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Legislative Update: April 20, 2018

Posted By Administration, Monday, April 23, 2018
We are at the point in the Legislative Session where Finance Committees are assembling their Omnibus Supplemental Appropriations Bills. In the House, the bill which is of greatest significance to EDAM members is the Jobs and Energy Omnibus Bill, which had three hearings on April 18th , 19th, and 20th.

This is the bill which includes all of the Department of Employment and Economic Development accounts. EDAM’s priority focus here has been to advocate for the Minnesota Investment Fund, the Job Creation Fund, and to seek new resources for the Redevelopment Grant and Loan Program.  

The Chairman’s initial draft bill presented to the Committee earmarks much of the Minnesota Investment Fund (MIF) and the Job Creation Fund (JCF) resources for Fiscal Year 2019 for a number of projects that have petitioned the Legislature for assistance. In fact, there are so many earmarked appropriations that all that remains for the second year of the biennium for the Minnesota Investment Fund is $4 million and all that remains for the Job Creation Fund is $1.5 million.

On April 19th, EDAM First Vice President Matt Brown appeared before the House Committee and testified on behalf of EDAM expressing concern about cuts to the DEED funds. Matt provided testimony that spoke to his community’s use of the funds to spur economic development. He noted that the projects created high paying jobs in the community and that the state funds were vital to securing the projects. Matt cited the importance of providing consistent funding of the DEED programs to support statewide economic development efforts.  

Matt’s testimony complimented prior testimony given by DEED Commissioner Shawntera Hardy, as well as Charlie VanderAarde of Metro Cities, who both testified that reduction in available funds will hurt economic growth in the state. Commissioner Hardy will be submitting a letter to the Committee with detailed accounts of how the House Bill will hurt the programs and economic development in the state.

The House Committee met on Friday to “mark-up” their version of the Omnibus Bill. Representative Jeff Howe (R-Rockville) offered an amendment to restore funding for the MIF and JCF Programs. He noted how important these programs have been and that there is significant need for this type of state support. Ultimately, after making his statement, he withdrew the amendment – knowing that the Chairman would oppose the amendment. Representative Tim Mahoney (DFL-St. Paul) echoed Representative Howe’s call for restoration of MIF and JCF funding and expressed his disappointment in the lack of funding provided in the House Bill.

The next stop for the House Bill is the Ways and Means Committee – where it is expected to be heard early next week. Then, it’s on to the Floor for action by the full House.  

We are already shifting our attention to the House-Senate Conference Committee which will be formed to resolve differences between the House and Senate versions of the Omnibus Bill. The Conference Committee process provides significantly greater focus on a handful of legislators. The Conference Committee will consist of five Senators and five Representatives who will reconcile differences. As soon as we know who the Conferees are in each body, we will be directing information to them outlining EDAM’s concerns and preferences with respect to DEED funding.  

Conferees could be named within a week. We will be sharing information on who is named to the Conference Committee and what message would be most effective to deliver on behalf of EDAM’s concerns.

If you have any questions regarding our reports, please feel free to contact the Fryberger office at (651) 221-1044 or send an email to kwalli@fryberger.com, srichie@fryberger.com or dtomassoni@fryberger.com.  

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Legislative Update: April 17, 2018

Posted By Administration, Tuesday, April 17, 2018
We are at the point in the Legislative Session where House and Senate Leadership establish spending targets for the various supplemental appropriations bills. The Jobs Bill in the Senate received a very limited spending target – meaning very little in the way of additional resources was committed to this budget area. The only movement on Department of Employment and Economic Development Programs is a recommendation by the Chairman – Senator Jeremy Miller – that $2 million of money from the Minnesota Investment Fund be transferred for use in the Redevelopment Program. There is one appropriation in the amount of $15 million for the Border-to-Border Broadband Program.  

