3 Vetoes; 2 Hearing Rooms; 1 Month ‘Til Shutdown

by Winthrop & Weinstine, P.A.


Gov. Mark Dayton vetoed two more budget bills (he vetoed E-12 last week) over the last weekend. The latest vetoes mean there are even more issues for legislators and the Governor to resolve in a Special Session. No dates have yet been scheduled.

On Saturday, the Governor vetoed the omnibus agriculture, environment and natural resources bill. Environmentalists had called on the Governor to do so because of the elimination of a citizens’ board that oversees certain decisions at the Minnesota Pollution Control Agency.  However, the bill also included something Dayton wanted regarding water quality: a requirement that farmers maintain buffers between cropland and waterways.

Rep. Denny McNamara (R-Hastings) said the veto affects avian flu funding, extended unemployment benefits, state parks and the Minnesota Zoo.

Dayton also vetoed the omnibus jobs and energy bill to fund the Department of Commerce, the Bureau of Mediation Services and Minnesota Workers’ Compensation Court of Appeals. He criticized the inadequate funding for broadband and also the amount budgeted for the state’s Olmstead Plan efforts to address the needs of community living for people with disabilities. In his veto letter, Dayton also said he objected to the “changes to Minnesota’s net metering laws that will disincentivize the use of wind and solar power.”

House Speaker Kurt Daudt (R-Crown) said he was very disappointed with all three vetoes.

Dayton and Daudt met privately Tuesday and Wednesday to discuss the coming special legislative session, but a deal on the budget bills has not been reached. Agreement on provisions of the three vetoed budget bills will have to be reached by June 30 to avoid a partial government shutdown. Minnesota Management and Budget estimates the number of employees who will be laid off on July 1, the start of the Fiscal Year 2016, if agreement is not reached on the three budget bills to be 9,451. Daudt said they’re working for a one-day special session, as soon as possible.

Rep. Pat Garofalo (R-Farmington), Chair Jobs/Energy, said with three budget bills now on the agenda for a special session, the negotiations should not be limited to the Governor and top legislative leaders.

Lawmakers are also expected to take up the bonding bill and legacy bill that failed to pass in time before adjournment.

A tax bill could also be part of the mix. Dayton is proposing a $260 million, one-year income tax cut in exchange for an additional $250 million in education spending, including partial funding for preschool. That’s a bigger increase than Dayton was willing to settle for at the end of the regular session. During his weekend news conference, the Governor said he’s taken back the previous, lower offer, which was made in hopes of avoiding a special session.

Senate Democrats wouldn’t support a tax cut bill in the regular session because House Republicans wouldn’t support their approach to transportation funding, including a gas tax. But Senate Majority Leader Tom Bakk, (DFL-Cook) who also had a private meeting with Dayton, said he could go along with the Governor’s latest offer.

One item that has been decided is the location for the Special Session. It will be held in Rooms 5 and 10 of the State Office Building. Capitol construction and renovation makes that building unavailable for the special session.

E-12 Funding

In anticipation of the upcoming Special Session, lawmakers are laying the ground to position themselves regarding spending priorities on early learning programs.

Prior to meeting with the Governor on Wednesday, Speaker Daudt and several other Republicans met privately with Art Rolnick, a former research director at the Federal Reserve Bank of Minneapolis and a leading proponent of directing taxpayer money to help disadvantaged children attend preschool. Rolnick said he believes child care scholarships are the best way to close the achievement gap, rather than universal pre-K.

Republicans included funding for early childhood education scholarships in their budget but did not fund Dayton’s plan for universal pre-k. Daudt said he isn’t convinced that universal pre-k is a better option. The Governor insists scholarships could end up further segregating low-income children from peers whose parents still might not be able to afford to pay for pre-kindergarten.

Party Divided

Setting aside negotiations with Republicans, Dayton appears to be facing challenges within his own party. Democrats who disagree on big issues in the bills he vetoed, including education, economic development and the environment, expose an urban-rural divide in the party.

