For more information contact: Christina Gosack 651-296-5524

NEWS COLUMN

SUMMARY OF IMPORTANT UPCOMING ISSUES IN 2006

I appreciate the opportunity to serve you in the legislature, and I ask your advice as we face important decisions this legislative session. We will be facing important policy and budget issues. Nearly $1 billion will be spent on important major construction projects (we'll try to get some for the Northside), with another billion considered for stadiums, and more for highways. Additionally, I believe we must stop the accelerating property taxes in Minneapolis; provide adequate funding for urban schools while initiating more effective education methods; provide basic healthcare, especially for children, while promoting efficiency; make the tax system fair; help businesses create good jobs and economic development on the northside; and stop the explosion of crime.

This letter outlines many of the issues and funding decisions that we will have to make this year. I also urge you to look at my website (www.house/58A), which contains in-depth analyses of some issues and summaries of important recent laws. You can also contact me about these issues, or others of importance to you, by email at rep.joe.mullery@house.mn or by calling or sending me a letter to the contact information listed at the bottom of this page.

The most effective way for you to have a say in what happens at your state or local government is to become part of the election process yourself by attending the precinct caucuses on March 7th, 2006, at 7pm. This is probably the most effective way for you to have your concerns put into action. You can obtain the location of the precinct caucus for your address by calling 612-348-5151.

If you remember my letter to all of you during the early part of the legislative session four years ago, I warned that the state should take care of the large deficit that was looming. Instead, both the Senate and House leadership glossed over it and proceeded as if we weren't headed for disaster. The enormous deficit of the last few years, as well as the huge cuts to important initiatives that occurred as a result, could have been avoided. Four years ago a few of us warned the leadership in both bodies of the effect their policies would have by ignoring the projected facts, and we were proven right.

SUMMARIES OF THE ISSUES WE FACE IN THE 2006 LEGISLATIVE SESSION
$500 Per Year Property Tax Increase: Unquestionably, the most important issue of this year's session for Minneapolis property taxpayers is the enormous unfunded liability in the Minneapolis teachers' pension. I have been at the forefront in the work to save benefits for retired Minneapolis teachers without sticking Minneapolis taxpayers with the cost. Last year a bill was introduced by Minneapolis legislators and others, as well as the political arm of the teachers pension fund, which would have added roughly $500 per year in property taxes to the average homeowner in Minneapolis (of course, that amount would have been higher for higher-valued homes). That increase would have continued each year for approximately 25 years and would have roughly doubled every nine years. I have put in hundreds of hours researching the history of the Minneapolis teachers pension fund and the causes of its deficit. The history clearly shows that the actions of the state, the Fund, and its political arm, are the main reasons for almost all of the problems. Because I knew the history behind the problem, I prepared several memoranda for other legislators and the governor's office, which pointed out very strongly that the Minneapolis taxpayers should not be forced to pay for the teachers pension fund deficit. Fortunately, I was able to stop the bill that would have unfairly shifted most of the cost onto Minneapolis taxpayers.

Over the interim I've continued to work on this issue tirelessly and now more people at the state understand that it's not the responsibility of Minneapolis taxpayers. The fact is that there was an unfunded liability of $76 million in 1975. At that time, the state terminated the levy on Minneapolis and legally assumed all obligations for the teachers' pensions. Since 1975, the state - not the City or School District -- has had control over everything about the fund. Within a few years of the state takeover, the unfunded liability for Minneapolis teachers grew to $270 million and has continued to grow to nearly a $1 billion deficit at the present time. Even before 1975, however, the state had taken over the unfunded liability for the pensions of teachers in the rest of the state (except St. Paul and Duluth). That pension fund (TRA) became much better funded because the state put an extra $1.5 billion into it. Thanks to the influx of extra money from the state and a state management program, that fund has actually become sufficient. At no time has the state ever asked any other school district or city to pay property taxes to make up for the unfunded liability on those teacher pensions.

Because of my extensive work arguing that Minneapolis property taxpayers should not have to make up the deficit, the latest proposals don't have a new property tax in Minneapolis to pay for this deficit. While the Fund and its political arm played major roles in the cause of the deficit, I believe we should preserve the expected retirement benefits of Minneapolis teachers. The state put those benefits into statute and teachers relied on the belief they would receive a pension when they retired.

Neighborhood Revitalization Program: As chair of the Citywide NRP Policy Board, I consider it very important to the Northside to preserve NRP. I have spent hundreds of hours trying to find ways to fund NRP in the future, and I created a task force last summer to look into various ways to accomplish that. We looked at over two dozen possible sources of funding and narrowed them down to roughly a half dozen proposals that we think might have a chance for support. They would require action by city government, and in some cases, county, schools, and state government. Everyone can find fault with particular neighborhood organizations at times, but I think there is no question that NRP has provided a tremendous boost for our community, and it is vital that we find a way to continue this program.

