Inflation eats away surplus

Lots of charts

The Minnesota state budget surplus sits at $1 billion, but not really.

While state officials said a Thursday economic and budget report was good news, Minnesota’s top finance official said that inflation will eat up what many called a surplus. Still, political leaders agreed that the added money, unlike deficits they often have been dealt, will make budgeting easier when legislators return to St. Paul Jan. 6 and that no overall tax increase will be needed.

“Inflation is essentially everywhere,” Commissioner Jim Schowalter said of the state budget, and the $1 billion “surplus” mostly will be used to counteract it in the state’s two-year budget that begins next July 1.

“Yes, if you add in inflation, it evens out,” his boss, Gov. Mark Dayton, said.

However, Dayton and most other political leaders said Thursday’s report was good news and the governor insisted there is a surplus.

After raising taxes more than $2 billion in 2013, Dayton said that he sees no need for a general tax increase. On the other hand, the Democratic governor said that some type of new revenue is needed to inject needed money into road and bridge budgets.

House Speaker-designate Kurt Daudt, R-Crown, said that he does not think higher taxes will be needed for transportation, although all ways to increase transportation funding “are on the table.”

Dayton said that what he called a “surplus” could help fund some child care tax credits, increased broadband facilities across greater Minnesota and other needs.

As soon as the $1 billion surplus was announced, groups ranging from the University of Minnesota to those representing nursing homes said they need some of that money.

Part of the $1 billion is $373 million that is not being spent in the current budget and can be spent in the next two years. State law automatically requires another $183 million to remain in the reserve and not be folded into the next budget.

The news gives Dayton a benchmark as his administration works on a budget proposal that he plans to give legislators Jan. 27. The Republican-controlled House and Democratic-controlled Senate will draft their own budget plans, most likely based on the Dayton budget, after another revenue report in late February or early March. Dayton will tweak his budget after that report.

Thursday’s report, known as a budget forecast, takes a look at the national and state economies and predicts how much is available to spend on state programs.

The state general fund budget has grown from $31.5 billion in 2006-2007 to $40 billion now. It is expected to top $40 billion for the two years beginning next July 1, a figure state lawmakers and the governor will work out in the legislative session that begins Jan. 6.

The general fund budget is that part of state spending funded by Minnesota taxpayers. When federal and other funds are included, the state’s total spending can be twice the state-funded total.

While Democrats, who have controlled the Legislature and governor’s office the past two years, were celebrating Thursday’s report as good news, Republicans had their doubts.

Daudt said that the state is bringing in more money, but Minnesotans’ personal budgets do not appear to be improving.

The Minnesota economy is closely tied to national trends, State Economist Laura Kalambokidis said. That includes a worse-than-expected housing market, which affects industries across greater Minnesota such as lumber and window makers.

Senate Majority Leader Tom Bakk, D-Cook, said that he hopes the budget cushion announced Thursday gives lawmakers a chance to work on one of greater Minnesota’s most pressing issues: housing.

Industries located in communities from Roseau in the north to Jackson in the south say they have jobs available, but need housing for workers, and in many cases potential workers need more training.

Most of the state’s key political leaders specifically said after Thursday’s budget forecast that it means no overall tax increase will be needed. However, Dayton emphasized what he sees as the need to raise revenue for transportation.

While he said he is open to ideas about how to raise that revenue, one possibility he has discussed would be to add a tax on gasoline at the wholesale level. The current gas tax is added at the pumps.

Daudt, whose Republican candidates this fall campaigned on improving roads and bridges, said he is not convinced higher taxes are needed. He and other Republicans have said they prefer to cut other state programs that may not be needed and transfer those funds to transportation.

In general, state political leaders were waiting for the budget forecast to draw up specific proposals.

Besides transportation, Dayton specifically mentioned the need to fund expansion of high-speed Internet, known as broadband, across the state.

Broadband, he said, is “crucial for economic development over the state.”

