Taxes

The House Republican Omnibus Tax bill (HF848) was released on Monday.  The $2 billion tax cut package includes $538 million to pay for a one-time income tax exemption and $450 million to begin phasing-out the statewide business property tax.

The House GOP also proposed new tax breaks for Social Security income, military retirement pay, college loans and farm property. It would establish a new tax-exempt savings plan for long-term care and raise the threshold for estate taxes.

The package also calls for an $85 million cut in local government aid to Minneapolis, St. Paul and Duluth. The House GOP bill includes a $35 million expansion of the child care tax credit, far less than the $100 million the governor has proposed.

The Republican bill also directs dollars toward families with pre-kindergartener to high school seniors through expanded education deductions.  There is an allowance for families saving for higher education costs to deduct their contributions to college savings plans.

The House Tax Committee passed the bill on Wednesday. The full House could vote next week. The Department of Revenue estimates that the House tax bill would cost $2 billion this year, but double in cost to $4 billion in six years. Gov. Dayton warned the tax bill would put the state back in perpetual budget deficits.

Senate Democrats are preparing a $460 million tax bill that focuses on property tax relief and tax breaks aimed at getting jobs for veterans. The Senate tax bill will be released on Monday morning with testimony and amendments on Tuesday.  The Senate plans to vote on all of their budget bills, including the tax bill, by the end of next week.

Transportation

The Republican majority in the House approved its transportation plan late Tuesday night by a nearly party-line vote of 73-59. Consideration of the bill took over 7 hours. Included in the offered amendments were: an increase in penalty and confiscation of cell phone devices for secondary offenses for texting while driving, withdrawn; providing a Driving Card for illegal residents was ruled out of order; and a motion to assess railroads $32,500,000 per year failed.

Republicans would redirect about $300 million per year from existing taxes, such as that on auto parts, to transportation. They include no new taxes, but also no significant new money for mass transit in the metropolitan area.

Gov. Dayton acknowledged that the dispute over transportation is “less impossible” to solve than other issues, such as the budget.

The Senate transportation plan passed out of its first committee Tuesday morning, but is still expected to go to Finance and Taxes before the full Senate votes on it sometime next week.

In the Senate Tax Committee the bill was amended to add Scott and Carver County to the 7 county metro area sales tax increase. This was hotly contested by Carver County Senator Julianne Ortman. The bill includes significant tax increases via the gross receipts tax (6.5% increase), a vehicle registration tax and a Metropolitan Transit Improvement Area Sales Tax increase from 1/4 of a cent to 1 cent. There are numerous other fee increases and a tax on railroads of $32 million per year. The bill was passed as amended to the Senate floor.

Oil Trains

The U.S. Department of Transportation announced an emergency order last Friday requiring trains hauling crude oil and other flammable liquids to slow down as they pass through urban areas.

Major freight railroads have already limited oil trains to no more than 40 mph in urban areas under a voluntary agreement reached last year with the Dept. of Transportation. Friday’s order makes the speed limitation a requirement and extends it to trains carrying other flammable liquids like ethanol.

The Department has issued an advisory to railroads to use the latest technology to check for flaws in train wheels that can cause a derailment.  The Department also wants inspectors to conduct brake and mechanical inspections before trains carrying oil and other hazardous liquids depart.

Railroads were also asked to put a system in place to quickly provide investigators with key information on trains and their contents in the event of an accident. Besides the steps announced Friday, the Department has a proposed a more comprehensive series of regulations to address oil train safety, including a stronger tank car design and better train braking systems.

The proposal is under review at the White House and final regulations are expected to be released in the next few weeks.

House HHS Omnibus Bill

Due to clerical errors found last week, House Republicans had to make some last-minute revisions to their Health and Human Services spending bill. Instead of cutting about $1 billion from administrative costs associated with Medical Assistance, ending MinnesotaCare and delaying insurance company payments, the new total is about $1.2 billion in cuts over two years.

Here are two big ways the numbers changed, since House Republicans unveiled their bill.

• Eliminating MinnesotaCare, a public health program for people who make too much money for Medical Assistance but not enough to buy a plan on their own, will save $563 million over two years instead of $849 million as the committee’s number crunchers initially predicted. The difference is the result of a clerical error. That number doesn’t include premium subsidies that HHS Chair Dean (R-Dellwood) has promised to help current MinnesotaCare enrollees buy a plan on MNsure.
• Another big change is a line-item that was left out of the initial budget: The bill now requires the Department of Human Services to save $300 million by verifying that everyone on public programs, like Medical Assistance, is eligible.

Senate HHS Omnibus Bill

Democrats in the Minnesota Senate released a plan this week to fund health and human services for the next two years. Their proposal would increase spending by about $341 million to fund programs including child protection services, nursing homes and mental health services. Senate Health and Human Services Finance Committee Chair Tony Lourey (DFL-Kerrick) said the two chambers have a long road of negotiations ahead of them.

There’s at least one area where the House and Senate bills overlap: nursing home funding. The House bill includes $138 million to help nursing homes keep up with salary costs, among other things, while the Senate bill would increase funding by $25 million and keep an already-scheduled 2.4 percent cost-of-living increase.

Both bills make big changes to MNsure. The Senate legislation would make the quasi-state agency a traditional state agency accountable to the Legislature and the governor. The House bill would require the state to get a federal waiver to allow people eligible for federal assistance buying an insurance plan on MNsure to bypass the website and buy a plan directly from a health insurance company.

Minimum Wage 

An amendment to reduce the minimum wage for tipped workers passed the Republican-led House Wednesday by a vote of 73-56, as part of the Omnibus Jobs and Energy bill.

The amendment would create a two-tiered minimum wage, with a lower rate for employees who receive tips of at least $4 per hour, while also prohibiting cities or the Minneapolis-St. Paul International Airport from enacting a higher minimum wage than the state minimum.

As it relates to energy, the bill would end certain conservation and renewable-energy programs, including greenhouse-gas-reduction goals, repeal the moratorium on new nuclear plants, and rescind the ban on importation of coal-fired power.

Avian Flu

Gov. Dayton, Thursday, declared a peacetime state of emergency to strengthen the state’s response to an unprecedented avian influenza outbreak. The order came after a preliminary test showed that a strain of avian flu has struck a Minnesota chicken flock for the first time this year.

In seven weeks, the disease has spread to 46 Minnesota farms wiping out 2.6 million birds. The emergency order clarifies the roles of state agencies as they fight to contain the lethal bird flu outbreak.

State Agriculture Commissioner Dave Frederickson, described the situation as a crisis for the state’s turkey industry. The flu has affected 17 percent, or one in every six birds, in production at the state’s 600 turkey farms. Chickens also are susceptible to avian flu and Minnesota is beginning to see some outbreaks among those birds.

Avian flu is killed by sunlight, high temperatures and dry conditions. State officials are hoping it will subside with warmer weather. Scientists believe migrating waterfowl brought the virus into the state, but exactly how it travels from wetlands into poultry barns is still a mystery.

Goat Trails  

One of the more interesting points of the House Transportation debate was the discussion of an amendment to rename a rural Minnesota highway a “goat trail.” The amendment, offered by House DFL Minority Leader, Paul Thissen (DFL-Minneapolis) stemmed from comments to the StarTribune by freshman Rep. Tim Miller (R-Prinsburg) that Hwy 12 “is in about as good a shape as a goat trail.”  The amendment was to ostensibly draw attention to the state of Greater Minnesota roads.  In the end, the amendment was withdrawn after nearly 45 mins of debates on “goat trails.”