Tuesday, May 19, 2009

End of Session Wrap-Up

The 2009 legislative session just ended and news reports say that a “deal” was not made on the budget. In fact, the Legislature did deliver a balanced budget to the Governor after five months of rigorous work.

During the last five months, all committees in the legislature worked to enact significant cuts to the state budget and hold the line on spending in major areas. We cut ethanol subsidies, agency administrative budgets and bureaucracy, reimbursement rates for certain health care providers, and many more items.

We also made significant reforms. We reduced mandates on schools and other local governments, reduced reporting requirements, and restructured health care payments. We also agreed with the Governor to delay $1.8 billion in payments to K-12 schools.

In addition, we made prudent use of federal money to maintain health care eligibility for more than 100,000 people, many of whom have recently been laid off, and to cap higher education tuition increases.

That left us with a $1 billion gap in a $6.4 billion deficit that could only be solved in one of four ways. The first option included the Governor’s proposal to borrow the money and pay off the bonds for 20 years plus $600 million in interest. Constituents overwhelming rejected this idea in my legislative survey, and Democrats and Republicans voted against this option on the House floor almost unanimously.

The second option was increased gambling revenue. We also voted on this idea and it did not pass. The Governor said he would not sign a bill that increased revenues from gambling.

The third option was a tax increase. We passed a bill that would raise the money from a higher income tax rate for joint filers making more than $250,000 a year, a surcharge on credit card companies that charge higher than 15% in interest rates, and increased taxes on alcohol. Our plan dedicated this funding to K-12 schools, nursing homes and similar facilities, and our hospitals. We felt that this was a pay-as-you-go approach as opposed to a borrow-and-spend approach. The Governor vetoed this bill.

The final option was more cuts. The Governor signed all of our finance bills, but vetoed our bill to raise revenue. To close the gap left by his veto, the Governor said he would make some line-item vetoes in those bills and then use his unallotment power to unilaterally make cuts starting on July 1. The first line-item veto he made was $380 million in General Assistance Medical Care. GAMC provides health coverage to 30,000 adults who make less than $7,800. Seventy percent of these patients have a serious mental illness and many of them—including veterans—are homeless. In public testimony, the Governor’s own Department of Human Services Commissioner Cal Ludeman said these people are the “poorest of the poor, and the sickest of the sick.” These are precisely the people—the least of these—for whom a government safety net is required.

In addition, our hospitals like Regions and HCMC are expected to make significant job layoffs and reductions in services because this funding makes up such a large part of their budgets. HCMC in Minneapolis could be cut up to $100 million and Regions could be cut up to $46 million. This will drive up health care premiums for those of us with private health coverage.

Readers of my columns and blog will know that I do not engage in a lot of partisan rhetoric and finger-pointing. But that line-item veto, and the subsequent party-line vote in the House that upheld the veto, were the coldest and fiscally counter-productive political actions I have ever witnessed.

The Governor’s unallotment is also likely to cut higher education significantly, and the University of Minnesota tells us that will likely increase tuition by about 15%. Circle Pines and Lexington residents will likely see increased property taxes due to his proposed cuts to local government aid and the rest of us will lose a lot from cuts to the market value homestead credit and the property tax refund program. Taxes hurt, but so do cuts.

There was a lot of good legislation that ran under the radar this session, due to the budget shortfall, including some of my own legislation. But that can wait for a future entry. Have a good summer, and I hope that you will share your thoughts with me in the months to come.

Thursday, May 14, 2009

Questions about the End of Session

Minnesota Budget Bites posted a good set of frequently asked questions about what happens at the end of the legislation session, such as discussing deadlines, vetoes, overrides, and so on.

The House of Representatives Session Weekly includes a good article about unallotment, which is the tool that the Governor says that he is going to use to balance the budget.

At this writing, the details are sketchy as to where the Governor unallot once the new fiscal year starts on July 1. I'll defer judgment until we see the details, but he would have to unallot something like ten times the amount that has ever been done in state history, and I don't know how he can pull it off.

Here's what the Governor is saying about what he will do.

Wednesday, May 13, 2009

Week of May 10 & 17, 2009

This is the last full week of the session, and the major budget bills and omnibus policy bills are coming forward. Here's a quick summary.

Tax or Borrow: The major sticking block in our budget negotiations with the Governor is about $1 billion. Our bill that the Governor vetoed on Saturday would raise $1 billion in taxes (see entry from last week) and his proposal since January is to borrow $1 billion, then to spend the next 20 years paying it off along with $600 million in interest. We have made major cuts to our hospitals, people with disabilities, nursing homes, economic assistance to needy families, as well as curbed spending in other areas like education. We are also looking at deferring some of our state payments (a "shift") to schools. That still leaves us with big gap that the $1 billion will help fill.