Dayton and legislators this year approved a down payment for improving broadband access, but some projections indicate that billions of dollars more are needed to bring greater Minnesota to the same level as the Twin Cities.

 Key budget numbers

in next two-year budget

$1.037 billion: More money expected than earlier projections

$412 million: Lower revenues expected than earlier prediction

$502 million: Expected drop in overall state spending

$443 million: Less spending needed than expected in health programs

$2 billion: Expected gain in individual income tax receipts

$598 million: Expected increase in sales tax collections

Bakk

Dayton

Daudt

State economist

$1 billion state budget surplus predicted

Minnesota legislators and governor will have a bit more to spend in the next two years.

State officials announced this morning that better-than-expected revenues are expected to give the state budget $1 billion more than previous predictions. Revenues are expected to be up compared to a February version of the revenue report.

A summary of a report due out later today shows that total revenues are expected to be $41.9 billion, 4.8 percent higher than the current budget.

Part of the $1 billion revenue expectation is $373 million not being spent in the current budget and can be held over for the next budget. State law automatically requires another $183 million to remain in the reserve and not be folded into the next budget.

The news gives Democratic Gov. Mark Dayton a benchmark as his administration works on a budget proposal that he plans to give legislators Jan. 27. The Republican-controlled House and Democratic-controlled Senate will draft their own budget plans. Another revenue report in late February or early March will lead to tweaks in early budget plans.

The report, a short summary released two hours before the full report was made public late this morning, takes a look at the national and state economies and predicts how much more is available to spend on state programs.

November budget forecasts in recent years have had their ups and downs, with mostly deficits in the first 10 years of the 2000s and mostly surpluses since then. At times, budget forecasts in late February or early March have shown dramatically different results, and those reports are the ones used to develop final state budgets.

The state general fund budget has grown from $31.5 billion in 2006-2007 to $40 billion now. It is expected to top $40 billion for the two years beginning next July 1, a figure state lawmakers and the governor will work out in the legislative session that begins Jan. 6.

The general fund budget is that part of state spending funding by Minnesota taxpayers. When federal and other funds are included, the state’s total spending can be twice the state-funded total.

Political Chatter: It will be an orange cone session

By Don Davis

The orange cone, that construction icon, could be featured during the upcoming Minnesota legislative session.

An extensive ongoing renovation projects has all but taken over the state Capitol.

“It is going to be like a major highway project,” Gov. Mark Dayton said about the disruption Minnesotans visiting the Capitol will experience.

Just how big a problem it will be is anyone’s guess, he added. “I don’t know if anyone fully grasps it.”

Dayton was describing the disruption from his temporary office at the other end of the mall from the Capitol, talking to Capitol press corps reporters who more than a year ago were ousted from their Capitol basement offices to a building a couple of blocks away.

“It will be a very different experience … but we will make it,” he proclaimed.

During the 2015 legislative session that begins at noon Jan. 6, the House and Senate chambers will be open. But just three of six Senate committee rooms will be available, likely forcing schedulers to plan earlier and later meetings, as well as some on Fridays and Monday mornings that often are reserved for senators to travel home and back.

All House committee rooms are in another building and not affected by renovation work.

Representatives of both parties and Republican senators are in the other building, so will not be affected by construction work. But Democratic senators are housed in the Capitol and since most of that building is closed they and some staffers will be crammed into a much smaller space.

Many staffers have been moved to other buildings.

The big impact for the public will be, quite simply, lack of space.

In other years, groups rallying for or against some legislation, or just a general principle, often have gathered inside the Capitol and then dispersed to lobby lawmakers. There will be no space large enough for rallies next year, and probably not even enough room for large crowds to move around.

It is typical for the Capitol to host hundreds of people for committee meetings dealing with controversial topics such as gun control or abortion. It is not clear how those throngs will be handled next year.

