End-of-Session Update

Below is an update from GMNP Executive Director Dan Dorman on how the final days of the legislative session went down and how some of the GMNP’s top priorities fared.

The 2016 legislative session technically ended on Monday. However, as required by the state Constitution, all bills had to pass both bodies by midnight Sunday in order to be signed into law by the Governor. And the end was not pretty.

The leadership of the House and Senate waited until the very last minute to agree to budget targets. The Legislature attempted to debate and pass the three big bills upon which there was agreement: Taxes, Omnibus Spending, and Capital Investment (bonding). Two of these three ultimately passed: Taxes and Spending. There was, for the second year in a row, no agreement on transportation.

So what happened at the end? Late Sunday afternoon it became clear that leadership had reached an agreement on a $1 billion bonding bill. No details were released, but negotiations on which specific projects would be included continued to take place. At about 11:30 p.m., with less than half an hour remaining in the session, the House took the bill up and was able to pass it. Click this link to watch the debate. House members did not get to see the actual bill until the debate began!

The House passed the bill with very little time remaining and then sent it to the Senate for passage. While debating the bill, the Senate added an amendment that would allow the metro area to pay for transit locally. The bill then passed the Senate, but because an amendment was added it needed to be sent back to the House. However, at that point there was not enough time to get the bill back to the House. There was an attempt to remove the amendment, which would have meant the bill would be on the way to the Governor, but as you can see in this link, it was past midnight and the session ended. In the video clip, someone can be heard saying “Cover the clock!” – a move last used decades ago to pretend it was not yet midnight. I guess some things never change.

Both the House Republicans and Senate Democrats are now blaming each other for the failure of the bonding bill. The Senate maintains there was an agreement on the transit provision and that the House broke the deal by not including it in the bill they sent over for final passage. The House maintains there was no such deal. So whose fault was it? Theirs — meaning both sides. Waiting until the last day of the session to take action on three major bills is simply poor public policy and an invitation for failure.

There is still no bonding bill publicly available for review, so we aren’t exactly sure what was included in the final failed bill. When it becomes available, we will complete our bonding analysis and send it out.

Highlights of what did pass this session:

Taxes
Keep in mind this bill should have passed last year, but no agreement was reached so it carried over to this session. Unfortunately, the GMNP Workforce Housing Tax Credit was not included in the final bill. From what I can tell, the Senate remained committed until the end, but they could not get the House to agree. In speaking with Senate Tax Chair Rod Skoe, he encouraged us to keep pushing for the tax credit in the future, noting that new ideas — even really good ones like this — usually take more than one year to win over both bodies. It’s encouraging to know there is hope for the future, but the exclusion of the Workforce Housing Tax Credit from the bill is still a major disappointment in what was supposed to be a Greater Minnesota Session.

LGA – The tax bill that passed did contain a $20 million addition to the Local Government Aid (LGA) program. We were requesting $45.5 million, which is the number needed to get back to the 2002 funding level. Considering how far about the two sides were on this issue (the Senate had proposed the $45.5M increase, while the House was looking to cut the program by $84M), it is positive that they were able to agree to an increase.

Statewide Business Property Tax Relief – The tax bill contained an exemption for the first $100,000 of value from the statewide business property tax. This is very close to what was support by the GMNP of exempting the first $150,000. This is a win for Greater Minnesota and needed boost to all businesses, especially smaller firms. This is great for Main Street and okay for Wall Street. The geographic distribution of this reduction favors Greater Minnesota.

The tax bill also contained a few other major changes including an increase in the working family tax credit, ag tax relief and the removal of the automatic inflator in the tobacco tax. I never thought I would see the day when a bill reducing tobacco taxes would get over 100 votes on the House floor.

Omnibus Spending Bill
This is where the funding for broadband traveled. The final bill included $35 million for the broadband grant program. Without major reforms to the eligibility for funding we assumed it would be difficult to get to the $100 million that Governor Dayton and Lt. Governor Smith wanted. On the plus side, $5 million of the $35 million was set aside for areas that currently have speeds greater than 25 mbps down and 3 mbps up but less than 100 down and 20 up, which means those funds will be available for communities that need better broadband service to boost economic development. However, on the minus side, the bill contained a provision for a “challenge process” that would allow a telecom company to stop a project from receiving a grant if that company currently provides or promises to provide service at the low speed goal of 25/3. This provision in the bill could make it difficult, if not impossible, for projects seeking to upgrade existing broadband service to receive a grant. We will have to see how this all plays out.

Other provisions in the omnibus spending bill that are disappointing and hard to understand are reductions in the Job Creation Fund and Minnesota Investment Fund, both of which are great statewide economic development programs, and the inclusion of an increase in the Angel Investment Tax Credit. Over 90% of the Angel Investment Tax Credit fund has gone into the metro area and we have yet to see great results from prior investments.

What about a special session?
There has been some talk of a special session on bonding. Governor Dayton is the only one with the power to call a special session, and so far he has said he is unsure if he will call one. We will keep you posted on any development if/when they occur.

If you have any questions about what passed and what didn’t this session, please contact me at dan@gmnp.org.