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Legislative Update: May 15, 2018

Posted By Administration, Tuesday, May 15, 2018

Late last night the Supplemental Budget Conference Committee took up the Jobs and Economic Development articles of the Omnibus Supplemental Funding Bill.

Good news - the Conference Committee reversed House and Senate proposals to significantly cut the Job Creation Fund and the Minnesota Investment Fund. As you will recall, the House proposed reducing the Job Creation Fund by $7 million and the Minnesota Investment fund by $5 million and to reduce the base of both programs into the future; the Senate proposed reducing the Minnesota Investment Fund by $2 million. They kept two carve outs to MIF, $1,000,000 for Verso Paper in Duluth and $1,000,000 for a company in Minnetonka. The rest of the earmarked MIF and JCF allocations that were in the House bill were not accepted in Conference.

Ultimately, the Conference Committee agreed to:

  • $15 million from the General Fund for Broadband
  • No reductions to the Minnesota Investment Fund
  • A one-time reduction of $1.5 million to the Job Creation Fund and appropriated that funding to a project in Cambridge, Minnesota
  • No cuts to the base (future funding) of either JCF or MIF.

Here is a link to the spreadsheet, which does NOT reflect the reduction of $1.5 million to the JCF because it was done by amendment during the committee hearing last night. Otherwise, the final column (“Conference”) is what was agreed to by the committee.

Bill Language:
SF3656 Jobs Appropriation Articles
SF3656 Jobs - Unemployment Insurance Articles
SF3656 Jobs - Economic Development Articles

Moving forward, the Conference Committee still has several articles of the supplemental budget bill to consider; it will then go back to the House and Senate for a final floor vote (no amendments are allowed at that point). If the governor receives the bill by Wednesday, he will have three days to sign, veto, or line item veto the bill.  If he receives it within the last three days of session, he has 14 days.  The Governor, House and Senate leadership are meeting this morning to negotiate an overall pathway through the end of session.

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Legislative Update: May 11, 2018

Posted By Administration, Monday, May 14, 2018
We are heading into the final week of the Legislative Session. There is a considerable amount of work that needs to be accomplished in a very short period of time. The House and Senate have both approved Omnibus Appropriations bills which include virtually all of the State Agency accounts. We are specifically watching the Department of Employment and Economic Development provisions which represent a very modest portion of the overall Supplemental Budget.  

Our biggest concern with the DEED provisions is the “earmarking” of funds from the Minnesota Investment Fund and Job Creation Fund. Both the House and Senate Bills earmark funds for specific projects, but the House does so more aggressively – leaving very limited resources available to respond to projects which come forward for funding in FY 2019.

We are also watching the Tax Bill. The Senate and House Conferees are working to assemble a bill that they hope will secure the Governor’s signature. At this point, it is hard to say whether they will accomplish this objective. There are very significant differences on the tax maters between Governor Dayton and Republican Legislative Leaders.  

One provision of significant interest to the economic development community is the inclusion of funding for the Angel Tax Credit Program. This is the program that provides 25% credit to investors who put money into start-up companies focused on high technology, new proprietary technology or new proprietary processes or services.  

The Senate Bill includes an additional $5 million to continue the Angel Tax Credit Program. The House included $10 million for the same purpose. The difference in the funding level will be addressed in the final Conference Committee Report.

The House and Senate are also working on their respective Bonding Bills. The House Bonding Bill has cleared Committee and is awaiting action on the House Floor. The Senate Bill has been marked-up by the Capital Investment Committee and awaits action in the Senate Finance Committee. Both bills need to be acted upon next week. The challenge they face is that both the House and the Senate established a general obligation bonds ceiling of $825 million which is considerably below the state’s debt capacity and approximately one-half the level recommended by Governor Dayton.  

Both the House and Senate Bills leave out a number of important projects and may struggle to secure the 60% Super Majority required to pass bonding provisions.

