Fishing for Budget Numbers

Gov. Dayton, Senate Majority Leader Bakk (DFL-Cook) and House Speaker Daudt (R-Crown) reportedly caught lots of fish last weekend, but no luck with agreed upon budget numbers. Leaders have been meeting at the Governor’s residence every day this week to try and arrive at an agreement for a way forward with the state budget bills.

The negotiators did cut a deal on two budget items on Thursday. They agreed to spend $111 million more on public safety and courts and $166 million more on higher education. The conference committee working on the higher education bill has to decide how money will be split between the University of Minnesota and the state colleges and universities. Legislative leaders said there isn’t enough funding to freeze tuition at either system. Senate Higher Education Chair Bonoff (DFL-Minnetonka) said she’s looking to divide the pie equally. House Republicans, however, put a priority on Minnesota State Colleges and Universities over the U in their budget.

There are still big policy differences between the House and Senate judiciary-public safety bills. Senate Judiciary Chair Latz (DFL-St. Louis Park) said he doesn’t plan to discuss those issues until all the budget issues are resolved. He also said he won’t consider any House policy provision unless the House agrees to accept the Senate’s language to restore felon voting rights.

Gov. Dayton said collaboration is needed in the remaining days to strike a budget deal. He said he’s not giving up on his top priority: universal preschool for four-year-olds, and he suggested House Republicans need to compromise on theirs: a $2 billion package of tax cuts.

Speaker Daudt said he remains optimistic about reaching a budget agreement and ending the session on time. But he said Democrats must give up on their proposal for a gas tax increase to fund transportation projects. Senate Democrats still want a gas tax increase and they’re unwilling to support a compromise with the House for $1 billion in tax cuts. Sen. Bakk continues to suggest that neither a tax bill nor a transportation bill is needed this year.

Sen. Bakk said he wants Republicans to give up on the idea of passing a transportation bill or a tax bill and instead focus on the “must pass” bills, including health and human services, education and state government finance.

The Governor and lawmakers have until midnight Monday to reach an overall budget deal or Gov. Dayton will be forced to call lawmakers back into a special session.

Lawmakers are also facing another deadline related to the ongoing renovation of the Capitol building. Matt Massman, commissioner of the Minnesota Department of Administration, says construction crews are scheduled to completely shut down the Capitol for the next phase of the $307 million Capitol renovation on Tuesday. He said a special session or any other delay would be “catastrophic” to their work schedule and run up work costs.

Health Care

Health care spending remains a big hurdle for Minnesota lawmakers as they begin the final week of the 2015 legislative session. House Republicans and Senate Democrats have a $1.4 billion gap to close in their competing budget bills for health and human services.

The big disagreements are over two House GOP plans. One would eliminate MinnesotaCare and move its low-income participants onto MNsure. The other is to save $300 million by cracking down on ineligible participants in public programs.

DFL Senate Majority Leader Tom Bakk has repeatedly said the House Republican proposal to eliminate MinnesotaCare is a non-starter. House Speaker Daudt stressed that a long-term plan is needed for MinnesotaCare, because its provider tax funding source is set to expire in 2019.

Speaker Daudt said he remains optimistic about an agreement coming together to adjourn the session on time.

Transportation and Taxes

Increased funding for transportation appeared to be a top priority for both parties heading into the session, but disagreement over where to get the money has permeated discussion throughout the session.

On Monday, Senate Majority Leader Bakk said he was willing to drop his push for a transportation funding bill that relies on a gas tax and a sales tax throughout the Twin-Cities metro area if House Speaker Daudt drops his push for $2 billion in tax cuts.

Rep. Daudt, however, said there’s no way his caucus will back a gas tax this session. He’s frustrated that Leader Bakk won’t look at the Republican plan to cut taxes and cut back on health and human services spending.

Despite the hardline positions of Sen. Bakk and Rep. Daudt, the House and Senate Transportation Chairs Sen. Dibble (DFL-Minneapolis) and Rep. Kelly (R-Red Wing) have continued to try and push for a deal.

Senate Democrats are pushing for a tax hike on the wholesale price of gasoline that equates to at least 16 cents a gallon. House Republicans’ funding plan would rely on a portion of the surplus, borrowing and dedicating existing sales taxes from auto parts, leased vehicles and rental cars to transportation.

State Transportation Commissioner Charlie Zelle said without new funding, it will be difficult for Minnesota to maintain its transportation system, let alone invest in new projects. He is also worried about a transportation stalemate in Washington D.C.  Zelle noted that without federal funding it would put a huge hole in our program even with new state funding.

Education

Throughout this year’s legislative session, Dayton has said he wants the Legislature to send him a budget that includes funding for universal pre-school for four-year-olds and has said he would not sign an education funding bill without it.