DNR Game & Fish Bill (HF1132): This always has some interesting sounding provisions like "free either-sex deer permit for recently discharged service members" and "elimination of slot limits for spearing northern pike." But they are important to many folks. This is also the first bill I've seen since my first election that deals with firearms, and that is always controversial. The bill contains a provision that would allow uncased firearms in your vehicle. The idea is that if you are hunting and you are going from one area to another close by, it takes a long time to case up your gun or bow. The Public Safety Policy Committee chair had the bill amended to maintain current law in the seven county metro area. There are various conditions under which you can have an uncased gun or bow that make this more palatable to me. The bill also has an amendment that would require gun show vendors to do a background check on their customers just like gun dealers at a store. I support this provision--I don't think requiring a 10-minute check is particularly burdensome and this is the law in 18 other states.

Manufacturing Housing Legislation Passes Again: HF2088 is an omnibus economic development and housing bill that the Governor signed recently to replace a previous bill that he vetoed. It included my legislation from HF356 to maintain the solvency of the manufactured housing relocation trust fund. The bill is now Chapter 78 of 2009 Session Laws, Article 8, Sections 1 to 3. (The Governor made some line-item vetoes in the bill but not my legislation.)

State Government Finance Bill: The Governor signed SF2082 on May 16th. In that bill there was the text of my HF167, which extends the life of the Legislative Coordinating Commission Working Group on Ethnic Heritage & New Americans. I'm the House DFLer on the working group, which brings together business, labor, and advocates on the issue of immigration to help find pragmatic solutions. The bill is now Chapter 101 of 2009 Session Laws, Article 2, section 1. The final bill did not include my HF625 that would require the state to use an Application Program Interface (API) that would allow third parties to analyze exported state budget information. It was in the House file but not the Senate file and it was not accepted in the final conference committee.

Technical Tax Bill: The Governor signed HF1298, a non-controversial bill with various tax compliance and other tax provisions. My bill HF1333 that authorizes bonding for Met Council transit facilities was included. The bill is now in Chapter 88 of 2009 Session Laws in Article 6, Section 20.

Transportation for the Disabled: My legislation to promote greater coordination of transit for the disabled and others who cannot drive has passed. It's actually in two parts. The legislation creates the Minnesota Council on Transportation Access, where state and regional agencies that serve the disabled come together to figure out how to make a very fragmented and inefficient network of transit services more efficient and cost-effective. HF1373 was the original bill and the funding ended up in HF1309 and the enabling legislation ended up in the omnibus transportation policy bill in HF928. HF928 passed the House on May 17th and is now Chapter 151 of 2009 Session Laws, Section 28, awaiting action by the Governor.

Homeowner warranty bills pass: For two years, several of us from the suburbs have worked to assist homeowners who have been hassled by their builders or remodelers over breaches of warranty. Some Shoreview residents I know have spent $100,000 out of pocket in legal fees while the builders delay a settlement, hoping that the homeowner will give up. Others in the state have had to spend thousands of dollars in hotel or rental housing costs when their house is uninhabitable. My bill, HF239, would allow homeowners to be reimbursed for short-term housing if they have to be out of their house as a result of warranty work. It passed the House and was presented to the Governor on May 15th. He has three days to sign it, which would be May 18th, the last day of session. The bill is now part of Chapter 103, 2009 Session Laws.

Public Safety Finance Bill: coming soon

Health & Human Services Finance Bill: coming soon

Capital Investment Bill: coming soon

E-12 Education Finance Bill: coming soon

Higher Education Finance Bill: coming soon

Agriculture & Veterans Affairs Finance Bill: coming soon

Facts about Recent GOP Mailing about Home Heating Fuel

Many district residents received a mailing from the Republican Party of Minnesota during the last few days that makes some misleading statements about my bill (HF1584-which is incorporated into an omnibus tax bill, HF2323).

It suggests that all consumers would be taxed on their home heating fuel, which is not correct. Right now heating fuel is exempt from sales tax during the period November to April. The bill (as I amended it in the Tax Committee) would have the sales tax kick in ONLY after one's cumulative use exceeds 130% of average use for the whole winter, which right now is about 875 "therms" on your Xcel bill for natural gas. Only about 10% of all heat that could be taxed in the state would be taxed. I looked at my own bill in my 2,000 square foot 1972 rambler with four people and I didn't reach 700 therms for the whole winter, so LOTS of people will not even be taxed at all.

The idea here is that the largest energy users tend to drive up prices for everyone else because during the coldest periods demand for these users disproportionately higher. We have also been advised by experts to focus on narrowing or ending certain sales tax exemptions (so called "tax expenditures") to avoid tax revenue volatility from year to year. This is why many people recommend charging the sales tax on clothing, for example.