In 2016, the theory is that the Senate chamber will be closed and action will move to a controversial office building now being built across the street. Senators are supposed to be housed in the new facility by then and a large committee room could replace the Senate chambers that year.

The only part of the Capitol open in 2016 likely will be the House chamber.

The normally ornate Capitol today features a good many plywood walls after construction workers isolated much of the building, including the rotunda where many events were held. The Great Hall, another favored location, also will be under construction and closed.

Forecast a biggie

Thursday likely will come and go with Minnesotans noticing little.

But their state officials will be neck deep in numbers that will tell them how much money they can spend in the next two years.

Thursday is when state finance officials release what they call a “budget forecast.” That is a report looking at the state and national economies and how it could affect state revenues, such as taxes.

The report forms the foundation of a two-year budget, probably in the $40 billion range, that Gov. Mark Dayton and legislators must adopt before July 1.

Dayton told reporters that preliminary indications some time ago were that the state will have a $635 million surplus for the next two years. However, he added, state rules forbid finance officials from telling him in advance what the Thursday forecast says.

Countrywide, economic projects show a slower economy than was predicted at the last budget forecast in February, but Dayton said that Minnesota is doing better than that.

While his staff and commissioners have been working on the budget, Dayton said he will not go at it “full bore” until he returns from a Thanksgiving trip to see family in California.

He promised to meet his Jan. 27 deadline of presenting a budget proposal to lawmakers.

New faces?

It appears a safe bet that some key aides soon may be missing from the Dayton administration second term.

“I asked most to stay,” the governor said about his commissioners and other keystones of the administration.

When a reporter asked if that meant he asked some to leave, he said that “if I didn’t ask them to say,” then let reporters’ imaginations take over.

While promoting the state’s turkey industry, Dayton revealed that Agriculture Commissioner Dave Frederickson is sticking around another four years. Commissioner Tony Sertich of the Iron Range Resources and Rehabilitation Board was the first to announce he is leaving the administration after Dayton was re-elected to another term.

Dayton said that he was thrilled that Lee Sheehy will continue to be chairman of the Minnesota Commission on Judicial Selection, a board that recommends judicial candidates to the governor.

Dayton did not talk about specific potential changes. “There is a degree of flux.”

2008 amendment offers buffet of outdoors, arts funds

Moose meeting

By Don Davis

The moose population in northern Minnesota’s forests is dwindling, but a tax that voters raised in 2008 could help save the giants.

“All of us came together on this project, Minnesota Moose Collaborative, to do what we know would work for one element to improve the moose’s existence: improving habitat,” President Mark Johnson of the Minnesota Deer Hunters Association said.

The $3 million the organization has received is being used to clear areas of forest of brush, some of which was 20 feet tall, to make way for better grazing areas. It also is being used to plant trees to give shade from the warm summer sun.

“From a moose’s standpoint, it is like we renewed the buffet,” Johnson said.

“Buffet” may be a good way to describe where the moose project received its funding, because like a food buffet gives a diner lots of options, a large variety of funding opportunities came in the “legacy amendment” voters approved in 2008.

In what is known as the Clean Water, Land and Legacy Amendment, Minnesota voters approved a constitutional change to increase the state income tax three-eighths of a percent. In the first six years of funding, including money legislators approved this spring, about $1.5 billion has been split among four funds: outdoor heritage, clean water, parks-trails and arts-cultural.

Revenue voters raised in 2008 provides money for projects as varied as $334 so the Becker County Historical Society could microfilm newspapers to $36 million for one of several projects to protect the state’s forests.

Nearly 10,000 projects have received funding from the state funding buffet.

The amendment requires that all money be spent on things the state otherwise would not fund. The sales tax increase ends after 25 years.

In the program’s sixth year, which is just beginning, $378 million is being spent on projects that otherwise would not have received money.

Pam Aakre, a Clay County Fair Board member, credits a mural painted on the back of the grandstand to the funds.

