money on the bottom line makes a budget stalemate and a government shutdown unlikely. 

Transportation – Next to the budget, transportation will be the big story of the 2015 session.   The Governor and House and Senate leadership all agree that it’s a priority and that something must be done in the upcoming session; it’s how to get it done that’s at issue.  Transportation Commissioner Charlie Zelle has stated that the state needs $6.5 billion over ten years to truly address the state’s transportation needs.  He suggested that the Legislature should establish a dedicated stream of revenue, such as a user fee.  During the 2014 election cycle, Governor Dayton also made transportation an issue and said he was open to a gas tax increase and has stated that he plans to include a major transportation funding package in his budget.  Speaker-designate Daudt has said that legislators first need to look at efficiencies within the Minnesota Department of Transportation before raising taxes. 

The Minnesota Chamber of Commerce has also cited transportation as a top priority, however, it stopped short of endorsing a gas tax increase.  The Chamber will be an important player in this debate. The Chamber's support for a gas tax increase was crucial to passage of the last major transportation funding package in 2008. 

There will be three main facets to the transportation debate: whether or not to raise taxes or fees, the breakdown of funding between the metro and greater Minnesota, and how much funding will be dedicated to transit versus roads and bridges. 

Education – The Governor has cited education as one of his top priorities for the 2015 session.  He will push for additional per pupil funding, early childhood funding for low-income families, and more counselors for schools.  The GOP has cited closing the achievement gap as a top priority and Republican leaders singled out teacher tenure as an issue they’re interested in working on.   Metro versus Greater Minnesota education funding will also be at issue during the education debate. 

Taxes – There does not appear to be an appetite on the part of the Governor or on the part of the legislature to pursue a large-scale tax increase.  As noted earlier, any revenue raised during this session would likely be a dedicated fund for a specific need, such as transportation infrastructure.  Even that, however, would have to pass a Republican House that has signaled very little appetite for any kind of tax increase.

MNsure – While MNsure got off to a rocky start last year, the current open enrollment period has been largely glitch-free. To date, tens of thousands have enrolled through MNsure in the first six weeks of the open enrollment period marking an operational turnaround over the past several months.  Republicans have indicated that they intend to seek some changes to the program, including its funding structure and governing board powers and makeup.  They will likely face significant opposition from DFLers in the Senate.

Greater Minnesota – While not a specific legislative proposal, the House GOP has indicated through words and deeds that Greater Minnesota will be a major theme of their agenda for the next biennium. Ten of the 11 seats the GOP won in the 2014 election to take the House majority were from Greater Minnesota.  The Greater Minnesota message will permeate many of the issues that the House GOP addresses.

Online Lottery Tickets – The Minnesota Lottery found themselves in legislative hot water last session when they implemented the online sale of lottery tickets without the approval of the legislature.  A bill banning the lottery from issuing such tickets passed overwhelmingly at the end of the last session but was vetoed by the Governor.  The House has indicated that they will move on this quickly in 2015.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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