On the House side, Leadership established a supplemental spending target of $15 million for the Jobs and Energy Omnibus Bill. That $15 million is dedicated to the Border-to-Border Broadband Program. This is one-half of the amount recommended by Governor Dayton.

We will be watching as the House and Senate Committees mark-up their supplemental appropriations provisions and we will report on amendments offered and any Committee action on economic development programs.  

If you have any questions regarding our reports, please feel free to contact the Fryberger office at (651) 221-1044 or send an email to kwalli@fryberger.com, srichie@fryberger.com or dtomassoni@fryberger.com

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Legislative Update: April 6, 2018

Posted By Administration, Monday, April 9, 2018
This past week has been the Easter/Passover break at the Minnesota Capitol. No hearings have occurred, no bills have been introduced, and no action has been taken on committee agendas. Lawmakers have been spending time in their Districts, or, if smart and lucky…on a beach in some far-flung location. When they return on Monday the focus will shift from policy bills to tax and capital investment bills. The next couple of weeks will set the stage for what the omnibus tax and omnibus bonding bill end up looking like, and while the two are not technically related, the politics of the Legislature really tie the two together. The Democrats want a robust bonding bill, something at or north of $1,000,000,000 while the Republicans typically want a large tax bill with cuts for business and individuals. The Governor is unlikely to sign a large tax bill unless he gets a bonding bill he can live with, so the fate of the two will be linked until the final moments of Session.

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Legislative Update: April 2, 2018

Posted By Administration, Tuesday, April 3, 2018
With the passing of Policy Committee Deadlines last Thursday (March 29) at midnight, all of the attention now turns to Finance Committees, the Capital Investment Committee and the Tax Committee. The key question that must be addressed in the coming weeks is what the funding levels will be in each of these three major bills.

Last week, we reported on the Dayton Administration proposals for Supplemental Appropriations for economic development. The two areas for which the Governor proposed supplemental funding are the Border-to-Border Broadband Program ($30 million) and the Angel Tax Credit ($10 million). The Angel Tax Credit would be considered in the context of the Omnibus Tax Bill – rather than the Supplemental Appropriations Bill.

What remains to be seen is whether Supplemental Appropriations will be considered in the context of a single Omnibus Bill, or whether there will be smaller, more focused Supplemental Bills in areas where spending targets are established. Those targets (or spending limits) will be set when the Legislature returns from its recess. The deadline for completing work on finance provisions is set for April 20.

One of the biggest challenges facing the Legislature will be assembling an Omnibus Tax Bill that will pass muster with Governor Dayton. Legislative leaders and the Governor share an interest in bringing state tax law into conformity with the federal tax changes that were enacted at the end of 2017. However, there is likely to be a significant disagreement over precisely how to come into conformity and what measures will be included in the Tax Bill. Governor Dayton would like to revisit some of the business tax breaks that were provided by the Legislature in the 2017 bill -- which caused the rift in the Governor’s relationship with the Legislature which led to legal action relating to the Governor’s Line-Item Veto of the operating appropriation for the Legislature. Republican Legislative Leaders are not likely to revisit these provisions.

The Legislature also faces a challenge in assembling an Omnibus Bonding Bill which must receive the  60% super majority required for passage. The current estimate for a Bonding Bill in the House is at approximately $800 million. Governor Dayton identified more than $1.5 billion of state projects in his Capital Budget Recommendations and embraced an additional $800 million in local/regional projects which he thought merited consideration in a Bonding Bill. Bridging this gap between the Legislature and the Governor’s request levels is going to present a significant challenge for the House and Senate Capital Investment Committees.   

One stand-alone bill that is awaiting action on the House Floor is H.F. 1005, authored by Representative Pat Garofalo (R-Farmington). The bill would reduce the number of Deputy Commissioners at the Department of Employment and Economic Development from four to one. The Deputy Commissioners currently serving would be allowed to continue to serve until January 1, 2019. There is no Senate Companion to this bill, but it could become part of an Omnibus Bill as the Committees mark-up their supplemental appropriations provisions.