“We would not have been able to do it without legacy funds,” she said, a comment heard across Minnesota from funding recipients.

A handful of other states have looked into expanding outdoors-related spending, and a few did by raising taxes, but Minnesota lawmakers found they needed to include money for arts and culture projects, such as theaters and artwork, for the measure to get enough legislative votes. The amendment faced relatively mild opposition once in front of voters, and indications are it passed mostly to boost outdoors program spending.

“Minnesotans feel so strongly about our great outdoors, when given the choice they are willing to pay for it,” Executive Director Brett Feldman of the Minnesota Parks and Trails Council said.

And it happened during a recession. It allowed Minnesota to increase spending in the four areas at a time when the economy forced other states to cut back.

“I think it is just phenomenal,” state Natural Resources Commissioner Tom Landwehr said of the first five years.

“We are in the early stages of constructing a house,” Landwehr said, illustrating why he and others think it is too early to declare the legacy amendment a total success.

Those involved with legacy funds generally agree the biggest problem has been geographic balance, especially in parks spending.

“One of the most disappointing aspects to us is our systems had to battle one another for limited resources,” Feldman said about state, greater Minnesota and Twin Cities parks.

Creation of a greater Minnesota parks organization has smoothed things out, but “as long as there is money, there always are going to be battles,” Feldman said.

Minnesotans cannot get a full handle on geographic distribution of the money because most projects cover more than one county and determining how much each county benefits from each project is next to impossible.

Data compiled by the Legislative Coordinating Commission show each of the state’s 87 counties got a piece of the pie, with counties with more people getting more projects.

In northwest Minnesota, Mahnomen County got the fewest projects, 82, while the state’s largest county, Hennepin, led the way with 2,081 projects that used legacy money.

There have been attempts to shift money from urban to rural and vice versa, but the battles have fallen far short of fears. Lawmakers retain final say over how money is spent after committees for each fund make their recommendations.

Some lawmakers, mostly Republicans, question land the state is buying with legacy money, saying it should be left in private hands. Rep. Denny McNamara, R-Hastings, said that while overall legacy funds are “doing so many great things,” there needs to be more discussion about land purchases.

“How are we going to deal with the cost?” he asked about ongoing expenses such as management and fire protection.

McNamara, Landwehr and others said they worry about the costs of creating new programs and suggested more work needs to be done so budgets do not balloon to take care of legacy projects.

Landwehr worries that the public could expect too much from legacy funds. They cannot solve all problems, he said.

In the clean water arena, for instance, Landwehr said that even though it gets nearly a third of all legacy money, all Minnesota water will not be clean when the legacy program ends in 2034. There are just too many problems with the water, he said.

Even with potential problems, interviews with people involved in legacy funding showed most consider the amendment a huge success. Few naysayers could be found.

The biggest success so far may be spending $36 million to protect large blocks of forest in northern Minnesota ($6 million more came from other sources).

Landwehr called it a “stellar example of a project you never would have seen” without the legacy amendment.

Other forest land near Brainerd and in southeast Minnesota also was protected, and legacy money helped leverage federal funds to clean up land along the St. Louis River near Duluth.

Compared to the forest work, the Worthington International Festival is a small-dollar user of legacy funds.

In past years, the festival often has received $5,000 for the annual mid-July festival.

This year, Rod Sankey, a Worthington City Council member, said he liked the International Festival approach because it offers a venue for Worthington’s diverse residents to mix and mingle.

“I think even more people should come down here because it’s a good way to begin understanding other cultures instead of just having negative attitudes about our diversity,” Sankey said.

Like the International Festival, the Clay County Fair has received smaller legacy grants.

In addition to the $10,250 the fair received for the grandstand mural, it got about $15,000 in two years to bring in singers, square dancers, a puppeteer and artist to offer family activities the fair otherwise could not afford.

“With this money, we are able to spend maybe a little bit more just to get some more quality arts and entertainment,” Aakre said.

