[co-authors: Joey Novak and Stephanie Pinkalla]

Today marks the end of the second deadline week at the Capitol. Non-finance bills which have not been heard in all required House and Senate policy committees by midnight tonight may not be acted upon. The legislature will be on a holiday break, beginning Saturday, March 28, and returning Tuesday, April 7. The next deadline is April 24, by which date committees must act favorably on major appropriation and finance bills.

Budget Targets

This week, House Republicans unveiled their budget targets, setting the limits for finance committees formulating budget bills. These targets were approved by the House Ways & Means Committee on Tuesday. Republicans in the House anticipate the total budget will spend $42.58 billion. Their top funding areas include $16.87 billion to E-12 education, $11.62 billion to health and human services programs, $5.63 billion to taxes and $2.95 billion to higher education.

The DFL Senate leadership released its targets this morning. Total spending under its budget will be $42.73 billion. The largest spending increases will be for education and health and human services.

Wages

Late Monday night, the House passed legislation to amend last year's minimum wage increase for tipped workers. HF1027 (Garofalo - R, Farmington) was passed by a vote of 78-55. It allows employers to pay an $8 minimum wage for employees with weekly earnings from tips that result in total earnings above $12 per hour. Provisions to provide more pay structure disclosure to employees and to protect against sexual harassment in the workplace were amended into the bill. The Senate companion has not yet been scheduled for a hearing.

Transportation

GOP House leaders unveiled their updated transportation plan on Monday, providing $7 billion over 10 years without imposing new taxes. Approximately $3 billion of this would come from a “Transportation Stability Fund” made up of a reallocation from the General Fund of sales taxes collected on auto parts, car rentals and car leasing. The proposal also uses $228 million of the projected budget surplus, $2.3 billion in trunk highway and general fund bonding, and $1.2 billion in MnDOT resource “realignment.” The funding would provide for renovation of 15,500 miles of road and 330 bridges statewide.

Taxes

It was a big week for tax bills as several key topics for the 2015 session were discussed. The Senate Tax Committee heard five bills related to the tax increment financing (TIF) program. SF993 would make technical changes to the program, specifically updating and clarifying requirements for interfund loans. The other four bills would provide TIF extensions and modifications in St. Paul, Wayzata, Richfield and Coon Rapids.

Discussion of the statewide general property tax took place in the Senate Taxes Committee on Wednesday, with four different bills aimed at reducing the tax. SF586 and SF1557 would eliminate the automatic inflator and fix the levy at $840 million, with the latter bill also allowing for a 5 percent reduction over the next four years. SF1479 seeks a separate and more lenient tax on seasonal recreational property, and SF1722 proposes to eliminate the state general levy, phased out over the next six years.

Three different bills affecting the child care tax credit were heard in Thursday's Senate Tax Committee hearing. SF1494 (Eaton - DFL, Brooklyn Center) would conform the Minnesota child and dependent care credit to federal credit amounts with a phase out at federal adjusted gross income of $70k per year and beyond. This is similar to Governor Dayton's proposal (SF1805 – Johnson - DFL, Blaine), which would similarly conform to the federal credit maximum payouts but would begin to phase out at income levels of $100k per year. SF244 (Franzen - DFL, Edina) takes a different approach by creating a tiered tax credit system based on a ratings program of various child care programs with a goal of promoting high quality care and kindergarten readiness.

All discussed tax legislation was laid over for possible inclusion in the omnibus tax bill.

Upcoming Legislative Notes

The legislative spring break will last until the morning of April 7, at which point committees will reconvene. There will be no update next week while the session is in recess. After the break, legislators will spend much of their time in finance committees working on budget bills. The Governor is slated to release a bonding bill on April 6.