The final countdown: the legislative session ends in three weeks. Here’s where things stand

Senate Majority Leader Tom Bakk
MinnPost photo by Briana Bierschbach
Senate Majority Leader Tom Bakk

With just a few weeks left in the legislative session, Minnesota Senate Majority Leader Tom Bakk has started to divide the big proposals still left on the table into two categories: those that lawmakers must do and those that would be “nice to do.” 

In the must-do category is passing a $40 billion budget for the next two years, which lawmakers are constitutionally required to do by July 1. In the latter category: DFL Gov. Mark Dayton’s and Senate Democrats’ 10-year, $11 billion transportation bill and gas tax increase, as well as the House Republican-backed package of more than $2 billion in tax cuts.

But if neither of those “nice to do” bills pass this year, the Senate majority leader said, “the world is going to go on.”

“I think what people need to remember is, we don’t have to do anything with transportation, the system will just continue to deteriorate,” said Bakk. “We don’t have to do anything with tax policy, current tax policy will prevail. If we can’t find an agreement on that, let’s just get the budget done and go home. That could be where this session ends.”

Welcome to the world of end-of-session political maneuvering. Based on Bakk’s dismissive tone, and the contentious party-line battles that inevitably heat up in the waning days of session, those “nice to do” bills are sounding less likely to reach the finish line. But neither side wants to walk away from the session without accomplishing their top priorities, and Bakk isn’t new to the game. Corralling the votes for Democrats’ plan to raise the sales tax on gasoline at the wholesale level hasn’t been easy, and dangling the prospect of no tax bill at all could, in theory, help sway some GOP votes for transportation — or move other concessions into a budget deal.

Republican House Speaker Kurt Daudt says Democrats are just trying to walk into the final weeks of negotiations with a strong budget position. Compromise can be reached yet on the two-year budget, a tax package and a transportation bill that doesn’t raise gas taxes, he said.

“If the Democrats, on top of spending every dime that is available of current resources, feel that to solve a basic function of state government that they need to raise a gas tax on Minnesotans in this economy, I would really question whether they are in touch with where Minnesotans are at,” Daudt said. “Obviously, they are trying to come into negotiations with a strong budget position, but I’m not sure they have much of a leg to stand on with this issue.” 

‘Clock keeps ticking’ on the budget

The divided House and Senate are in the process of passing all their major budget bills off the chamber floors so they can head into conference committees the first week of May. That’s where the major differences between the bills must be negotiated between both chambers. Lawmakers are constitutionally required to adjourn by May 18.

But even within the state’s massive two-year budget on the line and a nearly $2 billion budget surplus, there are a lot of issues that divide the two parties.

House Speaker Kurt Daudt
MinnPost photo by Briana Bierschbach
House Speaker Kurt Daudt

At the front end of the debate, Republicans and Democrats can’t even agree on what the “base” for the 2016-2017 budget should be. House Republicans have proposed a $39.9 billion budget, only slightly larger than the state’s $39.3 billion budget over the last two years. But Democrats are working off a base projected by the state’s budgeting agency, which says the costs of all current state programs will go up to $41.1 billion for the next two years.

Settling on final targets for each area of the state budget is the first thing Bakk and Daudt must figure out. But within those budget divisions are major policy roadblocks. In health and human services, Republicans want to cut $1 billion from the budget and dismantle MinnesotaCare, a program that’s targeted at low-income, working Minnesotans who make too much to qualify for Medicaid but aren’t offered a plan through work or can’t afford one on their own. 

Bakk says that proposal is a nonstarter for Senate Democrats. “If anyone wants to question our sincerity in doing that, they just have to look back at the 2005 session,” he said. “The Republican governor and the Republican House, that’s what they wanted to do, well the Democratic Senate said no and we had to shutdown state government over it. I don’t think they should think we are not serious about that.”

DFL Gov. Mark Dayton has doled out equally harsh criticism of Republican plans to take down MinnesotaCare, and he wants far more money pumped into education in the next budget. House Republicans passed their education bill early Saturday evening, which spends $157 million more over the next two years. Dayton has proposed spending nearly $700 million out of the budget surplus in education, much of it on his signature universal pre-kindergarten proposal. 

“There’s time remaining, but the health and human services bill, like the education bill, they aren’t even in the same ball field that we are on in terms of getting into any kind of meaningful discussions,” a frustrated Dayton said last week. By law, his budget has been out for months, and he said he was concerned legislators hadn’t made enough meaningful progress with little time left in session. 

“We are a very long way from resolution — the clock keeps ticking,” he said. “I realize the bills are progressing through the various phases, but on so many of the key ones we remain so far away from one another.” 

