February 10, 2017

Minnesota Weekly Legislative Update: College Affordability Proposals Headline Active Week

Legislative committees continued hearing proposals on issues ranging from wetland funding and palliative care to redistricting and tax benefits for retired CIA employees. House and Senate Tax Committee’s heard Governor Mark Dayton’s tax bill and bills for possible inclusion in omnibus bills.

On Tuesday night, legislators endorsed candidates for four positions on the University of Minnesota’s Board of Regents, the 12-member governing body of the institution. There were 36 applications submitted to the Regent Candidate Advisory Council for these positions. One of the candidates recommended was former House Speaker Steve Sviggum. No date has been set yet for a joint convention of the House and Senate to approve these candidates.

Later in the week, a group of House DFLers proposed a constitutional amendment legalizing marijuana, calling it a starting point for a discussion on the issue. The House also passed legislation authorizing Xcel Energy to build a natural gas plant near Becker, Minnesota without first obtaining a certificate of need from Minnesota’s Public Utilities Commission. Governor Dayton has indicated that he will sign this bill.

Below is a summary of key bills discussed at the Legislature this week.

Higher Education

A number of proposals have been introduced this session addressing college affordability and student loan debt. One of these proposals, HF 607, authored by Rep. Jennifer Schultz (DFL-Duluth), was heard in the House Tax Committee this week. HF 607 would create a grant program for students that maintain a 2.5 GPA, meet certain income requirements and are residents of Minnesota. Supporters informed the committee that by making education more affordable, students will be able concentrate on their studies and graduate at a faster rate. Opponents raised concerns about costs, noting that there was no fiscal note for committee consideration, so overall cost and the number of students who could utilize these grants is unknown. The bill was laid over for possible inclusion in the House Omnibus Tax Bill. The Senate companion, SF 156, authored by Senator Ron Latz (DFL-St. Louis Park), is awaiting a hearing in the Senate Tax Committee.

The House Tax Committee also heard HF 794, authored by Rep. Barb Haley (R-Red Wing), which continues a 2015 pilot program advising students regarding their options on how to repay student loans and avoid going into default. Supportive legislators noted that, while this proposal helps students avoid default, they were interested in finding a way to invest in educating students prior to taking out loans, rather than after. The bill was laid over for possible inclusion in the House Omnibus Tax Bill. No Senate companion has been introduced.

Other proposals addressing college affordability include two bills introduced by Rep. Anna Wills (R–Rosemount) encouraging Minnesotans to invest in 529 or higher education savings plans to keep college affordable. HF 520 provides a tax subtraction up to $3,000 for married couples and $1,500 for individuals or a credit up to $500 for investing in the Minnesota college savings plan. HF 521 expands the proposal in HF 520 to include investing in any state’s 529 plan. In both proposals, the available tax credit is income limited and an individual must choose either the credit or the deduction. Senator Greg Clausen (DFL - Apple Valley) authored the Senate companion bills SF 303 and SF 502 respectively. Bills in both bodies are awaiting hearings. The House bills were scheduled to be heard this week, but were pulled f

Still another proposal on college affordability is contained in SF 45, authored by Senator Ann Rest (DFL-New Hope). This proposal provides a student loan credit up to $1,000 for individuals and $2,000 for married filers for those spending more than 10 percent of their income on loan repayments. The amount of the credit is determined by total debt payment versus adjusted gross income. Filers who work in public service or an education profession receive a higher percentage of payment. Both the 529 tax subtraction/credit and college debt proposals are carryovers from the 2016 Omnibus Tax Bill vetoed by Governor Dayton.

Preemption Bill Continues Progress Through House and Senate Committees

Legislation preempting local governments from adopting ordinances regulating wage, leave, scheduling and other work benefits and conditions as well as invalidating local sick leave laws in Minneapolis and St. Paul cleared committees in both the House and Senate this week.

On Monday, SF 580, authored by Senator Jeremy Miller (R-Winona) and the companion to HF 600 (heard last week in the House), had its first stop in the Senate Jobs and Economic Growth Finance and Affordability Committee. Senator Miller testified that the motivation for this legislation included less mandates and more statewide consistency for wage and benefit laws.

Supporters, primarily representatives of Minnesota’s business community, highlighted the administrative burden of complying with a patchwork of wage and benefit ordinances and its impact on the state’s business climate. Opponents highlighted the negative health impact no sick leave imposes on service industries, the economic impact on families, and the loss of local control which would result if SF 580 becomes law. The loss of local control was underscored by opponents who noted that there were no elected officials from either Minneapolis or St. Paul listed as author.