The Governor wants the state to spend nearly $700 million more in the next two years on early childhood and K-12 education than the state spent the past two years. Senate Democrats have proposed $360 in additional spending, while House Republicans want to increase education funding by $158 million.

Kevin Donovan, president of the Minnesota School Boards Association, praised Gov. Dayton for dedicating 40 percent of the $1.9 billion surplus to fund early education through grade 12. However, he said the state needs to increase per-pupil funding because local school districts already plan to cut positions.

Senate Education Budget Committee Chair Wiger (DFL-Maplewood) said he’s willing to boost per pupil funding, but it will come at the expense of the money Gov. Dayton wants for early childhood education. Sen. Wiger added, however, that the Senate plan does spend some money on early childhood education.

House Education Finance Committee Chair Loon (R-Eden Prairie) also wants to spend more money on the per pupil formula. She said that’s what school officials want.  She said Gov. Dayton’s universal pre-K plan has too many costs for schools. Rep. Loon noted that the proposal doesn’t cover the facilities, equipment and additional transportation costs needed for universal Pre-K. Instead she said the House plan directs early learning money to disadvantaged children.

Destination Medical Center

Rochester leaders want lawmakers to allow the city to use a recently-approved quarter cent sales tax increase to pay for Destination Medical Center administrative costs. Otherwise, the money will likely have to come from Rochester property taxpayers. The price tag for those administrative costs is expected to be $21 million over the next five years.

But their quest to get the bill passed has hit an unexpected bump in the road. The provision is included in the House and Senate tax bills. House Tax Committee Chairman Davids (R-Preston) said there’s no way he’ll support passing any tax provisions — including the DMC language — if there’s no agreement on tax cuts.

Rochester City Council President Randy Staver said it’s unfortunate that the city’s top legislative priority appears to be swept up in the broader budget dispute. Still, he said he remains hopeful that lawmakers will cut a deal and pass a tax bill with the DMC language.

In 2013, the Minnesota Legislature approved a $585 million funding package for public infrastructure to support Mayo Clinic’s planned $3.5 billion expansion. The deal required a $128 million match from the city of Rochester. It wasn’t until after the bill passed that Rochester officials raised concerns that the city’s portion could swell far beyond the $128 million because of the administrative costs.

The House tax bill makes sure the city gets to count all the DMC-related costs toward the $128 million match. The Senate tax bill allows that full match until June 30, 2020.

Senate Tax Committee Chairman Rod Skoe (DFL-Clearbrook) said lawmakers can balance the budget and end the session without a tax bill. Rep. Norton (DFL-Rochester) said if it appears a tax bill isn’t going to move ahead, she’s got a backup plan for trying to get the legislation passed.  Sen. Nelson (R-Rochester) agrees that it’s important the DMC language gets passed, but said she rejects the idea that the tax bill and transportation bill must be linked to each other.

Airport Minimum Wage Hike

The Minneapolis-St. Paul International Airport is poised to set a new minimum wage, $1 above the state wage floor, effective in August.

That’s the recommendation going before the Metropolitan Airports Commission, published in advance of a regular meeting at the airport scheduled for Monday.  The new regulation would be implemented through new contract conditions between the MAC and vendors that are licensed to provide services to travelers and airlines at MSP.

It will mean at least a $10 minimum hourly wage this year for thousands of airport workers, which Gov. Dayton said he supported back in March.

The new minimum wage would not apply to workers who already have union contracts with their airport employers. It also doesn’t cover employees who work directly for the airport, as they generally make more than $10 an hour already. Instead, vendors who have contracts with the airlines will be affected.

The change would require approval by the MAC’s chairman and the 14-member commission.

Lottery

For the second year in a row, legislation banning the Minnesota Lottery from offering its games online, at gas pumps and at ATMs is on its way to Gov. Dayton. The House passed the bill Thursday with overwhelming support (122-6). The Senate also passed the bill by a wide margin.

Rep. Sanders (Blaine) said lottery officials should have voluntarily stopped expanded gambling options when lawmakers first raised concerns and asked for specific authorization.

Early this session, Dayton was critical of the bill and threatened a repeat veto. However, the votes in both chambers sent a loud message of support. Gov. Dayton’s office said late Thursday that the governor will allow the bill to become law without his signature.

Sen. Julianne Ortman 

State Sen. Julianne Ortman (R-Chanhassen) announced Tuesday she won’t be seeking a fifth term in the state Senate.

Sen. Ortman, who started her political career as a Carver County commissioner, took on a leadership role as tax chair in the state Senate when Republicans gained the majority in 2012 and in 2014 ran for the U.S. Senate seat held by Al Franken.

In her release, she didn’t indicate whether she will seek another political position.