Navigating the ‘nice to do’ 

Even on the “nice to do” bills, Dayton and Bakk had some harsh criticisms for Republicans’ tax proposal last week, which aims to cut $2 billion in taxes by phasing out things like the state income tax on Social Security, the statewide business property tax, and creating a state personal exemption to match the one at the federal level, among other things. Dayton said tax relief should be aimed at middle class families in the bill, but the personal exemption phases out after a few years. 

Gov. Mark Dayton
MinnPost photo by Briana Bierschbach
Gov. Mark Dayton

“Middle income tax cuts are something I could look at, but they provide those for two years, and then eliminating the estate tax and biz property tax are all permanent,” he said. “[You get] $282 for a family of four for two years, and then the wealthily Minnesotans and the estate tax for eternity?” 

Bakk, who has been equally critical of the Republicans tax cut proposal, and the future budget gaps it could create, understands the proposal could be a critical leveraging tool going forward. “I just sense the House wants a tax bill,” he said.

That could help Democrats move forward a few of their own “nice to do” bills. That includes their transportation bill, but Senate Democrats also want to see at least some money put into the state’s budget reserve, even though it’s not required by law. Their current budget puts $250 million into the rainy day fund as a buffer against future deficits, something Bakk said they “owe to the next Legislature.” On top of all that, Dayton has proposed an $850 million bonding bill this session.

Daudt confirmed that tax cuts are critical for Republicans, but he’s also walking into the final weeks of the session saying lawmakers can do it all. In addition to tax cuts, he also wants Democrats to jump on board with the House GOP’s $7 billion transportation plan, which spends some money out of the surplus and moves other resources around to pay for road and bridge projects over the next decade.

Daudt says that the presence of a surplus means that “our responsibility is to come down here, roll up our sleeves and make sure we don’t collect too much [tax money] from Minnesotans. Leaving some money in their pocket is what gave us this surplus in the first place, or a big portion of it.”

Comments (27)

  1. Submitted by Ralf Wyman on 04/27/2015 - 11:21 am.

    Actually, Speaker Daudt, this is the economy where it makes sense to invest in transportation, and our state can handle a modest increase in the wholesale gas tax.
    First, gas prices are at a level where an increase of a few cents a gallon can be easily absorbed by both citizens and businesses. When gas was approaching $4 a gallon? Nope. But prices are down and expected to stay low for some time to come, based on global demand.
    Second, our Minnesota economy is doing well. There are areas of stress, no doubt. The Range is dealing with big layoffs. If anything, that’s a reason to invest more in transportation right now. Let’s get more highway heavy work, bridge repair, and transit infrastructure.
    Overall, the Minnesota economy is much stronger than our upper midwest neighbors (sorry, Gov. Walker, but it is just true!). Our state’s unemployment rate is well below the national average.
    I think a strong case can be made that our legislature & governor acting to invest counter-cyclically last biennium was a good contributor to our success.
    Let’s not cut that off in a hurry.

    • Submitted by Bill Willy on 04/28/2015 - 01:20 am.

      Good basic point

      I was riding into town with my neighbor the other day when I noticed the price of gas was $2.30 a gallon (I think – somewhere right around there, anyway). I saw that and thought about this whole “gas tax issue” and how, if the Governor’s gas tax plan was implemented right then, the price would be $2.46, and how, a year or 18 months ago, people would’ve signed year-long contracts if they could’ve gotten a price that low.

      In other words, according to Republicans, as usual, even though people seemed to be able to squeak by relatively fine when gas was up around $3.60 to $3.80 a gallon, and the unemployment rate was dropping, and per capita income was doing better, all at the same time, if we raise the price of gas tax to $2.46 per gallon to actually PAY for transportation infrastructure maintenance it would absolutely crush the same people that were paying $1.00 to $1.50 per gallon more than that not all that long ago and send us all into the pit of economic ruin.

      As you also mentioned, “those in the know” are saying it’s likely the price of gas is going to be staying about where it is for the next couple of years (is what I heard). People can afford $2.50 per gallon gas and, despite all the knee-jerk, Republican-fueled whining, wouldn’t even think about it two or three months after it happened. And if they DID think about it and got mad they could take a breath and calm themselves down by remembering they were (finally) chipping in their fair share (like everyone else on the road) to pay for the transportation system that enables them to move around their part of America freely.

      And not to change the subject, but how come you Republicans never bark like hyenas when Exxon, Chevron, et all, and the commodities traders on the Street of Wall and in Chicago jack the price of gas to however much they think The Market will be able to wring out of the American public?

      Not that that can (technically) be called “a tax,” but how come the price of gas going up when private industry, or “the market,” raises it is never an issue at all?

      For example, gasoline cost 99 cents per gallon in 1999, but nearly $4.00 per gallon seven or eight years later. That cost the hard working families of Minnesota way more than a 16-cent per gallon increase (the increase of the 2000s was more like $3.00 per gallon, in case your calculator’s broken down), but I didn’t hear any of you making a peep.

