Happenings at the Capitol
The legislature needed four extra days, but legislators were able to pass a $46 billion two-year state budget at 3 a.m. on Friday, May 26. The legislature is now officially in interim after the 2017 regular and special sessions concluded, with all 12 major funding bills passed to Gov. Mark Dayton. The governor has signed all of the budget bills while outlining items he would like to see considered in another special session to remove several provisions he opposes. To punctuate his point, Gov. Dayton line item vetoed the entire operating budget appropriations for the House and Senate. Legislative leaders argue that eliminating the legislature’s funding is unconstitutional and are considering pursuing the matter in court.
Highlights of the completed work include a $650 million tax cut package (with an LGA increase), a nearly $1 billion bonding bill, increases to the E-12, higher education, and transportation budgets, and a decrease in funding to the health and human services budget. Legislation also passed this year included compliance with new Real ID federal regulations for state-issued driver’s licenses, an elections bill and the allowance of liquor sales on Sunday.
The Special Session of the Minnesota Legislature produced a $5.9 billion, two-year transportation funding bill that relies heavily on the state general fund and bonding and focuses primarily on funding construction for roads and bridges. Existing tax revenue from the sale of auto parts and rental vehicles that now goes into the general fund will be directed to fund roads and bridges. The bill provides a general fund increase of $300 million in new transportation funding for 2018-2019 and a $448 million increase in 2020-2021.
Providing $640 million for general road construction and $300 million for the Corridors of Commerce program, the bill authorizes $940 million in trunk highway bonds over the next four years. The bill does not raise gas taxes or license tab fees.
While earlier versions of transportation funding packages included deep cuts to the Metropolitan Council and transit programs, SSHF3 includes a $70 million increase for transportation functions of the Metropolitan Council. Metro counties will be allowed to expand the light rail and bus systems through generation of local revenues. The bill also allocates $1 million to suburban transit providers for suburb-to-suburb transit service.
SSHF3 limits the requirement that the state pay 50 percent of the net operating costs of light rail transit lines currently in operation and prevents using state funding for operating and maintaining the Southwest line or future lines or expansions.
Governance changes to the Metropolitan Council that were contained in earlier versions of the omnibus transportation funding bill were removed and are not included in this bill.
Other items of interest include:
- Provides an additional one-time increase of $10 million for county roads in the Twin Cities metropolitan area to be distributed based on an adjusted population calculation.
- Expands the driver’s license agent authority for the city of New Brighton, so that its office at city hall can provide the full range of driver licensing services in addition to the current limited service offerings.
- Amends the formula for allocating a portion of funds in the flexible highway account to use a percentage instead of using a calculation of revenues.
- Modifies eligibility requirements for the Corridors of Commerce program in statute and prohibits MnDOT from adding additional criteria.
- Requires MnDOT to track local government spending for trunk highway system work.
- Authorizes a special permit to exceed motor vehicle weight limits in order to haul road construction materials on six- and seven-axle vehicles. Allows for local control for issuing permits and routes and revenue from the permit goes to the bridge inspection and signing account.
- Creates a category for local bridge grants of over $7 million in the Local Bridge Replacement and Rehabilitation program.
- Establishes a $75 annual surcharge for electric vehicles.
- Directs MnDOT to implement agency efficiencies that amount to 15 percent of the increased trunk highway fund appropriations in this bill. Funds are to go to trunk highway construction and maintenance.
- If CTIB dissolves the bill permits funds allocated to counties to be used for transportation purposes that includes roads (as authorized for a county transportation sales tax that is available statewide).
- Clarifies that transit funding limitations for regional railroads authorities apply whether a county is currently a part of CTIB or is a former member of CTIB.
- Directs the Met Council to allocate a minimum 0.35% of revenue from the motor vehicle sales tax (MVST) to suburban transit providers (opt-outs), which over and above the current formula-based amount. And requires the Council to create a regional allocation process to distribute the funds.
- Establishes a system for resolving situations where the ownership of a manufactured home is at issue.
- Directs DPS to develop standards by August 1, 2017, on secure electronic storage of data as well as paper destruction procedures for deputy registrars and driver’s license agents.
During the Special Session of the Minnesota Legislature last week, legislators passed an omnibus tax bill that provides $650 million in tax reductions. Senior citizens will see the largest tax break ($117 million) from a reduction in state income taxes on Social Security benefits. College students will receive a first-in-the-nation tax credit ($55 million) for student loan payments, and families will see an incentive for saving for college through new tax credits. The tax bill also includes breaks for business property tax payers ($95 million) by exempting the first $100,000 in property value from the state-wide property tax levy and freezing the automatic inflator as well as property tax relief for farmers.
SSHF1 also contains:
- TIF provisions for Anoka, Coon Rapids and Maple Grove.
- Modifies TIF five year and pooling rules.
- $15 million permanent increase for Local Government Aid beginning January 1, 2018. You can view 2018 estimates here.
- A one-time partial early distribution of approximately 29 percent of a city’s July 2019 LGA to be paid to cities in June of 2019.
- $25.5 million increase for County Program Aid.
- A revision of the County Program Aid distributions formula as requested by counties.
- $34 million in property tax relief for farmers for school bond referendums.
- $36 million increase for the child and dependent care credit.
- Lowering the eligible age from 25 to 21 for the working family credit.
- Modifications to the estate tax exclusion.
- Qualified first-time homebuyers can establish a savings account for a home purchase up to $150,000 and be allowed to subtract the interest from their taxes.
- Repeals automatic increases to cigarette/tobacco taxes.
- Tax Forfeiture Lands technical changes
Items not included in SSHF1:
- Construction materials sales tax exemption for local governments.
- A prohibition on local taxes or fees on merchant-provided bags.
