Government Relations And Lobbying Insight: Dramatic 2013 Legislative Session Adjourns

by Stinson Leonard Street

In dramatic fashion, and with some historic footnotes, the 2013 Minnesota Legislature concluded its work last week.

As a result of the 2012 general election, Minnesota state government became a one-party majority government, controlled from top to bottom by the DFL party. Along with this newly acquired power came passage of sweeping legislation that impacts many areas of Minnesota public policy. Along with Governor Mark Dayton, the 2013 DFL-controlled legislature wasted no time adopting many of the proposals they campaigned on during last fall's election.

Although the DFL controlled both the House and Senate, the 2013 legislative session was full of disagreement and infighting between DFL allies. Beginning with Governor Dayton's sweeping tax reform proposals, DFLers struggled to find common ground on tax increase proposals designed to erase a $600 million deficit and increase spending by almost $2 billion in order pay for increases in funding for K-12 public schools, higher education and health and human services programs. In the end, the parties agreed to a tax bill that creates a new fourth tier income tax bracket for high income wage earners, increases the cigarette tax and broadens Minnesota's sales tax base to include some business services such as warehousing and repair and maintenance of machinery and electronic equipment.

Other highlights of the 2013 legislature include:

  • Passage of enabling legislation to create one of the country's first health care insurance exchanges. This insurance marketplace is a product of the federal Affordable Care Act (Obamacare) passed by the U.S. Congress in 2010. The insurance exchange-branded MNSure is currently under development and will go live on October 1, 2013.
  • Passage of legislation that will allow day care workers and personal care attendants to vote on whether or not to unionize.
  • After the defeat of a constitutional amendment banning gay marriage, the legislature passed legislation allowing gay couples to marry.
  • After much infighting, the legislature passed a limited capital-bonding bill of $177 million that will go toward continuing renovation of the Minnesota State Capitol and renovations to the Minneapolis Veteran's home. Governor Dayton and House DFL leadership were proposing a bonding bill package in excess of $800 million, pointing to the need for job creation and access to cheap capital.
  • Finally, a rather surprising development was the legislature's failure to pass an increase in the state's minimum wage. What appeared to be a priority early in the 2013 session, quickly became a family feud between DFLers over the size of the increase. The issue died in conference committee and will likely be a top priority for DFL leadership when they return to the Capitol in 2014.

The following articles are a comprehensive overview of many of the key policy areas addressed by the legislature this past session. For more detailed information regarding specific legislation, please go to the following web sites:

  • Minnesota Legislature. The Minnesota legislature's main website contains a comprehensive listing of all chapters of law adopted and signed into law by Governor Dayton.
  • Governor Dayton. The Governor's website also contains a comprehensive listing of each of the bills presented to him for signature. The site also contains any veto messages he may have signed.


The $2.12 billion tax bill passed the House with a vote of 69-65 in the early morning hours of Monday, May 20. With only two hours left in the legislative session, the Senate passed the tax bill, 37-29. This bill includes an increase in income, corporate, sales and cigarette taxes. Below is a breakdown of the revenue:

Income—The fourth tier income tax will be raised permanently to 9.85% for married joint filers with a taxable income above $250,000 and single filers above $150,000. This would make Minnesota the fourth highest income state tax, behind California, Hawaii and Oregon.

Corporate—Many measures were taken to close corporate tax loopholes, including foreign royalty provisions. In total, these provisions add up to a 21% increase for corporations in Minnesota, resulting in $424 million in revenue for the state.

Sales—The sales tax portion was one of the most contentious provisions that remained in the bill for final passage. Ultimately $314 million will be raised from business-to-business taxes. These taxes are as follows:

  • Storage and warehouse at $95 million, enacted on April 1, 2014. The chairs of the tax committees have since expressed concerns with the warehouse provision and have indicated that they will address this during the next session, which begins on February 25, 2014.
  • Repair and maintenance at $152 million, enacted on July 1, 2013.
  • Telecommunications at $67 million, enacted on July 1, 2013.