We will continue to follow issues of interest and concern to EDAM members and will continue to report on a regular basis.  

If you have any questions regarding our reports, please feel free to contact the Fryberger office at (651) 221-1044 or send an email to kwalli@fryberger.com, srichie@fryberger.com or dtomassoni@fryberger.com

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Legislative Update: March 23, 2018

Posted By Administration, Monday, March 26, 2018
The Governor’s Supplemental Budget Request for the Department of Employment and Economic Development was presented in the House Job Growth and Energy Affordability Finance Committee on Wednesday, March 21.  Commissioner Shawntera Hardy presented the Governor’s priorities for her Department. The presentation was very much the same as that which had been presented to the Senate Jobs Committee one week earlier. The focus was on to the Border-to-Border Broadband request, the Angel Tax Credit and an earmark of $2 million from the Minnesota Investment Fund to preserve jobs at the Verso Paper Mill in Duluth.

One development this week which is of concern is action by Chairman Pat Garofalo to remove the word “unserved” from the legislation authorizing the use of funds from the border-to-border broadband program.  “Unserved” communities were given priority treatment in the competitive process over “underserved” communities. Representative Garofalo argues that satellite service capacity renders virtually every community capable of receiving service and therefor no one is truly “unserved.”

Where there has been some considerable pushback on the Chairman’s analysis – including from rural members of his own caucus.  Nonetheless, the Chairman’s perspective is carrying the day on the House side. This issue will ultimately be resolved in the context of a compromise with the Senate over these budget items -- that’s assuming that we end up with a Supplemental Budget Bill which would be a vehicle for addressing these issues in 2018.

This week marks the first Committee Deadline at the Legislature. Policy Bills were to have cleared either the House or Senate Policy Committee by midnight, Thursday night, in order to keep moving through the process.  The second Committee deadline – the date by which bills have to have cleared Policy Committees and been referred to either a Finance Committee, Capital Investment Committee or the Tax Committee is scheduled for midnight March 29.  

The Legislature will recess on Friday, March 30 and they will be on Easter Break until Monday, April 9. The Supplemental Budget Bill will likely start taking shaping the week of April 9.

Last week, we reported that Senator Jeremy Miller had introduced Senate File 3579 which seeks an appropriation of $5 million for the Redevelopment Grant and Demolition Grant Programs. This week, Representative Tim Mahoney introduced H.F. 3968 which is the companion to Senator Miller’s Bill. Representative Miller is joined by Representative Mahoney is joined by Representative Greg Davids (R-Preston) who signed on as a co-author of Representative Mahoney’s bill.

While it is unlikely additional funds will be found this Session for the Redevelopment Grant Program, having this bill introduced fosters discussion about the importance of this program and will help build the case for restoring funding in the next budget cycle.  

We will provide a report again at the end of next week when the Policy Committee Deadlines are behind us.  
 
If you  have any questions, please give us a call at (651) 221-1044 or send an email to kwalli@fryberger.com, srichie@fryberger.com or dtomassoni@fryberger.com.

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Legislative Update: March 20, 2018

Posted By Administration, Tuesday, March 20, 2018

Governor's Supplemental Budget - DEED

On Monday, March 19, 2018, the Senate Jobs and Economic Growth Committee heard testimony regarding the Governor’s  Supplemental Budget Request for the Department of Employment and Economic Development (DEED).  Most specifically applicable to EDAM was testimony by Commissioner Shawntera Hardy on the border to border broadband request of $30 million.  This program funds the expansion of broadband service to areas of Minnesota that are underserved.  This program provides grants for up to 50% of the project development costs.  This funding level is expected to expand broadband access to over 11,000 households, businesses, and community institutions.  Three percent of this appropriation is reserved for program administration and broadband mapping.     