Healthcare: I have introduced a bill aimed at huge employers that have a proven record of covering very few of their employees in their health plan and instead help their employees get government-funded healthcare. The most notable example is Wal-Mart. My bill requires that these companies pay the state a fair share of their payroll to provide healthcare to their employees.

Another proposal is to provide discount cards to Medicare recipients to cover the $2,850 gap that is not covered by the new federal Medicare prescription drug coverage. This card would give a discount equal to the Veterans' Administration discounts, which is about 60 percent on most drugs. There are also bills to provide for universal coverage for all children, a constitutional amendment to guarantee everyone access to basic healthcare coverage, and a proposal to copy some European countries that give refundable tax credits up to $2,000 per year to anyone who takes care of their elderly or disabled relative in their home.

Education: I'm the author of a proposal to recalculate the Early Childhood Family Education (ECFE) dollar allocation formula so that urban schools would receive more money (an analysis by the Legislative Auditor found that other schools, especially in rural areas with less need, are receiving more funds per eligible pupil than the inner cities where the need is much greater). I am also working with teachers from Henry, the Department of Education, and the University of Minnesota School of Education to fund a pilot program at Henry that would train teachers who have just graduated from college to effectively teach a diverse student body. Another issue that will be hotly contested this year is whether to elect our Minneapolis School Board members by specific district (like the City Council or Park Board) rather than the present citywide system.

There are proposals to fund all-day kindergarten for everyone who wants it and to provide a tax credit of up to $200 per month for parents who volunteer at their children's schools for a certain number of hours each month. There will almost certainly be a change in some of the rules regarding integration aid, which was intended to accomplish desegregation and help stimulate real integration of students of diverse backgrounds. Instead, some suburban schools used integration aid for such things as purchasing telescopes.

Cigarette Tax And Other Taxes: As you probably recall the cigarette tax was set up as a "fee" so that Governor Pawlenty could keep his promise not to increase taxes. I thought calling it a "fee" and not a tax was absurd when the effect was the same. Our legal experts also thought there was a good chance that setting it up as a fee would be unconstitutional, and they were right. This is a $400 million loss of income out of the state's budget. There will be an effort this year to set it up as a tax so that we can collect it.

I will continue the effort, which I led last year, to close the huge loophole of foreign operating corporation income. Right now, a corporation can set up an operation (in a foreign country) that doesn't have many assets or real operation but the company runs its income into the foreign corporation and avoids paying the Minnesota income tax on it.

I am also very concerned about the quickly accelerating property taxes in our area. As you probably know, I led an effort to have the limited market value provisions extended another two years, which helps keep our taxes down. However, we really need to go further to stop the double-digit increases that are occurring every year. I need to hear from you as to which of the methods on the survey you prefer for lowering property taxes.

[It should be noted that since the Republican takeover of the House of Representatives, the portion of the total Minneapolis property tax paid by residential property has increased from 32 percent to 54 percent, and the portion of the total Minneapolis property tax paid by commercial/industrial property has decreased from 56 percent down to 35 percent - a huge shift of the property tax burden from Minneapolis businesses to Minneapolis homeowners.]

Major Projects: This year is called a "bonding year" at the legislature because a big issue will be how much to spend on the construction of major projects (highways, schools, etc.) and which major projects get funded.

Lowry Avenue Revitalization: A County project will revitalize Lowry Avenue by assisting reconstruction of the business nodes. The County is contributing a considerable amount, but needs help from the state to assist in the redevelopment. I have been working on this issue for a few years. Last year I got partial funding for the Lowry project into the bonding bill; however, the money was removed on the last night and was diverted to the Planetarium downtown because the City's lobbyists said it was a higher priority. This year, the City has indicated they will support the Lowry project (for the first time) and hopefully this will allow the redevelopment of Lowry to move forward with state funding.

Lowry Bridge: The bridge is nearly 100 years old and is in serious disrepair because one of the piers has slippage of the steel plates near the base. It has to be inspected every month by an engineer to see if it can be kept open for the next month. That is just not acceptable and I am working with other legislators to convince them of the immediate need for repairing this historic bridge.

The Shubert Theater: The City's priority this year is to get a large amount of money to recondition the theater for use as a dance (and other) art space. Unfortunately, there's a good chance that any money going into the Shubert will probably take away from redeveloping Lowry.

