Update from Capitol

Dear Neighbor,

 

With the end of the legislative session just two and a half weeks away, there is a lot going on. This past week we finished passing all the remaining major finance bills off the House floor except Agriculture Finance, which has been delayed as we have tried to deal with the bird flu outbreak. We did add an additional $6 million in funding to that bill in the Ways and Means Committee I chair this past week, and expect to pass that bill on Monday on the House floor.

 

But other work goes on, too. This past week the Contract Ratification bill I have been carrying that ratifies labor contracts for MNSCU employees, Minnesota Nurses, and law enforcement personnel like the State Troopers and game wardens passed out of the Ways and Means Committee. The next stop is the House floor. It is also awaiting action in the Senate.

 

Here are some other notable items:

 

TAXES

 

The omnibus tax bill was one of those approved this week and it includes a provision I authored to extend education-related tax credits for public, private and home-schooled students to include tuition. The deduction and credit amounts would increase and the income qualification would be adjusted for inflation.

 

This proposal expands upon credits which currently apply to expenses for things such as books, school supplies, tutoring, academic extracurricular activity fees, computer software, and other school related expenses, and other my bill would expand to include private school tuition (which is currently deductible under the state education deduction). The credit would now be $1500 per child, up from $1,000 now.

 

The inflation adjustments will make many more families in the lower- and middle-income ranges eligible to capitalize on these benefits. I have discussed this proposal with Gov. Mark Dayton and, while there are some differences to resolve in what we envision, he has expressed interest in making this happen and included portions of the bill in his budget proposal.

 

The tax bill also includes significant property tax relief for small business property owners (eliminating the state commercial property tax on the first $500,000 of a property's value), eliminating state income taxes on social security and veterans pensions, conforming the state estate tax limits to that of the federal government, lower charitable gambling taxes, and a wide variety of other tax breaks for middle class families.

 

HEALTH AND HUMAN SERVICES

 

The Health and Human Services omnibus bill is geared toward protecting aging adults’ quality of life, caring for our most vulnerable and respecting Minnesota taxpayers and consumers.

 

A key part of the HHS bill overhauls Minnesota's statewide reimbursement system to provide a funding increase for nursing homes, particularly in Greater Minnesota, totaling more than $138 million. In addition, the bill includes $90 million for a 5-percent cost-of-living adjustment for home and community-based care workers. Saint Benedict's Center in south east Saint Cloud would be one of the biggest winners in the state, getting an additional $2.8 million per year.

 

In total, the bill spends $11.81 billion, a $634 million increase over current spending while lowering the trajectory in growth. Health and Human Services spending has grown at an unsustainable rate and now consumes about 29 percent of the state’s budget, twice as much as just a few decades ago. That has left less of the state's budget available to support other important areas such as education and transportation.

 

One of the more controversial areas of the bill is the proposal to move people who are currently receiving coverage from MinnesotaCare into a new and improved coverage plan with MNSure. The MNSure is a health exchange that was introduced two years ago, and covers people who make too much to be covered by MinnesotaCare (who make too much to be covered by Medical Assistance, a program for which the federal government provides a 50% match).

 

Under the new program, the state would give additional tax credits to people who were on MinnesotaCare who would now be moved to MNSure. This would have the following advantages:

 

1) MNSure has a number of different health plans from which to choose, so people moving from MinnesotaCare would have more choices.

 

2) The provider tax, which funds MinnesotaCare, is scheduled to sunset in 2019 due to a bill passed by the Legislature and signed by Governor Dayton a few years ago. With its main funding source disappearing, the state needs to figure out how to take care of the people who are on MinnesotaCare.

 

3) MNSure has not gotten the enrollment it needs to be sustainable in the long term. Moving the MinnesotaCare population to MNSure should allow it to be sustainable in the long run.

 

4) MinnesotaCare is a very expensive program, and Minnesota is the only state in the country that has such a program. The program was changed to offer a much more generous benefit set a few years ago, under the assumption that the federal government was going to provide a lot of additional assistance to help pay for it. However, the federal contribution turned out to be far less than expected.

 

This bill, like the other major finance bills, now goes to the conference committee where it will be negotiated with the State Senate.

 

HIGHER EDUCATION

 

The House approved a partial tuition freeze for students at state colleges and universities as part of a higher education funding bill which also looks to reduce student debt and improve student safety on campuses.

 

The package provides $2.95 billion in General Fund appropriations, with $1.3 billion to the Minnesota State Colleges and Universities system, an increase of $105 million over the latest forecast issued in February. This includes a tuition freeze in 2016 and a 1-percent reduction in 2017 for two-year schools. The bill also provides a tuition freeze in 2017 for four-year schools and limits 2016 increases to 3 percent.

 

In addition to the MnSCU, the bill also funds:

Policy items in the package include conducting year-long student teaching preparation programs, providing a loan forgiveness program for teachers who work in areas deemed to have a shortage of instructors, facilitating the transfer of students between associate and bachelor's degree programs, developing a plan to encourage students to complete work in their field of study, revamping requirements pertaining to remedial or non-credit courses, and implementing new measures to respond to sexual harassment, sexual violence and sexual assault on campuses.

 

E-12 EDUCATION

 

The House's omnibus K-12 education finance bill spends $16.87 billion, a $1.06 billion increase over current spending. This represents and increase of roughly 7 percent over two years. However, due to the start of all-day kindergarten, increased enrollment and property tax relief that is included in this number, there is not as much here for the general classroom as one would think.

 

I think a lot of education proponents have been unhappy with the proposed increase in the general fund formula of all of the three proposals out there: the GOP House, the DFL Senate and Governor Dayton. The House proposes an increase of 0.6 percent per year, while the Governor and Senate are proposing 0.4 percent more, or 1.0 percent per year. I expect that all these numbers will increase somewhat in conference committee and I support such an increase.

 

This legislation not only provides more funding for our schools, but also includes important reforms to ensure we're offering all students a quality, well-rounded education. Reforms are in the bill to improve student learning by empowering teachers and schools, providing flexibility to local school districts, putting teaching before testing and providing fairer funding. The House plan also includes added funding for early-learning scholarships, with the focus on getting help where it is needed instead of taking a universal approach.

 

The House prioritizes early childhood learning by increasing funding for early learning scholarships, school readiness aid. This allows us to focus our efforts where they are needed instead of taking the governor's one-size-fits-all approach with universal pre-K funding.

 

May 18 is the day we are scheduled to adjourn, so the budget situation will remain fluid between now and then as we seek compromise. Please stay tuned as things develop and, as always, I welcome your input.

 

Sincerely,

 

Jim