Commissioner Hardy also testified on the Angel Tax Credit.  The Governor’s Tax Bill recommends one-time funding in the amount of $10,000,000 in fiscal year 2019 for the Angel Tax Credit Program.  The program provides a 25% credit to investors or investment funds that put money into startup companies focused on high technology, new proprietary technology, or a new proprietary product, process, or service in specified fields.  

The Department also proposes Minnesota Investment Fund language which would  appropriate $2 million for the expansion of the VERSO paper mill in Duluth.  

Economic Development Day at the Capitol

EDAM joined MAPCED, SBDC and Metro Cities in sponsoring an Economic Development Day at the Capitol on February 28.  The participants had the opportunity to hear from Senator Jeremy Miller (R-Winona), Chair of the Senate Jobs and Economic Growth Finance and Policy Committee.  Senator Miller has been a strong advocate for economic development funding.  He comes from a strong family business background and understands the importance of business development and job creation.  One of the topics that we discussed with Senator Miller was the need for funding for DEED’s Redevelopment Account.  Subsequent to our Day at the Capitol event, Senator Miller introduced Senate File 3579 which calls for an appropriation of $5 million in Fiscal Year 2019 for the Redevelopment Grant and Demolition Loan Program.  

Senator Miller may not have a spending target which will accommodate this funding level in the 2018 Session, but it provides a framework for discussing the restoration of funds for this important program.

Participants in the Day at the Capitol event also heard from Representative Jeff Howe (R-Rockville).   Representative Howe serves on the House Job Growth and Energy Affordability Finance Committee.  He was the author of the 2017 House File which was the vehicle for funding the Minnesota Investment Fund and the Job Creation Fund.  We also had the opportunity to talk with Representative Howe regarding the importance of restoring funding for the Redevelopment Program.

DEED Deputy Commissioner Kevin McKinnon addressed the group as well.  He spoke about the timing of the Supplemental Appropriations Bill in light of the fact that the State Revenue Forecast was being released the day of the event.  

In addition to the discussions regarding the Minnesota Investment Fund, Job Creation Fund and Redevelopment Account, participants were able to share their support for the Border to Border Broadband Program and the Angel Tax Credit.  

The Day at the Capitol provided an opportunity to elevate the profile of these important economic development programs with many key legislators. We will be following-up with key legislators as the Session progresses.

If you have any questions, please call (651) 221-1044 or send an email to kwalli@fryberger.com, srichie@fryberger.com or dtomassoni@fryberger.com.

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House & Senate Committee Deadlines Announced

Posted By Administration, Sunday, March 11, 2018
The House and Senate leadership recently announced the Committee Deadlines for the 2018 Legislative Session. This is a short Session and the deadlines are going to be fast upon us. The first Committee Deadline is set for Thursday, March 22 at midnight. This is the date by which bills need to have been moved out of either the House or Senate Committee of origin and on to either an Appropriations Committee or the Tax Committee.  

We will keep you informed as the pace of schedule quickens.  Read the official notice from Speaker Daudt and Senate Majority Leader Gazelka.

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Hearing Announcement: Job Growth & Energy Affordability Policy and Finance

Posted By Administration, Tuesday, February 27, 2018

HEARING ANNOUNCEMENT
Job Growth and Energy Affordability Policy and Finance

Wednesday, February 28, 3:00 PM

EDAM members -
We wanted to make you aware of the hearing taking place this Wednesday, and the agenda item related to the Minnesota Investment Fund (MIF). Read the background on the MIF audit.

We are asking members to attend the hearing to show their support for MIF funding, which is one of EDAM's top 2018 legislative priorities.

If you plan to attend, or have questions, please contact:
Government Relations Committee Chair Chris Eng or Vice Chair Judy Johnson.

