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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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