Cigarettes—The proposal includes an increase in the cigarette tax of $1.60 per pack, which will result in cigarettes reaching nearly $8 per pack in Minnesota. The tax chairs expressed hope that this will ultimately deter new smokers from starting and reduce consumption by current smokers.

Health Care

The past five months have been a historic period for Minnesota health law. The 2013 legislative session was characterized by a high volume of activity to implement federal health care reforms, including the creation of a state health insurance exchange, expansion of the state's Medicaid program and laying the groundwork for a Basic Health Plan (BHP) to succeed MinnesotaCare. Some of the legislative highlights are as follows:

Minnesota Health Insurance Exchange (HF 5/SF 1)—Creates a Minnesota health insurance exchange with a seven-member governing board and financing through a premium withheld on products offered within the exchange. Go here for more information on Minnesota's insurance exchange.

Market Rules (HF 779/SF 662)—A complementary piece of legislation to the health insurance exchange, providing additional conformity for Minnesota law to federal standards surrounding Minnesota's health insurance market.

Omnibus Health and Human Services (HF 1233/SF 1073)—Contains a variety of provisions establishing a budget of almost $11 billion for Minnesota's health and human services programs. The health and human services sector was directed to trim $50 million out of their projected budget for the 2014-15 biennium, which was largely accomplished by adjusting how hospitals and HMOs pay and process their respective surcharges.

Nurse-Staffing Reporting (HF 588/SF 471)—This legislation requires additional study and reporting on nurse staffing levels by the Minnesota Department of Health. The study language was the result of long negotiations between hospital and nursing groups. A final report is due out in 2015.


The Omnibus Transportation Bill (HF 1444) passed both bodies and was signed into law on May 23. It was one of the last conference committees to close, as chairs Scott Dibble (DFL-Minneapolis) and Frank Hornstein (DFL-Minneapolis) tried to put together a proposal with significant new revenue for transportation infrastructure.

Because of opposition to a fuel tax increase from Governor Dayton and legislative leadership, the final package includes no new statewide transportation taxes. Instead, the bill authorizes $300 million in trunk highway bonds dedicated to "corridors of commerce" (which are two-lane highways that experience significant volumes of freight). For transit, the state relies on general fund appropriations to Metro Transit rather than a metro sales tax increase to pay for existing operations as well as to build out the Southwest Corridor light rail line at a cost of $37 million. Counties were also successful in getting the authority to levy a wheelage tax (per vehicle surcharge) of $10 for vehicles domiciled in their jurisdiction.

No fuel tax increases made the final cut. The Senate had considered a gross receipts tax on motor fuels, then a 7½-cent tax, then 5-cent fuel tax. Governor Dayton vigorously opposed them all. The proposed rate increase in the motor vehicle sales tax also was dropped. Cities fought to the end for the ability to institute "transportation improvement districts" to pay for city streets, but were ultimately rebuffed by the strong coalition of impacted trade associations (including the MTA) and nonprofits against it.

Minimum Wage

Both the House and Senate voted to increase Minnesota's minimum wage this year, but on significantly different proposals. The House acted on HF 92, which incrementally raised the minimum wage to $9.50 over the next two years. The Senate voted on a more modest increase of 50 cents, raising the current federal minimum wage of $7.25 to $7.75. A conference committee on HF 92 was appointed late in the session, but only met for half an hour, taking testimony from two opponents and one supporter, but no discussion on the bill took place. While it appeared negotiations were taking place behind closed doors, no amendments or offers were made in the closing hours of this year's session. The bill's authors, Rep. Winkler and Senator Eaton, have promised to revive their efforts next year. Saying he plans to require $9.00 per hour or higher, Rep. Winkler insists that any bill raising the minimum wage to less than $8.00 per hour is only a "token" and does nothing for struggling workers.


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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