Minnesota Weekly Legislative Update: Budget Surplus and Sunday Alcohol Sales

With the first committee deadline rapidly approaching, policy committees worked overtime this week processing bills. There was also House floor action on two higher profile issues the Legislature is addressing this session: preemption of local governments from adopting wage, leave and scheduling ordinances and Sunday sales of beer and alcohol. On Thursday, the House passed HF600, the House’s preemption bill authored by Rep. Pat Garafalo (R- Farmington) on a 76-53, nearly party-line vote. While social justice groups demonstrated and waited outside the House Chamber, DFL members offered a number of amendments that would have added provisions for sick and safe leave, health insurance, preventative pay for work scheduling notice, wage theft penalties and paid family leave. All these amendments were withdrawn. The Senate companion, SF580, authored by Sen. Jeremy Miller (R-Winona) awaits action on the Senate floor. Governor Mark Dayton has expressed serious reservations about this proposal.

The House also concurred with the Senate’s language authorizing Sunday sales of beer and alcohol in Minnesota. The Senate’s only change from the version that passed the House floor was to move the start time for sales back an hour, from 10 a.m. to 11 a.m. Both versions required sales to end at 6 p.m. The concurrence motion passed 88-39. Governor Dayton signed the bill into law, making good on previous indications that if this proposal reached his desk, he would not stand in the way. This legislation will take effect July 1, 2017.

State Budget Surplus Increases

On Tuesday, Minnesota Management and Budget (MMB) announced that the state’s budget surplus has increased to $1.65 billion for the 2018-2019 biennium, a $250 million increase over prior estimates. MMB also estimates a slight increase in the current biennium’s surplus, up $87 million from previous estimates to $743 million. Higher than expected income and taxable sales growth and a stronger corporate profits forecast resulted in a higher tax revenue projections. Minnesota’s economy continues on a moderate growth path and the state continues to add jobs at a steady rate, keeping the unemployment rate low. This forecast, however, also notes that considerable uncertainty remains about which U.S. economic policies will be enacted in the near term—and their impact on the economy. Until these potential policy changes become clearer, their impact on key economic sectors remains a forecast risk. Because of this uncertainty, and the state’s past challenges with deficits, MMB Commissioner Myron Frans urged caution and emphasized the importance of maintaining a structurally balanced budget moving forward.

Both parties claimed credit for the surplus and provided a preview of their budget plans in dueling press conferences following the forecast. Republican leadership identified tax relief as its top priority, noting that surpluses on top of a healthy budget reserve are a result of the state taxing too much. Over the past two years, there has been no tax relief for Minnesotans, while government spending has continued to increase. Republican leadership emphasized that government expenditures should not grow at a faster rate than the average Minnesotans’ incomes and that their budget will reflect these priorities.

DFL leadership argued that the current, and consecutive, budget surpluses are a result of the tax changes they enacted in 2013. They encouraged Republican leadership to be cautious, to continue replenishing the state’s budget reserve, and to leave money on the bottom line to address potential federal government changes that are likely to occur after session adjourns.

With the forecast providing House and Senate leadership with budget numbers, tax and spending targets can now be finalized. These targets, which will be released in the next couple weeks, will give finance committees the direction they need to pass bills funding state government by Friday, March 31, which is the third and final committee deadline. For more information on the forecast, MMB’s budget documents can be found here:

Quick Fact Sheet
Full Budget
Forecast Presentation

Environmental Permitting Changes and Elimination of the Environmental Quality Board Proposed

This week, SF1087 and HF1291, legislation proposed by the Minnesota Chamber of Commerce to streamline environmental permitting, made their way through the House and Senate committee process. SF1087, introduced by Sen. Bill Ingebrigtsen (R-Alexandria) was heard in the Senate Environment and Natural Resources Policy and Legacy Finance Committee on Wednesday. It passed by a party line vote of 7-4 and was referred to the Judiciary and Public Safety Finance and Policy Committee where it will be heard next week. HF1291, introduced by Rep. Dan Fabian (R-Roseau) was heard in the House Environment and Natural Resources Policy and Finance on Tuesday and passed 15-8 with Rep. Rob Ecklund (DFL-International Falls) the only member from the DFL voting in favor. The bill was heard in Civil Law and Data Practices Policy on Thursday and passed by a voice vote. It heads to the Government Operations Committee next week.

The aim of the bill is to make the environmental permitting process in Minnesota more efficient. This bill makes changes to Department of Natural Resources (DNR) and Pollution Control Agency (PCA) environmental permitting processes. Some of these changes include: requiring the DNR to provide a schedule to permit applicants, allowing all permit applicants to pay for expedited services, and prohibiting the DNR from terminating permits if there is a government shutdown. HF1291 was amended to include a deadline extension for wild rice water quality standards by the PCA.

This bill also eliminates and reassigns the duties of the Environmental Quality Board (EQB). The EQB was formed to provide coordination across agencies on environmental issues that are multi-jurisdictional. It is made up of nine commissioners and five members of the public.

Proponents say this bill is not changing any standards, but the parameters this bill puts in place around existing procedures will streamline and ultimately speed up the rulemaking and permitting process in our state. Opponents of the bill agree that streamlining can be good. However, they have concerns that this bill would limit the public’s voice and do not believe streamlining should happen at the cost of a healthy environment.

HF1291 was amended to include an extension for the MPCA to adopt rules implementing a revised water quality sulfate standard. Currently, rulemaking is required to be completed prior to January 15, 2018. The amendment extends this deadline by a year.

Special Taxing Districts Proposed to Pay Transit Line Operations

The House Transportation and Regional Governance Policy Committee heard legislation this week that would capture increased property tax revenues along fixed transit lines, including light rail to pay for operating expenses. HF1315, authorized by Rep. Linda Runbeck (R-Circle Pines), would authorize the Met Council to create special taxing districts for all existing and new fixed transit lines that it operates. Similar to tax increment financing districts, these special taxing districts would capture revenue from the increase in property taxes paid by commercial-industrial and non-homestead residential properties along the line. Proponents argue that these special taxing districts would help eliminate the need for state dollars to subsidize operation costs for these transit lines. Opponents raised concerns that this proposal expands the authority of the Met Council, an unelected body. In contrast, TIF Districts are authorized by elected city officials who are accountable to constituents.

HF1315 passed and was referred to the House Transportation Finance Committee.

Status Updates

Below are status updates on legislation of interest summarized in previous weekly updates:

• Real ID. Passage of Real ID legislation became more complicated this week when Governor Dayton announced that he wants to enable undocumented immigrants to get Minnesota driver licenses and wants the Legislature Real ID bill to help make that happen. Both the House and Senate Real ID measures bar the possibility of creating licenses for people in the country illegally. SF 166 the Senate’s version of Real Id is scheduled to be heard on the Senate floor this coming Monday. For more information on this legislation please refer to our January 13 update.

Upcoming Important Dates

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.

Legislative Break

The House and Senate will be in recess Saturday, April 8 through Monday, April 17. No Committee, floor, or other action will take place in either body that week.

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