      But now, here come the big bad Democrats trying to raise the price an unimaginable 16 cents. And, what’s worse, they want to use that money to make those road and bridge repairs you ran on, which is a whole lot more than Exxon, Chevron, et all, or the commodities traders ever volunteered to do with any of the revenue they generated for themselves, wouldn’t you say?

      • Submitted by John Appelen on 04/28/2015 - 01:07 pm.

        Logic Check

        I actually understand that the “gas tax” should possibly go up because we are using fewer gallons as the cars become more fuel efficient. And that road maintenance costs keep going up with the CPI. However it does seem that DFL folk believe that tax rates are the equivalent of a roller coaster car on the lift conveyor. (ie they can only go up) So one little increase isn’t a big deal, however 20 of them really start to add up. Just look at our sales taxes if you question this, it is amazing we still have brick and mortar stores employing people in our communitees given this penalty we are charging them with.

        My point is that gas taxes and sales taxes are regressive in nature. A couple of years ago the DFL raised tax rates to be more progressive. So it seems we should be using some of that extra income tax money to improve the roads. What am I missing here?

        Why again does transportation need to be a stand alone budget? Can we not trust our politicians and bureaucrats to manage the revenues we give them from many sources?

        • Submitted by Mark Snyder on 04/29/2015 - 01:43 pm.

          No, we cannot.

          Anyone who has been paying attention to the Legislature over the past five to ten years should know the answer to that question is no. Especially when Republicans are in charge. Rather than pay for education outright, they relied on shifts and gimmicks to balance their budgets. Imagine now how bad that would get if you add transportation to that mix.

          • Submitted by John Appelen on 04/29/2015 - 04:09 pm.

            Gimmicks or Practical Tools

            We know that tax revenues increase and decrease with the economy. And we know that people want their government spend / services to be stable and increasing slowly. (ie no cuts)

            There are 2 ways to manage this:
            1. Have government collect the extra money in the good times, hold it and use it in the poor times.
            2. Have government use the tools they have at their disposal to borrow money in the poor times and pay down the shifts in the good times.

            Now that we are in the good times the government can either give back the excess collections to the citizens, hold the money in the rainy day reserves, or spend it on a wish list.

            Personally I would rather have the government “borrow / shift” in the lean times than have them holding and/or spending the money we could be using to care for our families.

  2. Submitted by Thomas Swift on 04/27/2015 - 11:27 am.

    So the legislature comes up with nothing but constitutionally mandated bills, and Dayton vetos everything else ’cause, Unbound!

    Sound like a plan!

  3. Submitted by Mike Davidson on 04/27/2015 - 03:42 pm.

    Why So Short?

    Perhaps something we should all be looking into and forcing upon our representatives is the amount of time they spend at the Capital each year. It’s unfair to citizens who elect these people to office when important legislation like transportation and education could get scrapped because they can’t decide on a budget. So what if they have to work through June, July, and (gasp!) August?!?!

  4. Submitted by Logan Foreman on 04/27/2015 - 04:49 pm.

    How much do the rich get back from Daudt?

    $250 a year for the middle class is a joke. And we already know that the rich (estate tax) and large businesses (business property tax) will rake in a perpetual tax break, which they hardly need. The republicans all for the rich and big business joined by the group who gets screwed by economic policy but can’t get over social issues. Luckily that last group will fade dramatically in the next few years

    • Submitted by Bill Willy on 04/27/2015 - 11:21 pm.

      Correction

      It’s funnier when the part about how the $250 a year is how much a family of four would get is added to the story, and how that translates to $62.50 per person per year (for two whole years) which is a little over five whole dollars a month.

      But then again, that’s if you make $50,000 or $60,000 a year, they say. If you make less it slides down. If you make more it slides up (“To infinity and beyond!”).

      Other than that minor tweak, everything else you had to say sounds about right to me.

      As far as what can be expected from Santa Daubt, even though it’s a rough number, business people, as “a group” (and that “group” usually includes the rich people you’re talking about, I think), would get somewhere between $850 million and $1 billion a year on the way to, and every year after, 2021.

      Like I keep saying, “There are 5.5 million people in the state and just 500,000 of them – a little less than 10% – are business owners.” So if you divide a billion dollars a year by 500,000 and call that the average, that would mean the average business owner would get or save $2,000 a year, every year, forever, plus his or her smokin’ hot $60 per year for two years middle class cut too.

      The estate tax “relief” part of the package would mean that about 900 Minnesota families or individual heirs would save (or receive via savings by way of their deceased relative having to pay less post-life tax) about $340 million which is somewhere around $300,000+ per recipient, and is more than two times what Republicans are proposing to spend on the educations of about one million Minnesota kids.

