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House and Senate Jobs Omnibus Provisions

With the House and Senate Jobs Committee’s constructing their omnibus bills over the last few weeks, both committees introduced their bills last week. SF 1937 being carried by Sen. Jeremy Miller (R-Winona), chair of the committee was heard by the Jobs Committee last week on Wednesday. Included in the Senate bill, the Minnesota Investment Fund (MIF) would receive $12.5 million in both FY 2018 and FY 2019. The Job Creation Fund (JCF) would receive $8 million per year. Also included in the bill, The Redevelopment Grant Program would receive $1.5 million each year.

The Senate proposal also has provisions allowing for flexibility between the programs. Miller’s bill allows for $2 million that could be moved between MIF and JCF accounts by DEED to meet business demand. The language also adjusts the qualifying thresholds to be an eligible JCF business. They are lowered for projects in greater Minnesota or for businesses with majority ownership by women, a veteran, minority or person with a disability.

EDAM testified in support of the bill last week and thanked Sen Miller for restoring partial funding of MIF and JCF after last sessions cuts.  We did urge the committee to keep looking deeper into restoring all funding.  We have and will keep in touch with Sen. Miller.

In the House, HF 2209 was introduced on Thursday afternoon. Under Rep. Garofalo’s (R-Farmington) proposal MIF would receive $12 million in FY 18 and $11 million in FY 19. The Job Creation Fund would receive $5 million in each year. No funding for The Redevelopment Grant Program was included in the bill.

Like the Senate bill, there was some policy language that was included. JCF policy changes outlined would bill would put restrictions on the Job Creation Fund (JCF) by limiting awards to counties where the average unemployment rate for the prior 12 months is equal to or greater than the state average unemployment rate for the same 12 months. This would eliminate communities from 31 Minnesota counties from accessing JCF funds.

As you may recall HF 1916 and SF 1522 that were introduced and supported by EDAM, Metro cities, and Minnesota Brownfields, proposed to fund the Minnesota Investment Fund (MIF) $15 million per year over the 2018-2019 biennium. The bill also proposed to fund the Redevelopment Grant program (RGF) with $10 million over the biennium and $12.5 million per year for Job Creation Funds (JCF).

Another key item that EDAM has been watching is the Border-to-Border Broadband Grant program.  Under the Senate bill the program is funded at $10.25 million for both FY 18 and FY 19. The House proposal only funds the program for FY 18 $7 million.

Next Steps

The House took public testimony on their bill all day on Monday with about 40 organizations raising concerns.  EDAM was one of those groups that shared our concerns with the funding levels of MIF and JCF as well as no funding outlined in the bill for RDG fund.  On Tuesday afternoon the committee will mark the bill up with proposed amendments and then pass it off to most likely Ways and Means where they will look at the fiscal amount of the bill.  From there it will head to floor for a full hearing where it will be subject to more changes by the entire House.

In the Senate, the Senate Finance Committee passed the bill out last night and is planning to send it to the floor for a full hearing as soon as Tuesday (today) perhaps.  From there, we will wait for the House and Senate to match the bill up and start the conference committee process where they work to make the bills match up.   Look for more on this in the next two weeks and what the next steps will be.

House and Senate Announce Budget Targets – The Big Picture

In January, Gov. Mark Dayton announced a $45.8 billion budget proposal. There are several new major spending proposals in Gov. Dayton’s budget, which has been updated with the February budget forecast showing a $1.65 billion surplus.

View Gov. Dayton’s complete supplemental budget proposal.

Two weeks ago, the Senate released budget targets that prioritize education, transportation, and taxes. Health and Human Services would receive a reduction of $335 million to its department funding over the two-year biennium, while Higher Education would see a $100 million increase. Senate leaders have also chosen to commit to a $900 million tax relief plan.

Here is the complete list of Senate targets:

Committee

Change

Agriculture, Rural Development and Housing

$0

Commerce & Consumer Protection

$0

E-12 Education

$300 million

Energy & Utilities

$0

Environment & Natural Resources

-$40 million

Health and Human Services

-$335 million

Higher Education

$100 million

Jobs and Economic Growth

$10 million

Judiciary & Public Safety

$59 million

State Government

-$30 million

Taxes

$900 million

Transportation

$570 million

Veterans & Military Affairs

$1 million

The House followed suit this past Monday by releasing budget targets. Similar to the Senate, the targets prioritize transportation and tax relief. The total multi-year transportation funding numbers are still being worked out in the committee (read on for additional information). House leaders have committed to a $1.35 billion tax relief package.

For education, the House is proposing a $257.8 million spending increase. The House’s proposals would spend $1 billion less than Gov. Dayton’s nearly $46 billion two-year state budget.

Here is the complete list of House budget targets:

Committee

Change

Agriculture

$0

Education

$257.8 million

Health and Human Services

-$599 million

Higher Education

$149.5 million

Public Safety

$102.3 million

State Govt/Veterans

-$90 million

Taxes

$1.76 billion

Transportation

$586 million

Environment

-$21.3 million

Job Growth and Energy Affordability

$10.8 million

Transportation Plans Take Shape

The next steps for the final budget are within the Finance committees of both the House and Senate. These committees will work within the budget parameters given to them for their omnibus bills, which must complete the committee process by Friday, March 31. Once each chamber passes its omnibus bills, conference committees will meet throughout April and May to negotiate the differences between the House and Senate positions. They must have a state budget in place by the end of June to avoid a possible government shutdown.

A major issue at the capitol in recent years has been passing a comprehensive transportation plan into law, a feat that has not been accomplished since 2008. This week both the House and Senate Republicans announced their proposals for multi-year funding to improve the transportation system in the state.

House Proposal

Led by Rep. Paul Torkelson (R-Hanska), chair of the Transportation Finance Committee, the House Republicans’ plan would use existing revenue in the general fund and redirect $450 million toward transportation projects across the state, citing the state’s budget surplus as a resource to fill the gap in general fund revenue. The plan would also utilize over $1 billion in bonding over several years. The plan would create a $75 surcharge on electric vehicles. The proposal would also require local governments to be responsible for cost of operation and upkeep costs for the light rail.

Senate Proposal

The Senate Republicans, led by Transportation Finance Committee Chair Sen. Scott Newman (R-Hutchinson), have announced a plan that would spend $1.3 billion over two years and create dedicated transportation funding of over $500 million. Similar to the House plan, the Senate redirects roughly $400 million in sales tax on auto parts, car rentals and leases (money currently in the general fund) to fund transportation projects across the state. The Senate proposal does not include funding for any transit projects in the state.

Tax Relief Takes Center Stage

Last week, both the House and Senate Republicans announced their proposals for comprehensive tax relief. At this stage of the session these proposals are mostly an outline of initiatives to pursue, with details to be filled in as the proposals make their way through the committee process. The House proposal is a $1.35 billion plan that would emphasize an exemption for seniors from the tax on Social Security income by increasing the income tax threshold for senior citizens. The House proposal also includes a $203 million reduction in state property tax relief for businesses and a $640 tax credit for an estimated 77,500 students paying off college loans. The Senate proposal totals $900 million and would create a permanent cut to the lowest income tax rate, which Senate Republicans estimate will impact 81 percent of Minnesotans. Limited details are available on the plan, but the proposal will focus on tax relief for middle class families, senior citizens, business owners, and students.

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