Recap 2011

The 2011 regular legislative session ended with an unresolved budget that forced a partial shutdown of state government. The Republican controlled Legislature passed budget bills that balanced the budget by making significant cuts to government programs without raising any new tax revenue. Governor Dayton vetoed 9 of the 10 budget bills at the end of the regular legislative session. After several weeks of negotiations, the state government shutdown began on July 1. In mid-July, Governor Dayton announced he would accept the last Republican offer from the regular session, with certain conditions, to end the shutdown.

Preview 2012

When the legislative session opens on January 24, 2012, the biggest priority on the mind of every legislator will be the November elections; all of the members of the Minnesota House and Senate will be on the ballot.  United States Senator Amy Klobuchar and all members of the House of Representatives also will be up for re-election. Minnesota will keep all eight of its congressional districts.

This election cycle will include new legislative districts that will be shaped using the census data released last year. The Republicans in the House and Senate passed redistricting plans, which the governor vetoed. Due to the impasse, the final decision falls to a panel of judges appointed by the Chief Justice of the Minnesota Supreme Court, which will release its decision on February 21, 2012.

The high profile issues on the legislative agenda will be a bonding bill, a proposed jobs plan, government reform and the selection of a site and financing plan for a new Vikings Stadium. This is traditionally a "short" session year, in which major budget issues are off the table.

The Republican-led Legislature will focus on their "Reform 2.0" effort intended to improve efficiencies that reduce the size and scope of the state government. The governor's office has already laid out the DFL vision for creating jobs with a job creation tax credit, worker training incentives and a $775 million bonding bill, including investment in infrastructure and renovation of state-owned facilities.

Budget Surplus Forecast

Minnesota's economic forecast was released in November and projects an estimated $876 million dollar balance for the 2012-13 biennium, all of which is statutorily dedicated to state reserves. The next forecast will be delivered around March 1.

Bonding Bill

Governor Dayton presented his bonding bill prior to the beginning of session. He proposes a plan for $775 million for new investment into infrastructure. The bill includes $20 million for the Department of Employment and Economic Development specifically designed to help businesses expand in Minnesota. Speaker Zellers and Senate Majority Leader Senjem have yet to specify a dollar amount of the Republican version of a bonding bill, or what it will contain.

Jobs

Governor Dayton released a jobs plan designed to decrease unemployment through a New Jobs Tax Credit for businesses that would provide businesses with a $3,000 tax credit for each unemployed Minnesotan, veteran, or recent graduate hired in 2012 and a $1,500 credit for each new hire through June 2013. The credit only applies to new hires for full-time jobs that pay over $11.89 per hour.

The governor's jobs plan is estimated to cost $35 million, which would be paid for in part by new revenues from the Internet Sales Tax Fairness Bill. This proposal is designed to put Minnesota retailers on an even playing field with online retailers located outside of Minnesota. The new law would obligate internet-based companies to collect and remit state sales tax.

Taxes

Expect the dispute on tax policy to continue this session.  Governor Dayton's tax commissioner, Myron Frans, has traveled the state over the past several months making the case that current tax revenues tip too heavily toward property taxes, while services and internet sales are not taxed, but should be.  Governor Dayton and the DFL caucuses have announced tax proposals as part of their "jobs plan," including:  a new credit available to businesses hiring veterans, unemployed individuals or recent graduates; and improving collection of the sales tax on internet sales.    House Republicans recently announced tax proposals of their own:  immediate reductions and a phase-out of the statewide business (and cabin) property tax; expansion of the angel investment tax credit to create additional job creation incentives; and freezing the state general tax index.

Vikings Stadium

The governor set a deadline for Vikings stadium proposals and received a total of nine plans for review. The main plans being discussed are three locations in downtown Minneapolis, Ramsey County, and Shakopee.

Minneapolis' plan would contribute more than $300 million to a new $918 million stadium at the site of the Metrodome. It would funnel $150 million of existing taxes for construction and $6.5 million annually over 30 years for operation and upkeep of the stadium. But the plan does not address how the city will deal with a charter provision that caps sports facility spending at $10 million without a referendum.

Ramsey County officials, submitting a hefty 148-page document to the governor, said the Arden Hills property has had more analysis than any other location. But they acknowledged that the county's share of the $1.1 billion project, which increased to $375 million, relies on legislative backing for a local 3 percent food and beverage tax that appears to lack political support in the Legislature.

State Gaming Proposals

In order for the State to be able to finance a portion of the Vikings stadium, proposals have been introduced to expand gaming. The three main proposals are for added forms of gaming at Canterbury Downs and Running Aces horse racing venues (called a "Racino"), a newly constructed casino in the Block E district in downtown Minneapolis, and the authorization of electronic pull tabs.

K-12 Education

Improving student performance and closing the state's renowned "achievement gap" between white and minority students, continues to put a priority on education reform proposals.

Several sets of key recommendations to the Legislature are due early in the session including teacher evaluation, principal evaluation, and use of integration aid.  Look also for debate on ending the practice of "last in, first out" when it comes to teacher layoff decisions.

Health and Human Services

There will be legislation introduced regarding an establishment of a health insurance exchange. States have until January 1, 2013 to create their own exchanges before they are defaulted to the exchange created by the federal government. Mike Rothman, the commissioner of the Minnesota Department of Commerce, chairs an advisory task force to provide the governor recommendations for the design and development of an exchange in Minnesota.

Constitutional Amendments

So far, there is one proposed constitutional amendment that will appear on the 2012 ballot in Minnesota: defining marriage as between a man and a woman. Expect a substantial sum of money to be spent on this issue as both Republicans and Democrats gear up for this election.

Look for additional amendment proposals to surface, including a push for a voter identification requirement. This was proposed as legislation last year and was vetoed by Governor Dayton.  Another possible constitutional amendment may surface requiring a supermajority of the legislature to pass budget increases or raise taxes.  Other amendments may be advanced by the Republican majorities, which control this debate because the governor has no veto over constitutional amendment proposals that pass both the House and Senate.

Conclusion

The Republican leadership in the legislature is projecting a relatively short session. However, with hot-button political issues to address this session, such as a bonding bill and state funding for a stadium, it may be hard to reach agreements by the suggested adjournment date of April 30.