      Some people think he’s not all that smart, but I’d say Speaker Daubt knows exactly what he’s trying to do. I don’t think he’s going to get away with it, but at least – when he’s running for Governor in 2018, if he makes it that far – he’ll be able to say, with a clear conscience, “I tried to let you keep your money!”

      • Submitted by John Appelen on 04/28/2015 - 07:39 am.

        Assumptions

        Your argument assumes that it is correct that the businesses and families should be paying those taxes in the first place. Should businesses be paying a special state property tax when we citizens do not? Should families who worked, saved and invested to amass a high net worth be forced to give part of it to the government just because someone died? (especially when it forces them to sell off part of the farm or business) Besides the fact that MN is not aligned with the federal tax law on this.

        It seems people here should research bar stool economics again.

  5. Submitted by Tom Anderson on 04/27/2015 - 08:00 pm.

    Given that very little is likely to get done in the next 3 weeks

    Eliminating next year’s session makes a lot of sense since all the players will be the same. Pass the budget and bank the windfall that comes from not having a session next year. Don’t forget to watch how only three people will be making the big decisions during the last 2-3 days of the session. The rest of our Senators and Representatives are just window dressing.

  6. Submitted by John Appelen on 04/27/2015 - 10:02 pm.

    This will be Fun

    The DFL aggressively raises spending 2 years ago, and now the GOP tries to encourage restraint. I hope they succeed to some extent.

    Dayton and the DFL’s desire to raise the on going spending bench mark just because we have one good year is disturbing. Now if they had said let’s use the extra for roads or to pay off some bonds, then that would have been investing the windfall.

    It really was dull and dangerous to have one party running the show.

    • Submitted by Bill Willy on 04/28/2015 - 11:53 am.

      Restraint on display

      Hi John,

      If you happen to read this in time, and you have access to MN public tv, or can watch on the internet, the House Health and Human Services Finance Committee’s omnibus bill is going to be debated today. The floor session starts somewhere around 1:00, and will probably running into the evening. There are three bills scheduled to be heard:

      – Tony Cornish’s Omnibus Public Safety and Crime Prevention Finance bill

      Includes the bills that promote public safety and crime prevention by allowing the sale of “silencers” or, as proponents prefer to call them, “sound suppressors,” and allowing anyone with a conceal/carry permit to pack on state capital grounds and inside the capital building without having to notify capital security staff that they’ll be doing that (both related to everyone’s second amendment militia rights).

      – The Omnibus Liquor bill.

      Sunday liquor sales will be a big part of that one, I think. Not for sure, but probably, Speaker Daubt has said in the recent past.

      And, for the grand finale (unless they change the order in which House Majority Leader Peppin said the bills would be taken-up)

      – Matt Dean’s HHS Finance omnibus bill.

      That debate will provide a Grade-A example of the thinking, strategy and mechanics behind that Republican Restraint you referenced, no doubt. I sure hope you and lots of other Minnesotans get a chance to see it. (Tell your friends and relatives, everyone!)

      House & Senate Broadcast Television Schedule – a list of upcoming events:

      http://www.house.leg.state.mn.us/htv/htv.asp

    • Submitted by jason myron on 04/28/2015 - 06:42 pm.

      See Kansas and Wisconsin

      for proof of your last sentence.

  7. Submitted by Paul Udstrand on 04/28/2015 - 08:20 am.

    So the best you can hope for…

    Whenever republicans get into power the best you can hope for is that they get nothing done and just kick the can down the road for future generations. That’s exactly what happened for 8+ years. People forget that the “cost” of transportation is so much higher now because in addition to new infrastructure we’ll need because of growth (don’t ask me how all this growth is happening what with all the wealthy fleeing out high taxes and all, but there have you it), we let the system deteriorate for over a decade with under spending and inadequate revenue. So now it’s a double whammy that’s not going to get any cheaper.

    So go ahead… do nothing and see what happens and rejoice in warm bath of small govment.

    • Submitted by John Appelen on 04/28/2015 - 09:09 am.

      Roads and Bridges

      For a group with supposedly inadequate funding, I am amazed at the number of roads under construction and expansion. Where again are these poor roads?
      http://www.dot.state.mn.us/roadwork/current.html

      And Lord knows the beautiful bike bridges and paths are going up all over. As well as the incredibly expensive light rail projects.

      I guess I am curious, how good of roads is good enough?

      • Submitted by Dennis Wagner on 05/02/2015 - 06:57 pm.

        JA

        That is the magical question now isn’t it? When is something good enough.
        Same could be said for education, tax subsidies, welfare, water quality, air quality, medical care, safe streets, sewage disposal, farm run off, park space, bank regulation, etc. etc. Thus the great debate!

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