However, critics believe that there will be too many drafty houses, especially in rural areas, where people with low or fixed incomes live. I can't get them to prove to me that the tax would apply to them, but just in case, we amended the bill to exempt anyone on heating assistance. Also just in case, I have an amendment to exempt anyone who is affected by the Cold Weather Rule who has trouble paying their bills, often because of a job loss.

It looks like this bill will not proceed in any case--the metering technology in rural Minnesota for electric heat is not very uniform and the variability in the housing stock is too great to precisely target the legislation to the right people. But it certainly raised some helpful issues for future deliberations. Sometimes we propose ideas that might seem like a "stinker" on the surface but it's important to have the dialogue and in so doing we often stick our necks out a bit in the legislative process.

Improving communications with your legislative colleagues

Greetings. I am posting the text of an e-mail I sent out to my colleagues today along with an attached letter.

Dear colleagues,

At this time in the session, the pressure builds, the deadlines loom, and the differences among us start to magnify. We're tired and a little cranky. That said, we still need to maintain high standards in our communications to each other, either with the opposite caucus or within our own.

I recently failed to maintain those high standards in some electronic communications regarding two of our members. I have attached a letter that I shared with Rep. Emmer and Rep. Buesgens.

Friday, May 8, 2009

Education & Health Care/Tax Bill & Legacy Funding Bill (May 8, 2009)

The House and Senate are voting today on a new education and health care bill that would raise about $1 billion in revenue and use the funds for K-12 education, nursing homes and similar facilities, and hospitals.

Here's the breakdown. There would be three accounts set up: E-12; Nursing Homes & Long-Term Care; and Hospitals.

* K-12 Education: The bill would generate $585.7 million in the next two year budget cycle for an E-12 account. If we were to cut $500 million from K-12, it would break down this way.

Centennial School District
: Loss of $3.8 million, or $566 per student
White Bear Lake: Loss of $4.7 million, or $580 per student
Mounds View: Loss of $5.5 million, or $584 per student

Statewide, 12,000 teachers would lose their jobs.

* Nursing Homes & Long Term Care: The bill would generate $287.5 million in the next two-year budget to a specific account. The bill passed today would have us cut 30% less than the Governor to our nursing homes. Many rural nursing homes in particular are in danger of closing. The funding would also avoid deeper cuts to services for Minnesotans with disabilities. We have a lot of group homes in our district and families with disabled children so this is of particular interest to our area.

* Hospitals: A hospital account in this bill would receive $114 million in the next two years. Support from the state comes in different forms including General Assistance Medical Care (GAMC), which serves indigent Minnesotans who do not have health care and often have other major mental health or chemical dependency issues; Medical Assistance (MA) which usually supports health care for the disabled; Minnesota Care, health coverage for low-income adults who have a job but no coverage; inpatient mental health treatment that is cheaper than institutionalization, and others. Under the Governor's proposal, our hospitals would be cut significantly. Here's how our area's hospitals would be affected under the Governor's budget proposal:

Unity (Fridley) cut of 7.3%
HCMC (Minneapolis) cut of 15.1%
Abbott Northwestern (Minneapolis) cut of 4.1%
Regions (St. Paul) cut of 9.9%
Bethesda (St. Paul) cut of 7.2%
St. Joseph's (St. Paul) cut of 5.9%
St. John's (Maplewood) cut of 5.0%

These cuts all get passed along to the rest of us who have health coverage through private plans, so this bill would help lessen the impact of the cuts on our premiums.

Where the revenue comes from:
* A 9% income tax rate on joint filers with $250,000 in taxable income a year (2.3% of all filers), raising $516.3 million. This provision would sunset in four years.
* An increase in the alcohol tax, raising $240.9 million.
* Surtax on credit card companies on interest penalties charged on rates above 15%, raising $216.3 million.

The amount of revenue raised equals what the Governor is proposing should be raised through appropriation bonds. Our proposal chooses taxes over borrowing, and I voted in favor of this bill.

Legacy funding bill: The other bill taken up this evening is the Cultural & Outdoor Resources Finance Division finance bill, HF1231. This bill allocates the funding derived from the new dedicated sales tax approved by the voters in November. There are four funds in the bill: outdoor heritage (for habitat); clean water fund (including money for drinking water); parks and trails fund; and the arts and cultural heritage fund. There is some controversy with the bill among hunting and fishing organizations because they want the legislature to adopt 100% of the recommendations of the Lessard Outdoor Heritage Council, which recommends projects to be funded by the outdoor heritage fund. We actually are likely to pass all of the PROJECTS recommended by the council, but the House has cut the amount of administration money that the council wants. We also are requiring that there be a web site for the public to see where the money is being spent, and some folks don't like that apparently. We are still in the middle of debate, but I plan to vote for this bill.

Thursday, May 7, 2009

Weeks of April 26th & May 3, 2009

The last two weeks have seen a lot of floor activity and plenty of constituent e-mail, letters, calls, etc., so it has been pretty hard to keep up!

