By Rep. Bud Nornes
We are midway through the 2010 legislative session and the most notable events have been: reforming GAMC, passage of a jobs/taxes bill, and the adoption of a bonding bill to fund construction projects.
The Legislature passed the jobs/taxes bill Monday before members dispersed for Easter break. In a nutshell, the bill includes an "angel" tax credit to encourage investment in start-up companies to create jobs. It also promotes historic building renovations and Mall of America expansion and provides incentive for the Ford plant to continue operating in St. Paul, all to create jobs, .
These various programs/credits are paid for by repealing the state’s low-income motor fuels tax credit. Savings from the elimination would be approximately $30.1 million. The money comes from taxes on lease vehicles.
This bill was not perfect, but it passed by a wide margin and is a step in the right direction. We attempted to make across-the-board reductions in the corporate tax - which is nearly the highest in the nation – but that amendment was denied by the majority.
The Legislature also on Monday re-passed the first step in the majority's three-phase plan to erase a state deficit of $994 million.
The first phase includes $312 million in cuts to local governments, public colleges, agriculture programs and more. The largest cut is a $105 million reduction in Local Government Aid. Disappointingly, the conference committee stripped the zero-based budget amendment we successfully added the first time the bill was on the floor. That was the only true reform component in this legislation, so removing that left us with the same old redundancies, duplications and bureaucracy in government that helped put us at a deficit.
We expect the Health and Human Services and K-12 education to be addressed in the next two phases; they comprise approximately 70 percent of the state's budget. I would have rather had a chance to view the budget in its entirety instead of this piecemeal approach because it's easier to make decisions when you can look at the whole picture.
Another top item the first half of the session was our re-working of the General Assistance Medical Care program for low-income Minnesotans. This program was in serious need of an overhaul since it had become unaffordable with expected growth of 30 percent per biennium to become $1.3 billion by 2014-15. The good news is we ended up replacing GAMC with a program that will continue providing care for those in need, but new efficiencies will save taxpayers more than $700 million in the next two-year cycle.
If we had not upheld the governor’s veto of an unfunded, temporary "Band-Aid" bill, we would not have achieved this bi-partisan improvement of GAMC. We did not get dissuaded by those who abandoned reform and told us there were no alternatives. It’s not always a pretty process, but we all will benefit for having stayed the course. This is a positive development.
The last headline-maker to date consumed much of the debate early this legislative session was the bonding bill, which borrows money to fund construction projects. Unlike the GAMC agreement, cooperation and compromise was more difficult to attain and the bonding process became very contentious. Part of the conflict surrounded the bill's size. The majority pushed for a borrowing bill in the $1 billion-plus range, but the governor recommended a more priorities-based bill of around $700 million.
The final bill was passed to the governor’s desk with a total of $996 million in various projects. He line-item vetoed many of the extras in the bill to better focus on the priorities, bringing the final cost to $680 million.
Although the bonding bill contained certain projects of merit, government borrowing must not be seen as the magic solution to create job growth and economic recovery. Many projects in the bill will benefit the state’s infrastructure and have some economic impact, but long-term economic growth and stability will come from Minnesota’s job creators and innovative citizens.
The Legislature will resume its work to balance the budget when re return to St. Paul after Easter. Until then we will be spending time with loved ones and attending Easter services. I will stay in touch and will look for your continued input; it will be extremely valuable to me as we enter the second half of the 2010 session.