SF 580 passed 6-3, all members voting on party lines, and will move to the Committee on Local Government.

On Wednesday, HF 600, authored by Rep. Pat Garofalo (R-Farmington), had its second stop in the House Government Operations and Elections Policy Committee. Rep. Garofalo testified that the intent of HF 600 was uniform statewide labor and benefits laws and expressed hope that appropriations for the Bureau of Mediation Services and the Labor Standards Division of the Department of Labor and Industry would help garner support from Governor Dayton and House DFLers. He also noted that failure to pass statewide uniformity might result in “less progressive” laws in some cities, especially those allowing initiative and referendum.

Eleven amendments were offered, all by DFLers, carving out exemptions so local governments could pass ordinances allowing sick leave in certain situations, including when employees have sick children or when they have a contagious disease and work around food. All amendments were rejected on party line votes.

HF 600, passed on a party line vote and was referred to the House Ways and Means Committee, its likely last stop before the House Floor.

Vendors Discriminating Against Israel Barred from State Contracts

HF 400, sponsored by Rep. Ron Kresha (R- Little Falls), would bar state government agencies, including Minnesota State Colleges and Universities, from entering into contracts with vendors discriminating against Israel. As introduced, HF 400 would have required all state contracts to include a vendor’s certification proving that they were not engaged in a “boycott” of Israel. However, Rep. Kresha offered a delete-all author’s amendment during HF 400’s first hearing in the House Committee on Government Operations and Elections Policy that would change the language from “boycott” to “discrimination.” “Discrimination” is defined as “engaging in refusals to deal, terminating business activities, or other actions that are intended to limit commercial relations with Israel, or persons or entities doing business with Israel.”

There are two exceptions to this prohibition: contracts worth less than $1,000 and contracts where a state commissioner decides it wouldn’t be practicable or in the best interests of the state to comply.

Rep. Kresha and proponents argued that this legislation supports Israel and the state should not subsidize discrimination. Opponents argued that HF400 revokes free speech rights and is inconsistent with the long history of using economic pressure in the form of boycotts to effect change.

HF 400 was passed as amended and referred to the Committee on State Government Finance. The Senate companion, SF247, sponsored by Senator Warren Limmer (R-Maple Grove), awaits action by the Senate State Government Finance and Policy and Elections Committee. Another bill requiring vendor certification of not being engaged in a boycott of Israel, HF 639 authored by Rep. Abigail Whalen (R-Ramsey), has been introduced and referred to the House Government Operations and Elections Policy Committee. There is no Senate companion to HF 639.

Local Government Sales Tax Exemption for Construction Materials

In 2013, the Legislature provided an upfront exemption for local governments from sales taxes on construction materials. However, this exemption has been underutilized because of the complicated approval process. HF 299, authored by Rep. Chris Swedzinski (R-Ghent), seeks to rectify this by allowing local governments to provide the sales tax exemption as a refund mechanism, instead of upfront, to local units who use contractors to purchase materials on a lump-sum basis. Concerns in the past included contractors purchasing materials for more than one project at a time, or for projects that don’t qualify for the exemption. The Department of Revenue feels the refund process is a creative solution and works. The bill was laid over for possible inclusion in the House Omnibus Tax Bill.

The Senate companion, SF 460, authored by Senator Gary Dahms (R-Redwood Falls), is scheduled to be heard in the Senate Tax Committee Tuesday, February 14.

Upcoming Important Dates

February Budget Forecast. The February Budget & Economic Forecast will be released on February 28. This forecast is used by Governor Dayton and the Legislature to set the FY 2018-2019 budget and ensure that the FY 2016-2017 budget remains on track and in balance.

Committee Deadlines have been announced by legislative leadership. They are:

  • First Deadline- Friday, March 10, 2017: ◦All policy committees must act favorably on a bill in the House of origin.
  • Second Deadline- Friday, March 17, 2017: ◦All policy committees must act favorably on bills or companions of bills that met the first deadline in the other chamber.
  • Third Deadline- Friday, March 31, 2017: ◦Committees to act favorably on major appropriation and finance bills.

The deadlines do not apply to the House Committees on Capital Investment, Ways and Means, Taxes, or Rules and Legislative Administration, nor to the Senate committees on Capital Investment, Finance, Taxes, or Rules and Administration.

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