 Reporter Jane Moore contributed to this story.

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International mask

Projects, spending per fund

Arts and Cultural Heritage Fund, 7,345; $317 million

Clean Water Fund, 1,233; $533.9 million

Outdoor Heritage Fund, 141; $533.4 million

Parks and Trails Fund, 238; $228.9 million

Subject of projects

Agriculture-forestry-mining, 72

Archeology, 3

Arts, 6,261

Arts access, 5,113

Biological diversity, 121

Cultural heritage preservation, 1,409

Education outreach, 2,269

Historic preservation, 270

History, 733

Natural areas and habitat, 284

Legacy spending by county

Statewide, 414

Aitkin, 176

Anoka, 467

Becker, 214

Beltrami, 313

Benton, 205

Big Stone, 124

Blue Earth, 446

Brown, 252

Carlton, 180

Carver, 350

Cass, 254

Chippewa, 132

Chisago, 249

Clay, 193

Clearwater, 146

Cook, 218

Cottonwood, 131

Crow Wing, 270

Dakota, 609

Dodge, 167

Douglas, 159

Faribault, 181

Fillmore, 263

Freeborn, 172

Goodhue, 325

Grant, 104

Hennepin, 2,082

Houston, 165

Hubbard, 184

Isanti, 208

Itasca, 260

Jackson, 118

Kanabec, 114

Kandiyohi, 236

Kittson, 95

Koochiching, 126

Lac qui Parle, 123

Lake, 199

Lake of the Woods, 108

Le Sueur, 265

Lincoln, 111

Lyon, 151

Mahnomen, 82

Marshall, 123

Martin, 148

McLeod, 203

Meeker, 188

Mille Lacs, 144

Morrison, 253

Mower, 209

Murray, 87

Nicollet, 297

Nobles, 116

Norman, 88

Olmsted, 436

Otter Tail, 294

Pennington, 119

Pine, 166

Pipestone, 95

Polk, 192

Pope, 140

Ramsey, 1332

Red Lake, 82

Redwood, 138

Renville, 158

Rice, 364

Rock, 86

Roseau, 155

Scott, 325

Sherburne, 283

Sibley, 190

St. Louis, 809

Stearns, 544

Steele, 197

Stevens, 125

Swift, 109

Todd, 215

Traverse, 67

Wabasha, 186

Wadena, 169

Waseca, 169

Washington, 472

Watonwan, 135

Wilkin, 95

Winona, 279

Wright, 340

Yellow Medicine, 119

 Source: www.legacy.leg.mn

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Minnesotans advise North Dakota

Minnesotans entering their sixth year of a fund that pays for a variety of outdoor projects have some advice for their North Dakota neighbors who this fall may decide to implement a similar fund: Work out spending details early.

One of the few major problems encountered in launching the Minnesota legacy fund, with money coming from a sales tax increase, was vague language about how parks and trails money may be spent. That issue only arose following a mostly harmonious campaign to get the constitutional amendment passed.

“One of the lessons that was learned in Minnesota is if you don’t identify and advance the process on allocating funds, you will have a lot of agreement before the ballot (vote), but a bloodbath after the ballot,” Minnesota Natural Resources Commissioner Tom Landwehr said.

While the constitutional amendment Minnesota voters approved in 2008 specifically divided the new tax money among four funds — outdoor heritage, clean water, parks-trails and arts-culture — it left specifics alone, which became an issue when it came to the $30 million to $40 million parks and trails receive each year.

The feeling before the 2008 vote was “we will play nice in the sandbox,” Landwehr said about parks and trails advocates. “Now it is this annual bloodbath among the metro (Twin Cities) parks, the regional parks and the state.”

The addition of a commission to look after park interests outside the Twin Cities has helped, the commissioner said, since state and Twin Cities parks already had organizations.

