April 4, 2008
In this Issue:
Showdown on Capital Bonding Bill Begins
Senate Passes Health Care Reform Proposal
Mortgage Foreclosure Prevention Bill Passes House
Donations to Nonprofits Passes House
Senate Committee Recommends Sviggum Appointment
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Showdown on Capital Bonding Bill Begins
The House and Senate this week sent to the Governor a $1.1 billion capital investment bill, including nearly $925 million in state general obligation bonds. That is $100 million higher than the governor’s recommendation, with at least two of his key projects absent from the proposal.
The bill’s total spending could make it veto bait. It comes in over the 3 percent of the General Fund threshold that has been a traditional marker to determine the size of a bonding bill. The governor has said that a bill beyond that amount would not make it past his veto pen. However, what is more of a question is whether he will choose to line-item veto items or to veto it entirety. That decision will likely be made on Monday.
Nearly half the investment bill, approximately $410 million, would be allocated to projects at the University of Minnesota and the Minnesota State Colleges and Universities system. However, there are other items contained in the conference committee report that priorities for the MRCC, including:
- $70 million to the Central Corridor LRT project
- $16.7 million for the Urban Partnership Agreement
- $3 million for the renovation of Minnesota Orchestra Hall
- $500,000 for the Southwest Corridor LRT project
The Chamber will continue to monitor and advocate support for priority projects in the bill. If you have any questions or comments, please direct them to Travis Bunch, Director of Public Policy at tbunch@minneapolischamber.org.
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Hennepin and Washington Counties Approve Transit Sales Tax
Earlier this week, Hennepin and Washington joined Ramsey, Anoka and Dakota counties in approving a new transit sales tax of a quarter-cent (effective July 1st). Only Carver and Scott Counties elected to not participate thus far, but could join at a later date.
During a special meeting held on Tuesday, Hennepin County Commissioners voted 5-2 (Steele, Johnson) to adopt the sales and use tax increase of quarter-cent for new transit projects and enter into a Joint Powers Agreement establishing the Counties Transit Improvement Board (Action Requests 08-0117 and 08-0116, respectively).
Three amendments of note were added to the original resolutions during this meeting. First, Commissioners expressed their intent to withdrawal from the Joint Powers Agreement if the Minnesota Legislature used the sales tax revenues to supplant state funding for the Metropolitan Council's current operating budget. This was a move by the County Board to again indicate that the revenues generated by the sales tax increase will be used for the development of new transit projects in the region, not backfill cuts to existing operations (with the exception of one initial diversion of approximately $30 million this year).
Second, Commissioners approved an amendment for the Hennepin County Railroad Authority to decrease its proposed 2009 property tax levy by 61 percent, since the county’s share of operating costs for the Hiawatha and Northstar lines will now be funded by the sales tax revenues instead of county property taxes. If you recall, the County has been subsidizing the Hiawatha LRT operations with property tax revenue. The new sales tax revenue will replace this funding need and allows the County to lower the levy.
Third, Commissioners named the Bottineau, Central and Southwest corridors as “priority transit corridors” for Hennepin County. The sales tax is estimated to generate approximately $100 million for transit in 2009, with more than half of that amount collected in Hennepin County. For more information, click here.
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House and Senate Pass Versions of Budget Reduction Bills
After more than 14 hours of debate and 62 amendments, the House passed its deficit-reduction bill at almost 2:30 a.m. Sponsored by Rep. Lyndon Carlson (DFL-Crystal), HF1812 is a plan to solve the state’s projected $938 million biennial deficit. It was approved 83-49.
The Senate passed its version, SF3813, sponsored by Sen. Richard Cohen (DFL-St. Paul) on a voice vote last night. A conference committee is expected to work out the differences.
Carlson said the balancing act includes budget reductions, use of reserve funds and increased revenues by closing some corporate tax loopholes. “There are no general tax increases in the proposal and we keep our commitments to schools, health care and college students.”
It makes nearly $135 million in cuts, drains $350 million from the cash-flow account and $250 million from the budget reserve. The reserve would be left with $403 million; similar to the governor’s proposal.
The governor’s proposal includes reducing state spending by $341 million, using $250 million of the state’s $653 million budget reserve and taking $250 million from the surplus in the Health Care Access Fund. It also includes no reduction in K-12 education or local government aid and a 4 percent reduction for most state agencies.
Because the bill contains numerous policy provisions, some of the House debate centered on the constitutionality of the bill. Rep. Mark Olson (IR-Big Lake) and a handful of Republicans said it violates the state constitution, which says, “No law shall embrace more than one subject, which shall be expressed in its title.”
House DFLers countered that because the bill is all about balancing the budget there should not be a problem. House Majority Leader Tony Sertich (DFL-Chisholm) also pointed out a number of Republicans voted for similar bills when they were in the majority.
A number of Republican amendments were ruled not germane, including those dealing with abortion and one that would authorize use of deadly force against an unwanted attacker that enters a person's home, car or business.
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Senate Passes Health Care Reform Proposal
A significant health care reform bill on the Senate Calendar, sponsored by Sen. Linda Berglin (DFL-Mpls.), was passed on a final vote of 39-23. S.F. 3099 creates a statewide health improvement program, imposes a public health improvement assessment on hospitals and health plans, provides for health care homes, provides brokers to provide Section 125 plans to small businesses, restructures the health care payment system and establishes a savings recapture assessment.
Opponents of the bill said the reforms may increase bureaucratic costs and harm rural hospitals and clinics. Berglin said the payment reforms in the bill make purchasing health care clearer. “Do not let the perfect be the enemy of the good,” said Berglin. Sen. Julie Rosen (R-Rosemount) said the time for reform is now.
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Mortgage Foreclosure Prevention Bill Passes House
A bill that would increase the financial assistance cap for those participating in program assistance and counseling to prevent mortgage foreclosures was passed 127-2 by the House.
Sponsored by Rep. Jim Davnie (DFL-Mpls), HF3346 would help families and individuals in financial crisis by increasing money available in the Foreclosure Prevention Assistance Program. Currently the cap is set at $5,500 per individual or family. The bill would raise that to “110 percent of the greater of state or applicable metropolitan statistical area median monthly owner cost of owner occupied housing … multiplied by six.” The change would amount for a $10,718 cap for Twin Cities metropolitan area homeowners and $9,478 in Greater Minnesota.
Foreclosure prevention counselors have said that monthly mortgage payments multiplied by six frequently exceed the $5,500 cap. Therefore, they’re not able to help people who may have had a temporary loss of income and can’t catch up from the crisis.
The bill now goes to the Senate Finance Committee where Sen. Linda Higgins (DFL-Mpls) is the sponsor.
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Donations to Nonprofits Passes House
Political subdivisions may be permitted to donate gifts to nonprofit organizations. Sponsored by Rep. Jim Davnie (DFL-Mpls), HF3220 was passed by the House 97-33. It now goes to the Senate, where Sen. Jim Vickerman (DFL-Tracy) is the sponsor.
The bill would authorize a political subdivision to give money or make in-kind gifts to nonprofit organizations. The gift must be for public purpose that supports educational, social service, health or charitable purpose and requires the proposed gift to be presented and voted on at a regularly scheduled meeting of the governing body.
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Senate Committee Recommends Sviggum Appointment
Former House Speaker Steve Sviggum was given the seal of approval by members of the Business, Industry and Jobs Committee, Mon., Mar. 31, as his appointment to serve as commissioner of labor and industry was considered. The panel, chaired by Sen. James Metzen (DFL-South St. Paul), recommended the Senate confirm Sviggum.
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by the Minnesota House of Representatives and the Minnesota State Senate.
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