Of particular interest to economic development professionals are the Greater Minnesota Business Infrastructure Program – which the Senate includes in its bill at $8 million. Also of interest is the Transportation Economic Development Infrastructure Program (TEDI) at $4 million. One million dollars is included in the Senate Bill for the Innovative Development Infrastructure Program (IBDPI).  

We will continue working on these issues in this final busy week of the Session. Our next report may be the very conclusion of the Session since it will likely be difficult to know precisely where things land until the Legislature adjourns.  

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: May 8, 2018

Posted By Administration, Monday, May 7, 2018

Both the House and Senate have now passed their respective Omnibus Finance Bills which contain funding for the Department of Employment and Economic Development. Both Bills transfer funds from the Minnesota Investment Fund and the Job Creation Fund to other accounts at DEED or for earmarked projects. In both instances, we are seeing a reduction in the level of funding available generally for projects which will present opportunities for business development and job creation. At this point in the process, the Senate Bill retains more of the MIF and JCF funding for yet to be determined projects. The FY’19 funding levels for these programs in the House Bill have been reduced to $1.5 million for MIF and $4 million for JCF. The Senate funding levels for FY’19 would be at $8 million for MIF and $8.5 million for JCF.  

The Senate Tax Bill made its way through Committee and the Floor this week. One of the key provisions from EDAM’s perspective is another round of funding for the Angel Investment Tax Credit. Senator Paul Anderson (R-Plymouth) championed this initiative and was able to convince the Chairman to include the Angel Tax Credit in the Senate Bill. We will now need to work the Conference Committee to retain the $5 million allocation for the Tax Credit Program.

The House Bonding Bill emerged this week and cleared the Capital Investment Committee on Friday morning. The projects of greatest interest to EDAM members would include the Business Development Public Infrastructure Program (BDPI) at $3 million, the Transportation Economic Development Program (TEDP) at $10 million and the Innovative Business Development Infrastructure (IDBPI) at $2 million.  

In addition, the Bonding Bill included a substantial amount of funding for water infrastructure including $20 million to match U.S. EPA Capitalization Grants, $55 million for water infrastructure (which includes the Clean Water Program and the Drinking Water Program) and $45 million for wastewater infrastructure – Point Source Implementation Grants.  

The Conferees have been named for the Omnibus Finance Bills and the Tax Bills.

House:
Rep. Jim Knoblach (St. Cloud)
Rep. Jennifer Loon (Eden Prairie)
Rep. Paul Torkleson (Hanska – District includes New Ulm)
Rep. Pat Garofalo  (Farmington)
Rep. Gene Pelowski (Winona)
 
Senate:
Sen. Julie Rosen (Vernon Center – District includes New Ulm)
Sen. Michelle Benson (Ham Lake)
Sen. Mary Kiffmeyer (Big Lake)
Sen. Warren Limmer (Maple Grove)
Sen. Scott Newman (Hutchinson)

 

We expect that the Senate Capital Investment Bill will emerge by mid-week so that we can compare House and Senate provisions.  

We will keep you informed of all developments of interest and concern to EDAM as the process moves to its conclusion, scheduled for May 21st.  

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 30, 2018

Posted By Administration, Monday, April 30, 2018
EDAM was able to get a letter voicing opposition to proposed cuts to economic development funding included in the committee materials for the April 27 Ways and Means hearing on the Omnibus Jobs Bill, but the language dealing with the DEED budget was not amended and remains problematic. The Senate Omnibus Jobs Bill was rolled into the overall Senate Omnibus Supplemental Budget bill,  which passed off the Senate Floor on April  26th. The House will take up their Omnibus Supplemental Bill (which now includes the Omnibus Jobs Bill) on the House Floor this week, at which point Conferees will be named. We will shift our focus from trying to amend the House language to advocating for the Senate position in Conference.

We expect the focus to shift now onto the Omnibus Tax Bills in both House and Senate as well as the potential unveiling of the Bonding Bills in each body.

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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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