A broad-based coalition opposing the North Dakota amendment touches on the issue: “This measure would commit 5 percent of North Dakota’s oil extraction tax — at least $300 million per biennium — to a new massive conservation fund with no clear idea of how the money would be spent.”

The amendment North Dakotans will consider is different from the Minnesota one in several ways.

Most importantly, the Minnesota fund divvies up the new sales tax money four ways: 33 percent to clean water, 33 percent to outdoor heritage, 19.75 percent to arts and cultural heritage projects (something not included in the North Dakota proposal) and 14.25 percent to parks and trails.

The Minnesota Legislature has final say over spending money, but various boards made recommendations, which lawmakers generally follow. In North Dakota, a 13-member citizen board would recommend spending to a commission composed of the governor, attorney general and agriculture commissioner, which would have the final spending decisions.

Minnesota Sen. Tom Saxhaug, D-Grand Rapids, said he knows a bit about the North Dakota issue, which “seems to have a much more organized campaign against it than we did.” The opposition coalition includes members from farm, business, local government and energy organizations.

Saxhaug, Landwehr and others suggested that one thing North Dakotans should consider is how to fund ongoing operating costs after the state buys more land and starts programs with the new money. Such costs usually fall into the regular state budget, which may not be able to take on the added costs.

But President Mark Johnson of the Minnesota Deer Hunters Association had just one bit of advice: “North Dakota, jump on it.”

Johnson said that despite what many people think, “if they wait 20 years, the money is not going to be there. … If they want to keep their standard of living, from a natural resources standpoint, now is when they need to be doing it.”

‘Legacy’ has different meanings

Minnesota and North Dakota may be neighbors, but they do not always speak the same language.

In Minnesota, “legacy fund” means revenue from an increase in the state sales tax that voters approved in 2008. The money goes to outdoors, clean water, parks, trails, arts and culture programs.

In North Dakota, voters approved a measure in 2009 they know as the “legacy fund” to use revenues from the state oil and gas tax to build up a budget reserve in case it is needed for any reason in the future. The state calls its proposed constitutional change, similar to the Minnesota 2008 one, the Clean Water, Wildlife and Parks Amendment.

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Creek change

Other money joins legacy funds

The “legacy amendment” usually is blended with other money to fund nearly 10,000 projects around Minnesota.

One of the most complex projects fell on the shoulders of Myron Jesme, Red Lake Watershed District director in northwestern Minnesota, to implement. He cobbled nearly $12 million from about a dozen federal, state and local sources to fix problems caused in 1904 when a straight channel was cut to replace six miles of the meandering Grand Marais Creek from near Fisher to the Red River.

Jesme said that about $3 million in legacy money was the key, especially a $2.32 million allotment from the outdoor heritage fund.

“We needed this $2.32 million to put the gas in the car and start driving,” Jesme said. “Once we got that money, the federal government came in.”

Other agencies began joining the project, too. Each has its own reason, but combined they are funding flood reduction, erosion control, water quality improvement and habitat restoration along the creek.

After a multiyear effort, the hope is to have water flowing through the original channel by year’s end, keeping the shorter straight channel for flood relief when that is needed. Putting water through a curvy creek will keep 700 tons of sediment out of the Red River each year.

Restoring the last six miles of the 45-mile-long Grand Marais Creek has many benefits, Jesme said, by returning aquatic and related ecological systems to how they were before the 1904 channel was changed.

Legacy money often provides the seed funds to attract other projects. In that way, it is like the Minnesota Environment and Natural Resources Trust Fund. That fund has nothing to do with the legacy amendment, but it gets a lot of attention on a Web page otherwise devoted to legacy funds and has been around longer than the legacy amendment.

The Legislative Coordinating Commission reports that the fund, which gets revenue from the Minnesota Lottery, attracts nearly as many page visits as its legacy home page. The arts and cultural heritage fund gets about a third of the page visits, slightly more than a page about the clean water fund.