Earlier this week, the House and Senate passed three finance bills out of about nine that need passage. These bills were among the least controversial so the Governor and legislative leaders decided that we should proceed with these first to help "set the table" for the big bills. Two of these bills also don't have that much funding from the General Fund that is in deficit. The bills included environment & energy, economic development, and transportation. All of them had some legislation of mine that deal with bioplastics, housing, and transit for the disabled.

HF1309, the transportation bill, relies mostly on dedicated funds from the motor vehicle sales tax, the gas tax, and so on and was pretty uncontroversial. My provision in the bill will help better coordinate transit for people who cannot drive. There is a lot of room for taxpayer savings in this area because there is a lot of duplication in bus and van fleets that serve seniors, the developmentally disabled, and others. The legislation (originally from HF1373) would set up a coordinating body of the folks who operate the fleets. The Governor signed this bill just before midnight on Thursday and is now Chapter 36 of Minnesota statutes.

SF2081, the economic development bill, included a wide variety of legislation related to housing, economic development programs, funding for the Department of Employment and Economic Development, and some cultural resources programming. This bill contained controversial language about forgiving the last remaining debt that St. Paul has on the Xcel Energy Center loan. The loan forgiveness would not actually kick in for four years so it would not affect the next two two-year budgets. The city would then use the dollars to build a community ice rink across from Xcel. I am not enthusiastic about this proposal but we also have some important stuff in this bill for assisting people who are losing their homes. My provision in this bill was a revision to the manufactured housing (mobile homes) relocation trust fund so that a fund that helps these homeowners relocate when their mobile home park closes will be solvent. The Governor vetoed this bill over the Xcel Energy Center provision.

HF2123, the environment and energy finance bill, passed with a high number of votes on the House floor from both parties. It included budgets for the MN Pollution Control Agency, the DNR, and several other smaller agencies. My legislation in the bill included provisions that will boost two industries in Minnesota--bioplastics and compost. Many district residents are asked by their waste hauler to dispose of their yard waste in a rolling cart or a compostable bag because the regular plastic bags contaminate the finished compost. Haulers pay a higher fee to get rid of plastic and compost site operators can't sell their compost. The legislation has all metro area residents use certified compostable bags if they use a bag. (Carts and reusable bags are fine too.) The idea is to increase quality and streamline rules across multiple jurisdictions. We have several Minnesota manufacturers of compostable bags who will be able to meet consumer demand, and they are part of our growing bioplastic industry. The original bill was HF403. This bill was signed by the Governor on Thursday and is now Chapter 37 in Minnesota statutes.

We have several other bills which are in conference committee and are ready to go pending a few minor decisions that have to be made. The state government finance bill includes language from my HF625 that would require the state Department of Finance to allow the exporting of state budget information into a common format so that enterprising and tech-saavy people can develop third-party applications for this information. Who says that the state must be the only entity that holds data and information that we paid for? Politics in Minnesota has followed this legislation and reported on the need for this legislation for greater government transparency. They have also aggressively followed up on it in articles on May 6th and May 7th. (The state Department of Finance doesn't like it yet.)

Federal funding for local roads and bridges: Anoka County just informed me that the federal recovery program will provide funding for the 35E & Highway 14 intersection at $4.825 million. You can track the accounting on these projects at www.recovery.gov. I believe that a park and ride lot will get installed there after it's all done.

The way it was: The Minnesota Legislative Library has a 30 minute documentary posted on line about the legislature in 1976. The filmmaker follows Rep. Tom Berg. The technology (typewriters!) is interesting to see, as well as all the smoking and plaid suits. Thought readers might be interested! A lot of the experience is still very much the same.

Mounds View Schools survey and article: The Mounds View School District recently performed a survey in the community, and the results can tell you about the possible results of state budget cuts.

Tax bill from April 25th: I voted against our first tax bill. While I thought there were some good ideas in it, it was really a lot to ask of almost all Minnesotans. My particular concern was the provision for allowing a local options sales tax of one-half of one percent. We have another tax bill coming on May 8th and I look forward to considering it thoughtfully.

Constituent contacts: The volume is so high right now that I can't list all of them as in the past. However, I can give you a flavor of what people are sending me. They include: weatherization funding from federal recovery legislation to be used for low-income Minnesotans (all pro); K-12 education funding (all pro); alcohol tax increase (all against, from beer distributor employees in district); state agency enforcement of law against internet gambling (all against); DNA newborn screening (several MDs for, many conservative constituents against), medical specialist reimbursement rates (all MDs against cuts); provider tax (all MDs against increasing it); mortgage interest deduction changes in first tax bill (a lot, all against); tax cuts (all pro and all form e-mails generated by Minnesota Majority website); freedom to breathe act/smoking ban (all pro); medical marijuana (all pro); tax increase on the wealthiest (all pro and all form letters)