 



Committee Meeting Notice
To: HOUSE INFORMATION, 175 STATE OFFICE BUILDING
Mike Cook (296-1341)
From: Adam Seidel, (296-1544)

Committee: Job Growth and Energy Affordability Policy and Finance

Date/Time/Location:
Wednesday, February 28, 2018
3:00 PM to 4:00 PM
10 State Office Building

Committee Chair: Rep. Pat Garofalo

Agenda:
Review of Results of 2017 Session:

Jobs Expansion Report, Digikey, Thief River Falls
Rick Trontvet, Vice President of Administration

Summit Academy OIC Training Results
Louis J. King, CEO

Release from the Office of the Legislative Auditor: an audit on the Minnesota Investment Fund
David Kirchner, Office of the Legislative Auditor Program Evaluation Division

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Legislative Update: February 20, 2018

Posted By Administration, Tuesday, February 20, 2018
Updated: Monday, February 26, 2018

After a long and often times contentious off-season, the 2018 Legislative Session officially begins today. The major issue to be addressed is a Capital Investment Bill – to provide state funds for public infrastructure projects all across Minnesota.

The question of whether funding will be available to expand economic development programs remains to be seen.  Prospects for a Supplemental Appropriations Bill depend on the Revenue Forecast which will be published at the end of February.  If the Forecast shows state revenues to be lagging, there is little prospect for any kind of a Supplemental Appropriations Bill.  Even if the revenues are coming in at a rate which provides a small or even moderate surplus, there will likely be significant competition from K-12 Finance and Health and Human Services for these extra state dollars. 

The other key focus of the 2018 Session will be a state Tax Conformity Bill – to adjust state taxes to avoid severe impacts on Minnesota taxpayers as a result of the interplay of our State Code and the recently enacted Federal Tax Reform measures.   The Tax Conformity Bill will also need to rely on state surplus funds to mitigate adverse tax consequences for Minnesota taxpayers.  

As soon as the February Forecast is published, we will provide our analysis and report on prospects for additional resources to be directed to the economic development programs that are so important to business growth and job creation across the state.

If you have any question or comments, please give us a call at (651) 221-1044 or send an e-mail to kwalli@fryberger.com, srichie@fryberger.com or dtomassoni@fryberger.com

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2018 Legislative Session Preview

Posted By Administration, Tuesday, December 19, 2017


Judging from the action packed off-season, the 2018 Legislative Session will have no shortage of storylines. With legislative lawsuits, accusations of sexual harassment, a wide-open gubernatorial race and both US Senate seats on the ballot, not to mention the actual policy issues at play in 2018, it promises to be a very busy close to the 90th Legislature. This preview aims to make sense of what has happened since the Legislature adjourned in May and what it will mean for 2018.

Legislative Funding Saga

Governor Dayton and legislative leaders spent the off season locked in a protracted legal battle stemming from the Governor’s line-item veto of roughly $130 million in funding for the House and Senate. The Governor vetoed the funding with the goal of forcing legislative leaders to call a special session to renegotiate provisions in the tax bill. Legislators opted instead to take Governor Dayton to court over what they claimed to be an unconstitutional abolishment of a co-equal branch of government. Legislators won the initial court decision, with the Governor’s veto ruled null and void and full legislative funding restored. But Governor Dayton appealed the ruling to the Minnesota Supreme Court, which chose not reverse the lower court ruling, but deemed the veto constitutional and ordered mediation between the two sides.

Mediation lasted a day and a half and was ultimately successful only in upsetting the parties further. Governor Dayton left claiming he had been lied to by the Legislature with respect to how long they could operate without additional funding. Legislative leaders were frustrated that they were renegotiating things that had already been negotiated during Session. The case then went back to the Minnesota Supreme Court, who upheld the constitutionality of the veto.

The Legislature acted quickly after the ruling to transfer $26 million in reserves from the Legislative Coordinating Commission to maintain operations ahead of the 2018 Legislative Session.  Considering the rhetoric and divisive nature of the legal matter, the funding issue is likely to roll over into the 2018 Legislative Session and keep tension between Democrats and Republicans extremely high.  