Dayton said this week that his toughest veto was the spending bill for agriculture, environment and natural resources. Although the bill included money for avian flu relief and a compromise on the buffer strips for farms, the Governor said there were too many bad policy provisions in the bill. He blamed the DFL-controlled Senate.

Dayton’s list of objections included the elimination of the Minnesota Pollution Control Agency’s citizen review board, added rule-making steps for the MPCA, cuts to two landfill accounts and amnesty for polluters that self-report violations. The bill would put air, water and land at risk, said Sen. Scott Dibble (DFL-Minneapolis). Ten Democrats, nearly all from rural districts, joined Republicans to pass the Environment bill, 35 to 30.

Senate Majority Leader Bakk said coalitions based on geography are nothing new at the Capitol. The Special Session, Bakk said, provides an opportunity to improve three of those bills.

Private vs. Public

The Association of Minnesota Counties (AMC) is pushing Gov. Dayton and legislators to preserve a new law to allow counties to hire private firms to conduct annual audits. Executive Director Julie Ring said many of their members believe this is an issue of fairness and competitiveness for counties to have the option of private audits. However, she noted that they are also comfortable working with the State Auditor’s office and don’t see a change in law as something that would automatically result in counties not utilizing the State Auditor.

The counties have long asked the Legislature for the flexibility included in the provision, and this year Republican legislators in the House, including Rep. Sarah Anderson (R-Plymouth), who chairs the State Government Finance Committee, gave it to them.

The issue has become a flashpoint between State Auditor Rebecca Otto and counties that want the flexibility. Dayton just signed the State Government funding bill, but says he wants legislators to repeal the new rule because it undermines the role of Otto’s office. Unlike most Minnesota cities, towns and school districts, counties are required to have the State Auditor’s office conduct annual audits unless they get an exemption from Otto’s office.


One of the priorities for Gov. Dayton in the soon-to-be-renegotiated Energy and Jobs bill is an increase in broadband funding.  The residents of Annandale, Minnesota are particularly interested in what that funding will look like. As vetoed, the bill included $10 million for rural broadband. That is half the amount allocated around the state in 2014, but 20 percent of it was earmarked for Annandale.

Dayton was critical of the legislation for not containing more money for rural broadband, but also objected to the special provision for Annandale. In his veto letter, he said it undermined the program’s competitive process and set a dangerous precedent.

Annandale residents complain that slow speeds and outages have caused businesses to leave their communities or to put up signs telling customers that credit card transactions were temporarily unavailable. In 2014, when the Legislature made $20 million available for projects in underserved and unserved areas around the state, Annandale put together a plan to build a network. The idea was for the city to build the network and then contract privately for its operation.

City officials were disappointed to not be included in the 17 awards made by the Office of Broadband Development.  The Department of Employment and Economic Development, which oversees the broadband office and which did not support the special earmark, says it’s trying to help Annandale create a stronger application for the next round of funding.

According to Sen. Matt Schmit (DFL-Red Wing), a champion of increased broadband funding, the notion that wireless technology will make hard-wired fiber networks unnecessary gained traction this year, but he believes wireless is going to be a supplement, incapable of providing the robust service needed for business and education.  Schmit thinks Annandale has perhaps the strongest case in the state for building a project, but would prefer to see it go through the competitive process again, rather than get an earmark.

Up In Smoke

The Legislature has taken steps to expand the availability of medical marijuana to Minnesota hospitals when it becomes legal in July. When state lawmakers approved the original law last session, authorizing health care providers to dispense the drug, they didn’t include liability limitations for hospitals.

The Legislature has added hospitals to the list of facilities that can control, dispense and manage the use of cannabis inside their systems without forcing criminal penalties. Hospitals said they were willing to continue the care regimen of those patients in their hospital setting, as long as the state gives them the same abilities and immunities that were afforded to nursing homes and assisted living facilities last session.

The registry for medical marijuana in Minnesota opens next week. Pill and liquid forms of marijuana will be legal in Minnesota. Raw leaf and smokable marijuana will remain illegal.

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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