Sex offenders: Since there are often one-fourth of released sex offenders living on the Northside at any given time, I am supporting efforts for bonding money to construct halfway houses for these serious sex offenders so they can be more closely monitored rather than just living in the community on their own. I also am supporting a proposal that would require the county where the sex offenders lived when they committed their crimes be the county that has to house them when they are released, rather than having them come from all over the state to small areas of north and south Minneapolis. I would also like to see additional state money for housing and treatment of sex offenders, including money to provide rent, so that sex offenders can live in other areas than the northside and middle southside of Minneapolis.

Violent crime has become an important issue on our Northside. I have reviewed the legislative agendas of both the City of Minneapolis and Hennepin County and they have no proposals that would directly get at the greatly accelerating violence we see in our neighborhoods. Their only proposal that would relate in some way is for additional money to further develop the criminal information network. There is already a 52 percent increase of reported gunshots from last year. One bill I will be working on with probation officers is to require the sharing of information between law enforcement, court, and probation agencies. Two more of my ideas will get at repeat drug dealers, both of which have been applauded by police and probation officers. The first one would allow a probation officer or law enforcement officer to stop and frisk a person they know is on probation for a drug-related violent felony connected to a gun if they are in any place where drug dealing is likely occurring. The other one is to prevent a person on probation from loitering within two miles of where they were convicted of drug dealing. Since a person is only released from prison and put on probation because they are supposedly being rehabilitated, there is no legitimate reason for them to be hanging around drug dealers or gang members.

Credit Scoring: I'm working with Attorney General Mike Hatch this year on credit scoring by insurance companies in setting premiums. We have a bizarre situation whereby the state, in essence, forces people to pay profits to credit card companies. This occurs because the state requires a person to have car insurance in order to drive; the insurance company then uses credit scoring to set the insurance premium; and the credit score is determined by having a good record of using a credit card and paying monthly over time without any late payments. Thus, if a person instead uses cash or checks or pays their credit card purchases within the first month after the purchase, that person does not have as good a credit score and has to pay higher insurance premiums. Additionally, credit scores are shown to have a negative effect for many low-income and minority people who may be injured or have a medical or other emergency and, because they have out-of-pocket expenses, miss one or two credit card payments; thus, they receive a low credit score. Moreover, insurance companies have never shown any causal connection between credit scores and a person's accident record.

Voting Rights: When doorknocking on the Northside, I discovered that former felons who have completed their probation period are not aware that they can vote again. I am authoring a bill that would require probation officers, at the time the probationary period ends, to inform their probationers in writing that their voting rights are restored.

Environmental Justice: Many businesses that pollute the nearby environment are located in minority and low-income areas. I authored a bill that would set up a state task force to look into this issue. It would also help prevent the siting of polluting businesses where they take advantage of the proximity to minority and low-income people.

Clean Water Legacy: Minnesota's rivers and lakes are very polluted. For our health, and because federal rules require they be cleaned up before future development occurs, it is important to start measuring the pollution and cleaning them up. However, Republicans want to spread the costs to everyone (through added fees on your city water bill or general taxes), whereas most Democrats feel those causing the pollution should bear most of the costs.

Business Regulation: Over the last few years, a handful of us in the legislature have worked on changes in the law to require disclosures of all governmental subsidies to businesses for economic development purposes, and to enforce the businesses' commitments on jobs and salaries, including requiring the businesses to pay the public back when they haven't met those commitments. Over the interim I met with the leading advocate against business subsidies (he testifies all over the country) who said that Minnesota leads the nation in regulating corporate subsidies by government. He pointed out that there is one loophole in Minnesota law, however. When a company gets an exemption from income tax here for sales of its product in another state, if that other state doesn't have a tax the income isn't taxed anywhere. Since the purpose for the exclusion was to avoid double taxation, I'm authoring a bill to close that loophole.

I 'm also working with the National Center for Policy Alternatives (a progressive Washington "think tank") to find ways to strengthen our laws against predatory lending, both with regard to mortgages and payday lending/check-cashing operations, which have been "fleecing" many of our low-income Northside residents.

Affordable Housing: Last session I was the lead Democrat in the House working with the affordable housing coalition on what is called "4d" apartments, which is rental housing for low-income people. We were successful in lowering the property tax on these units, which helps keep the rent low. However, quite a few of these buildings weren't included and this year I am again working with the affordable housing coalition to include more low-income buildings.

I hope this information is helpful and that you take a few moments to complete the enclosed survey. I also urge you to become actively involved in the election process by attending your precinct caucus on March 7th and having a direct say in the way your government operates. I look forward to hearing from you soon.