The Legislative-Citizen Commission on Minnesota Resources, which recommends to lawmakers how to spend the lottery money, recently compiled a $45.8 million list of 64 projects for consideration next year.

The list includes items ranging from a University of Minnesota research center aimed at slowing the spread of invasive plants and animals to researching animals including bats, turtles, elk, loons and white pelicans to improve preservation efforts.

Such projects are similar to some of the outdoors-related ones that get legacy money, and the two pots of revenue often are confused.

Here are some examples of projects at least partially funded by legacy money:

– Becker County Historical Society, $334, to add 12 rolls of microfilmed newspapers to broaden public accessibility to primary records.

– Goodhue Soil and Water Conservation District, $105,450, to construct seven grade stabilization structures in Minneola Township to reduce erosion and sedimentation to North Fork of Zumbro River, protect public roads, retain water, create wildlife habitat and increase groundwater recharge.

– Stevens County Water Quality Initiative, $84,000, to establish up to 12 miles of buffers along the Pomme de Terre River and its tributaries and install up to five rain gardens within the cities of Morris and Chokio.

– Clay County Fair, $10,250, to create a mural on the back of the grandstand that embodies the activities and spirit of the Clay County Fair.

– Friends of Lake Bronson State Park (Kittson County), $5,050, for the Woodcarvers’ Festival.

– Crow Wing Soil and Water Conservation District, $329,750, to improve the water quality of Little Buffalo Creek, a tributary to the Mississippi River.

– City of Kandiyohi, $6,114, to install new doors and windows to the well house, purchase and install six wellhead protection signs.

– Farmington Elementary School, $13,603, for all students at Farmington Elementary to work with artists using the European and American folk song and dance, Ghanaian drumming, West African dance and puppetry.

– Beltrami County Historical Society, $6,896, for Doctor, Doctor, Give Me the News: Early Healthcare, an exhibit on early county health care drawn from primary records in local and state repositories.

– Minnesota Public Television Association, $6.2 million, for production and to buy programs.

– Minnesota Discovery Center (St. Louis County), $4,829, to create an exhibit on the history of the Iron Range as told through personal narrative of 10 residents.

– Nobles Soil and Water Conservation District, $22,346, to test waters needing data for impairment listing in the Rock River and Little Sioux watersheds.

– University of Minnesota, $4.4 million, to establish an aquatic invasive species research center to fight species such as Asian carp and zebra mussels.

– Park Rapids, $8,058, to test wells water and aquifer.

– Boys and Girls Club of Morrison County, $4,500, to invite a resident artist and arts educator, Jodi Legeros, to conduct fine arts programs at the Little Falls club location.

– Carlos Township in Douglas County, $28,000, to evaluate alternatives to fix failing sewage treatment systems.

– Wadena-Deer Creek School District, $11,836, to create works of art and learn creative problem solving strategies.

– Cottage Grove, $6,500, for spill response plan and well survey.

– Woodbury, $10,000, for well site study, ordinance review and public education.

– Dakota County Historical Society, $6,183, for 20 interviews about the history of the Hastings State Hospital, 1938-78.

– Carlton County Soil and Water Conservation District, $130,055, to develop the watershed restoration and protection, while also enlarging and sustaining public participation.

Capitol notebook: Minnesota budget reserve up

By Don Davis

Minnesota officials bumped up the state budget reserve $150 million Tuesday, the first increase in 13 years.

Legislation that took effect Tuesday altered the $39 billion, two-year state budget lawmakers and Gov. Mark Dayton adopted a year ago. The reserve increase included in this year’s budget tweak leaves the budget cushion at $811 million, the biggest in state history.

“This action is a substantial step towards additional budget stability and prudent financial management for the state,” Commissioner Jim Schowalter of Minnesota Management and Budget said.  “Increasing the budget reserve helps the state manage economic risk and is viewed positively by the state’s bond rating agencies.”