- Allowing voters to petition for a reverse referendum on whether a city may enter into a lease of three or more years for real property with a housing and redevelopment authority, port authority or economic development authority if bonds or other debt are issued by that authority to finance the property.
- Section 179 expensing (federal conformity).
- A credit for “Equity and Opportunity Scholarships” for low income students.
- Subtraction for a first time homebuyer savings account.
- Various modifications to education credits.
- Increase in exclusion for estate taxes to the federal exclusion amount.
The Special Session of the Minnesota Legislature produced a $990 million capital investment bill that is heavy on infrastructure and of which nearly one-fourth is focused on transportation. After an $800 million bill failed to gain the required supermajority vote in the House earlier in the session, the $990 million passed the House 119-11 and the Senate 60-2.
With the legislature and the governor focusing on establishing a two-year budget, the capital investment bill was the last of the omnibus spending packages passed during the 72-hour special session. Traditionally Minnesota considers passing a capital investment bill on even numbered (non-budget) years, but due to the legislature’s failure last session to pass a capital investment bill lawmakers felt the needs were pressing enough to pass a bill this session.
Minnesota’s higher education institutions received funding for items such as $66.7 million for a health science education facility at the University of Minnesota, $28.3 million for a chemical science and advanced materials building at the University of Minnesota, Duluth campus and $20.6 million for asset preservation for the U of M state-wide campuses. Minnesota’s state university system will receive $92 million in funding for projects including $25 million in asset preservation.
Other projects included in the Omnibus Capital Investment bill include:
- $115.93 million in local road improvement fund grants.
- $71.12 million for rail grade separation crossings on crude oil rail transport corridors in Coon Rapids, Moorhead and Red Wing.
- $11.35 million for cleaning up the hazardous waste landfill in Andover.
- $3.3 million for restoration of the Champlin Mill Pond.
- $3.3 million for reconstruction of 105th Avenue in Blaine.
- $3.4 million for the Inflow and Infiltration Grant Program.
- $70.26 million for renovation and expansion at the state security hospital in St. Peter.
- $56.25 million for the local road improvement program.
- $55 million in water infrastructure ($40 million for wastewater and $15 million for drinking water).
- $31.88 million to rehabilitate the 10th Avenue bridge over the Mississippi River in Minneapolis.
- $25.41 million for contaminated sediment.
- $15 million for Department of Natural Resources asset preservation.
- $15 million for the first phase of renovation of the seal and sea lion habitat at Como Zoo.
- $12.1 million for the Orange Line bus rapid transit line between Burnsville and downtown Minneapolis.
- $11.55 million for four flood hazard mitigation projects.
- $10 million for Reinvest in Minnesota (RIM).
Metropolitan Council Governance
During the regular session, the Senate passed legislation altering how the Met Council is governed. SF1490 (Osmek) passed 34-32 and but did not receive action on the House floor. The bill includes:
- Removing the governor’s authority to appoint members.
- Creating staggered terms for members.
- Increases the size of the council.
- Sets the pay at $40,000 for the Chair and $20,000 per year for members.
- Eliminates the TAB.
Gov. Dayton signed the omnibus elections bill passed by the legislature during the regular session. With the exclusion of controversial issues, such as provisional balloting and requiring counties to administer school elections which were contained in the Senate version, SF514/Chapter 92 (Kiffmeyer/Fenton) passed the House 127-5 and the Senate 64-0.
Funding for voting equipment was not included in the bill, but a $7 million appropriation to establish a grant program was included in the omnibus state government finance bill that passed during the special session. The grant program will allow 75 percent match for electronic roster equipment purchases and a 50 percent match of the costs for other equipment or technology purchases. The Secretary of State will administer the program and MACO representatives will have an opportunity to provide input regarding the program before it goes into effect July 1, 2017.
Also not included is a provision extending the option of allowing in-person absentee voting during regular hours of the polling place to 46-days before the election and making the party affiliation of election judges public data.
Here is a list of some of the many components of the final omnibus elections bill:
- Clarifies the timeline for when a city must pass an ordinance if switching from odd-year to even-year elections.
- Allows cities to canvass primary results on the second or third day after a primary.
- Allows a person elected in a special election to fill a vacancy to take office immediately after receipt of election certificate, filing the bond and taking the oath of office.
- Requires that write in candidates request to have their votes counted must do so before 5:00 on the last day for filing a written request.
- Requires polling places be designated by December 1 of each year.
- Allows school districts to combine polling places if no other election is occurring, to a polling location already established by the county or city.
- Requires schools to combine polling location by December 31 each year for the next year.
- Establishes uniform voting dates for special elections in a city, township or school district to be held on:
- the second Tuesday in February
- the second Tuesday in April
- the second Tuesday in May,
- the second Tuesday in August, or
- the first Tuesday after the first Monday in November (general election date)
New Hope Liquor License Authorization
The omnibus liquor bill containing an important provision for New Hope stalled at the legislature during the regular session. However, an amendment to the omnibus state government finance bill was adopted by the House and Senate on the last evening of the special session. One of the provisions in the amendment authorizes New Hope to issue an on-sale intoxicating liquor license for the New Hope Village Golf Course. The omnibus state government finance bill was signed by Gov. Dayton.
Though both the regular and special sessions are over, the saga at the Capital will continue due to Gov. Dayton’s line-item veto of the House and Senate budgets. A joint House/Senate commission is scheduled to meet on Friday to discuss and likely approve contracting with outside legal counsel and challenging the governor’s vetoes as unconstitutional.
The meeting is scheduled to begin at 11:45 AM and can be viewed live by clicking here.
Legislative commissions, task forces and committees do meet during the interim and a full House/Senate schedule can be found here.