Minnesota Weekly Legislative Update: 02/03/2017

Committees Transition to Processing Bills

Legislative committees completed the pivot from background briefings to processing bills this week, working on topics ranging from how best to provide paid parental leave and preemption of local regulation of labor laws to Public Utilities Commission reform and technical legislation overhauling Minnesota’s real property statutes. Both the House and Senate Tax Committees heard bills — many of which were part of the 2016 Omnibus Tax Bill vetoed by Governor Dayton last summer — for possible inclusion in each Committee’s omnibus bill.

Bill Preempting Local Employment Laws Advances

HF 600, a bill prohibiting local units of government from enacting local labor laws, received its first hearing in the House Job Growth and Energy Affordability Policy Committee Thursday. Enacting preemption, sometimes referred to as uniformity legislation, is a major legislative priority for Minnesota's business community and will be one of the more contentious issues addressed during the 2017 session. Authored by Rep. Pat Garofalo (R-Farmington), HF 600 would prohibit local units of government from regulating private businesses by enacting:

• Minimum wages higher than the state minimum wage
• A requirement for paid or unpaid leave
• A work hours or scheduling requirement
• Mandates on benefits, working conditions, or other terms and conditions of employment

HF 600 applies retroactively to local ordinances enacted on or before January 1, 2016, negating the sick leave policies recently enacted by the Minneapolis and St. Paul City Councils.

Committee members heard almost four hours of testimony. Proponents were primarily employer groups concerned about the administrative burden of complying with a "patchwork" of local ordinances governing wages and benefits, especially in the construction and transportation industries where employees are frequently moving from location to location. Opponents of this legislation highlighted the negative health impact a lack of sick leave imposes on communities, the economic impact on families who lost wages, and the loss of local control this bill would produce.

HF 600 passed on a 13-9 party line vote and was referred to the House Government Operations Committee. The Senate companion, SF 580, authored by Sen. Jeremy Miller (R-Winona), awaits action by the Senate Jobs and Economic Growth Finance and Policy Committee.

Tax Credits for Paid Family Leave

Discussion about how best to address the family leave issue was also debated in the context of tax policy this week. Authored by Rep. Sarah Anderson (R-Plymouth), HF315 was heard in the House Job Growth and Energy Affordability Policy and Finance Committee. The bill provides a tax credit to both employers who offer family leave and employees who lose wages because their employers don’t offer the benefit. For employers to claim the credit, the employer must have a policy in place for employees who have worked there for more than one year and provide two weeks of leave. Employees who work at businesses that don’t offer parental leave may claim a credit for 25 percent of their lost wages during that leave. The maximum tax credit for employers is $3,000 and for employees is $1,000.

HF 315 passed 12-9 and was referred to the House Tax Committee. The Senate companion, SF 454, authored by Sen. Carla Nelson (R- Rochester), awaits action by the Senate Tax Committee.

House and Senate Tax Committees Start Working Toward Omnibus Bills

The House and Senate Tax Committees started hearing bills this week for possible inclusion in each Committee’s omnibus bill. Many of these bills were provisions contained in the 2016 Omnibus Tax bill vetoed last summer by Governor Dayton. Proposals ranged from exempting social security taxes and eliminating the estate tax to changing the research and development credit and lowering the income tax rate for pass-through income. Discussion in both Committees centered on how best to create a tax climate that keeps Minnesotans here and encourages businesses to start up or expand in Minnesota by reducing their tax burdens. The DFL’s main concern with the bills discussed this week is whether there are better targeted approaches to help larger portions of the population in need, such as the Working Family Tax Credit being proposed by Governor Dayton.

House Tax Committee Chairman Rep. Greg Davids (R- Preston) is hopeful to hear details of Governor Dayton’s tax proposal in the upcoming week. The Governor’s office has indicated that it should be finalizing and releasing language implementing the Governor’s tax proposals next week.

Proposals Take Aim at Public Utilities Commission

A number of bills have been introduced limiting the authority and changing the composition of Minnesota’s Public Utilities Commission. The Commission consists of five members appointed by the Governor and regulates the state’s large electric, gas and telecommunications companies. Commission members serve staggered six-year terms. Legislative criticism of the Commission ranges from leaning too heavily to the metro area to unnecessarily slowing the approval of needed energy projects.

A number of bills — ranging from changing the Commission’s makeup to allowing projects to bypass the Commission — have been introduced and began moving through the Committee process in the first month of session. One of the fastest moving proposals is SF 141, exempting rural electric cooperatives and municipal utilities from Minnesota’s net metering law. Authored by Sen. Bill Weber (R-Luverne), SF 141 removes the Commission’s ability to oversee fixed charges paid by distributed generation customers and resolve disputes between these customers and their local utility providers. SF 141 was heard in the Senate Energy and Utilities Finance and Policy Committee this week. Proponents argued that this proposal was placing an undue financial burden on cooperatives and municipal utilities who needed to involve the Commission in relatively minor net metering disputes. Opponents, mostly from the solar industry, testified that, if enacted, this proposal will effectively curtail the growth of distributed generation in outstate Minnesota.

SF 141 passed 6-4 on a party line vote and was referred to the Senate Finance Committee. The bill’s House companion, HF 234, has cleared all House policy committees and is currently on the General Register awaiting action by the full House.

Upcoming Important Dates

February Budget Forecast. The February Budget & Economic Forecast will be released on February 28. This forecast is used by the Governor and Legislature to set the FY 2018-2019 budget and ensure that the FY 2016-2017 budget remains on track and in balance.

Committee Deadlines have been announced by legislative leadership. They are:

• First Deadline — Friday, March 10, 2017: All policy committees must act favorably on a bill in the House of origin.
• Second Deadline — Friday, March 17, 2017: All policy committees must act favorably on bills or companions of bills that met the first deadline in the other chamber.
• Third Deadline — Friday, March 31, 2017: Committees to act favorably on major appropriation and finance bills.

The deadlines do not apply to the House Committees on Capital Investment, Ways and Means, Taxes, or Rules and Legislative Administration, nor to the Senate Committees on Capital Investment, Finance, Taxes, or Rules and Administration.

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