Sexual Harassment Policies

Sparked in part by the national conversation taking place around sexual harassment in the workplace, the Minnesota Legislature has had several high profile incidents of sexual harassment come to light in recent weeks. DFL Senator Dan Schoen and Republican Representative Tony Cornish were both accused of inappropriate sexual behavior. Both initially attempted to fight the allegations, but eventually agreed to resign their positions in the Legislature.

A request for a state task force to address “the culture of our legislative bodies and campaigns” has been called for by lawmakers who have experienced sexual harassment. The issue of sexual harassment is undoubtedly larger than just the two lawmakers accused of inappropriate behavior to date. Expect it to be a dominate story line all Session. With both a Democrat and a Republican accused of inappropriate behavior so far, this issue offers a chance for the parties to work together without partisanship derailing the effort to address a serious issue. A bipartisan effort to update sexual harassment policies at the State Capitol has been launched and will likely be a central issue in 2018.

State politics have also been impacted by the resignation of Senator Al Franken for sexual misconduct predating his time in the US Senate. Lieutenant Governor Tina Smith has been selected to serve out the final year of Senator Franken’s term, which has created additional drama at the state level. According to the Minnesota Constitution, State Senator and current Senate President Michelle Fischbach will replace Tina Smith as Lieutenant Governor and serve with DFL Governor Mark Dayton. Senator Fischbach and Senate Republicans are confident she can serve in both roles simultaneously, while Governor Dayton and DFL leaders are claiming she must resign her Senate Seat. It remains to be seen if this is an issue that can be worked out by party leaders or if we will be seeing yet another high profile court case in advance of the 2018 Legislative Session.

Bonding Bill  

The second year of the biennium is traditionally the year in which a bonding bill is assembled. In order to be eligible for this form of state funding, a project must be publically owned, be of state or regional significance, and be a capital project. To fund these projects, the state sells general obligation bonds on the bond market and pays the debt service on these bonds over time.  Normally the House and Senate Capital Investment Committees go on extensive tours of the state to see projects vying for state funding. They are able to tour facilities and ask questions of stakeholders to better understand the projects applying for state support.  However, as a result of the ongoing funding issue discussed above, the Senate Capital Investment Committee cancelled their bonding tour in an effort to save resources. The House Capital Investment Committee went ahead with their tour as scheduled.

There will be no shortage of requests for capital projects from across the state. It will be up to the Capital Investment Committees in each body to sort through the requests and assemble a bill that can get a 60 percent majority to pass, a process that will be highly anticipated and scrutinized by stakeholders across the state.

Supplemental Budget

While Minnesota’s two-year budget was set during the 2017 Legislative Session, there is an outside chance there will be a supplemental budget bill in 2018. A supplemental budget bill’s chances will be closely tied to the State’s economic forecast, which will be updated in February. The November economic forecast projected a deficit totaling $188 million, although the majority of this can be attributed to the lack of Children’s Health Insurance Program (CHIP) funding from the Federal government. In the event that a CHIP funding solution is worked out in Congress, the February forecast may be rosier than the November report was. We will be closely following these developments and will adjust our expectations and approach accordingly. 

Gubernatorial and US Senate Races

Politics usually plays a starring role at the Legislature, but with the 2018 gubernatorial race already fully underway, that will be especially true of the 2018 Legislative Session. Neither the Democrats nor the Republicans have a clear front-runner for their party nomination yet, and as such we are likely to see candidates jockeying for position during Session. Currently there are several sitting Legislators from both the House and Senate who have officially entered the Governor’s race.  With Senator Franken’s seat now thrown into play in 2018, along with Senator Klobuchar’s seat, there will be no shortage of statewide races, meaning both parties will have plenty of current office holders angling for a promotion. How this may impact the 20108 Legislative Session remains to be seen, but you can certain it will!

Please reach out with any questions to Sam Richie or Kevin Walli at Fryberger, Buchanan, Smith & Frederick, P.A., who can be reached at (651) 221-1044.

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