Friday, March 26, 2010

The Legislative Session At Halftime

The House and Senate are off for a week starting Monday, March 29th for the Easter/Passover Break. We will have a lengthy floor session on Monday and then we come back Tuesday, April 6th. Usually the legislature is accused of working at a snail's pace. While that is often true and is a function of 201 people all with different views trying to achieve consensus, the House and Senate hit the ground running in February. After seven weeks, we have completed the following tasks (or will complete them as of Monday afternoon).

* Fixed General Assistance Medical Care. This week we passed a fix to the General Assistance Medical Care (GAMC) program. GAMC is a health care program that covers about 33,000 Minnesotans at any given time (about 80,000+ a year) who have assets of less than $7,800 a year. About 70% of them have a mental health or chemical dependency problem, and about 30% of them are homeless. The Governor unalloted the program for the period April 1 to June 30 2010 and line-item vetoed the program for July 1 2010 to June 30 2011, so a bi-partisan team of legislators put together a series of proposals to serve this population until the Governor agreed to something he could sign. The fix cuts the program significantly but we hope to have a better long-term solution in the future.

* Cut the budget by $313 million and set budget targets for the remaining deficit. The state has a projected deficit of $1 billion for the two-year budget ending June 30, 2011.
Both the House and Senate passed separate bills to cut $313 million from all parts of the state budget except health & human services and K-12 education. This bill is now in conference committee and we are likely to vote on a final version to send to the Governor on Monday.

About $105 of this cut would be in aid to cities and counties. Shoreview, Blaine, Lino Lakes, and North Oaks would not see much change from the state from their present situation since they don't receive local government aid (LGA) and they would lose any market value homestead credit funding (MVHC) but they already lost it for this budget year because of previous cuts. Circle Pines and Lexington receive LGA and MVHC and they would lose a substantial portion. In the House Tax Committee (I'm a member) we did our best to make sure that these cuts do not translate into property tax increases in 2010. That may not be the case in the future.

In addition, both bodies adopted "targets" that show how much more we must reduce the budget in health & human services and K-12 education. Right now the only cut to K-12 would be about $1 million from the MN Department of Education. We also plan to have a net change to health & human services of $710 million. We have not acted on this part of the budget yet because there is still a lot of number-crunching that has to happen to figure out how Congressional action will affect our state Medicaid program. Usually the feds pay half and the state pays half for Medicaid. Right now we believe that the federal government will be sending $408 million our way to support Medicaid programs that serve the disabled and seniors. This is all before any calculations from the newly-passed federal health care form bill are factored in. In addition, the GAMC bill will save $147 million from the health & human services budget. So $147 million + $408 million = $554 million. That leaves $710 million - $554 million = $155 million left to cut after the break.

* Passed a bonding bill (aka Jobs Bill 1). Every two years the legislature produces a capital investment bill for "bricks and mortar" projects in the state. You can see more detail at the last blog entry below. It is expected that this bill will lead to about 15,000+ construction, design, and engineering jobs over the next few years.

* Passed tax credit bill for angel investors (aka Jobs Bill 2). The House Tax Committee that I'm on passed a bill that would create an angel investor tax credit and a historic rehabilitation tax credit to spur job growth. The angel investor credit would give a tax break to venture capitalists seeking to invest in MN companies. Right now we have been losing start-up businesses to Wisconsin because they have a credit and we do not. In addition, the historic rehabilitation credit would make it easier to start projects to renovate historic buildings. These buildings require a lot of specialized labor and craftsmanship. In addition, the bill includes a CarZ program (suggested by the Governor) that would promote re-use by technology businesses at the Ford assembly plant in St. Paul once it is vacated (with no state fiscal impact). The bill also has an extension of tax increment financing (TIF) programs for about a dozen cities that are trying to attract development at a few specific sites (with no state fiscal impact). Finally, the bill includes some flexibility for some existing tax incentives to expand the Mall of America. The mall plan does NOT include state subsidies but allows the City of Bloomington to increase the sales tax at the Mall of America and adjoining facilities ONLY. That was in place already but now we are giving the mall some other options for how to arrange the financing using those tools.

This bill has not passed the House yet but it is likely to on Monday after the House and Senate leadership agree on the final version. It would not go to conference committee so the Governor would get the bill next week. There are areas of disagreement between the House and Senate for how to backfill the loss of revenue resulting from the two tax credits but I think readers will fall asleep if I mention them in any detail!

* My bills: Quite a few of my bills have finishing going through committees and either reside on the House floor or have passed. The bonding bill included a section that I authored that requires recycling of construction waste from state building projects valued greater than $5 million. In Wisconsin, a similar measure saved more than $150 per thousand square feet. HF1217 dealing with disposal of pharmaceutical waste passed the House floor on Thursday, as did HF2949 that will help maintain the Met Council's financial reserve fund for wastewater treatment. More updates on these and other bills will come later in the session.