Tom Bakk always believed “this was going to be one of the easier legislative sessions I’ve ever participated in.”
Explained the DFL Senate Majority Leader, “We’ve got some money around, and there’s a little basket of things that have to be done this session. It’s starting to come together as it should.”
It took until early April, though, before any of this was publicly apparent. That’s when Democrats who control the legislature reached a deal on a 5 percent raise for long-term care and disability workers, followed by cutbacks to an eventual $77 million Senate office building. A few days later, there was a minimum-wage deal. A bullying bill, shot down in 2013, became law.
The current 11-day break is sort of a fishing-for-votes opener for the 2014 election, when the House, but not the Senate is on the ballot. Democrats are flying to mostly rural areas to tout the above accomplishments; the GOP is fighting back virtually, with a flurry of communications eagerly criticizing Democrats for everything listed above plus MNsure, last year’s tax increases, and what they say is cooked minimum-wage/office-complex deal.
“Single party control, with Democrats running everything, obviously has been pretty bad for Minnesota,” House Minority Leader Kurt Daudt said on the House floor last week. “When you go home, you are going to have a lot to answer to.”
The DFL’s late-session tests are these: a wide gulf on further spending and tax relief; working with and possibly going around the GOP on around a billion dollars of bonding and capital projects; and settling their own nasty split on medical marijuana.
Great divide on taxes
For starters, there’s still roughly $600 million of the $1.2 billion budget surplus left to spend, and Democrats have very different ideas about how to do that.
After a surprising sideswipe from DFL Gov. Mark Dayton, who accused senators of stalling progress to move the office building project forward, Democrats agreed to a $443 million tax bill in March that cuts three business-to-business taxes passed last year and conforms some state and federal tax code. On top of that, the bill pumps $150 million in the state’s rainy-day budget reserve.
But it doesn’t look like the House and Senate Democrats were in the same room when it came time to plan their second tax bills. The two proposals cover dramatically different tax territory with little crossover.
The House focuses most of its $103 million in one-time property tax relief checks for homeowners, renters and farmers, plus an sales-tax exemption extension for local government joint powers agreements starting in July 2015. The Senate’s $101 million tax bill left out one-time checks and instead, for sales tax breaks, dedicates more revenue to include “any instrumentality” of a city joint powers arrangement.
That will save local governments money and result in property tax reductions, Senate Taxes Chairman Rod Skoe said, taking the long view.
The Senate bill spends the rest of the money on a number of smaller provisions, like tax conformity to save foreclosed homeowners money, allowances for counties fighting aquatic invasive species and teaching tax credits for parents of children who suffer from dyslexia, autism and attention deficit hyperactivity disorders.
Bakk also included a provision that makes way for state negotiators resume Wisconsin income tax reciprocity talks. A deal would allow residents who live in one state but work in the other to file a single state income tax return.
Dayton — who has been quiet as to what he’d like to see in a second tax cut bill— is certain to want deeper tax cuts than either the House or the Senate have offered up. Dayton pitched $616 million of tax givebacks earlier this year, including full federal tax conformity and more tax credits for angel investors.
To spend or not to spend
The governor is also likely to call for less ongoing spending than the Legislature. In his supplemental budget proposal, Dayton proposed just $162 million in new spending out of the surplus on things like propane assistance and pay raises for long-term care workers.
But House and Senate Democrats have passed supplemental budget bills that spend $322 million and $209 million, respectively.
House Democrats, facing voters this year, invest money in fixing potholes. As with their fly-arounds, they focus a good deal of their spending on rural Minnesota. In their budget, outstate Minnesota would see $25 million broadband access grants and other grants and incentives for Greater Minnesota small businesses and foundations.
The Senate wants to put money into helping at-risk nursing homes absorb costs of the minimum wage increase and give college students financial assistance. The House wants to put about $58 per pupil in the state’s general education formula, while the Senate has pitched putting $20 million in preschool and other early childhood education programs.
“I don’t question the wisdom or value of almost every proposal that I’m aware of, but they add up to quite a bit of money,” Dayton said.
Dayton hesitated to say he would use his gubernatorial authority to line item veto spending bills to get them in the shape he desires. “I’m not going into threats in this stage,” Dayton added. “I’d rather work it out with them in a cooperative way.”
Republicans and bonding
While Republicans don’t currently control any of the levers of state government, they do get a say in the bonding bill. It takes a 60 percent majority to pass a bill that authorizes debt, meaning Democrats in the House need eight GOP votes and two Republican votes in the Senate.
Last session, DFL leaders made a handshake agreement with Republicans to spend just $850 million on a bonding bill in 2014, after about $150 million was spent last year on Capitol restoration and a few smaller projects. Republicans have warned against going back on that arrangement; on bonding, Daudt characterizes his party as the “adults in the room.” A large bonding bill fell short of needed GOP support to pass last year.
Dayton has called the $850 million cap “excessive,” as in excessively restrictive. “My opinion on that is rescind the agreement,” he said. “There’s certainly capacity to go higher than that.”
To get around the agreement, House and Senate Democrats are pitching smaller, separate cash-only bonding bills using money from the surplus. Those won’t require GOP help because they don’t borrow money. The House has proposed $125 million in cash bonding in addition to a package of projects costing $850 million. The Senate hasn’t released their bonding bill yet, but Bakk said it’s likely to include roughly $165 million in cash bonding.
Dayton proposed his own $986 million bonding bill earlier this session, and he has issues with the House’s list of projects — namely the lack of full funding proposed to finish the Capitol restoration project and for upgrades to the state’s security hospital in St. Peter. He would also rather not do cash bonding, since traditionally bonding repays long-term capital projects over a long number of years.
“Putting cash into a bonding bill to me is antithetical to the whole purpose of that enterprise,” he said.
Final medical marijuana push
Democrats have also entered into a sort of three-way staring contest on the issue of medical marijuana. Each side hopes the other blinks first.
Dayton appeared visibly frustrated before heading on break and dared legislators to take the issue into their own hands. The governor has taken significant heat for his opposition to a medical marijuana bill this session, and has been criticized for flip-flopping his position. “Let’s see ‘em vote. They’ve hidden behind their desks for the whole session while I’ve taken this on,” Dayton said. “If they want to vote, let them vote. Let’s see.”
The Senate took him up on that offer, holding the year’s first hearing on medical marijuana. The bill, which would allow patients to receive a card and purchase medical marijuana from approved dispensers, didn’t get a vote in a committee hearing but will come back up after the break.
In the House, DFL leadership is scrambling after Republican Rep. Pat Garofalo, R-Farmington, announced he would offer an amendment to insert medical marijuana legislation into a larger health policy bill on the floor. Garofalo’s amendment also would not allow smoking marijuana, but authorize it in pill form.
The larger health care bill was slated for a floor vote last week, but leadership pulled it from the agenda until a compromise could be struck with Dayton on medical marijuana. A standalone House bill has stalled in the legislative process, but advocates are confident it would pass if given a vote on the full floor.
“We feel confident that we can get this done legislatively this year,” said Heather Azzi, director of Minnesotans for Compassionate Care and a lead advocate for medical marijuana. “We are ready to compromise.”