Dayton said the reserve increase shows that “Minnesota has finally turned the corner on a decade of deficits that shortchanged our students and stymied needed progress for our state.”

Abortions down in Minnesota

The number of abortions dropped in Minnesota in 2013 for the seventh straight year.

The 9,903 abortions is the lowest number since 1974 and a 7.5 percent decrease from the previous year.

Tuesday’s Minnesota Health Department report confirms the success of laws that provide abortion information and alternatives, the Minnesota Citizens Concerned for Life anti-abortion group said.

Still, MCCL Executive Director Scott Fischbach said, the abortion rate could have been lower.

“As governor, Mark Dayton has vetoed seven protective measures, at least four of which would have protected women and further reduced the number of abortions last year,” Fischbach said. “Dayton’s defense of the abortion industry has been at the expense of unborn babies and their mothers, who are nonetheless rejecting the self-destruction, dehumanization and death that result from abortion.”

Minnesota health spending slows

Minnesota health-care spending increased by 4 percent from 2011 to 2012, a slower rate than in the past.

The state Health Department reported Tuesday that the most recent numbers show a nearly $40 billion increase in public and private health-care spending.

Minnesota spending growth was about the same as the national rate. But the state’s per-person spending of $7,403 was lower than the national figure.

“By historic standards, Minnesota saw low growth in health care spending in 2012,” Health Commissioner Dr. Ed Ehlinger said. “However, projections of future spending highlight that we must continue to focus on disease prevention and creating healthy communities if we are going ensure sustainability of health care costs over the long term.”

Ehlinger’s department credited several factors for the slower increase, including a waning recession, shifting costs to consumers, slower development of new medical technologies and legal requirements that insurers spend a certain percentage of premiums on health care services.

Pipelines allow Legislature to flow to end

Minnesota Senate

By Don Davis

Pipe dreams expressed early in the 2014 Minnesota legislative session gave way to pipelines as it neared an end Friday night.

The House adjourned for the year at 8:59 p.m. Friday, with the Senate following at 10:13 p.m. after two pipeline issues were settled in the final day. Oil-carrying pipelines, mostly in northern Minnesota, and southwest Minnesota’s water pipeline project received funding after talks among legislative leaders and Gov. Mark Dayton produced results that allowed for a smooth session close.

House Speaker Paul Thissen, D-Minneapolis, declared the 2014 session that began Feb. 25 and the 2013 session legislative successes.

“I think we had a productive two years, this year building on the work of last year,” Thissen said.

He pointed out measures lawmakers passed throughout the session such as raising the minimum wage, a measure to prevent school bullying and approving two tax-cut bills.

Republicans could not leave the Capitol quickly enough.

“Minnesota state government has not served Minnesotans well,” House Minority Leader Kurt Daudt, R-Crown, said, noting that Democrats control the House, Senate and governor’s office.

“As a result of this (two-year) session, we have one of the highest tax increases in state history,” Daudt said. “We have the highest budget increase in state history.”

While leaders of the two parties disagreed on the outcome of the 88th Minnesota legislative session, there was relatively little partisan debate Friday as work wound down.

Lawmakers Friday approved more than $1 billion in public works projects, legalized medical marijuana, lowered some taxes and told the state lottery to get out of online scratch-off game sales.

Pipelines took the spotlight in late-session negotiations.

A budget bill that wrapped up early Friday includes $3.75 million to increase training and buy equipment for first responders such as fire departments to deal with potential oil spills from pipelines. The money would come from assessments placed on pipeline companies.

The bill already contained more than $8 million for training and equipment where oil-carrying trains travel. The rail provision also would add two or three railroad inspectors to the one the state already employs.

About 900,000 Minnesotans live near oil pipelines, and many more live near railroad tracks where oil trains travel. Most oil trains go through Moorhead, St. Cloud and the Twin Cities, but trains do travel other parts of the state.

House Transportation Finance Chairman Frank Hornstein, D-Minneapolis, said a key part of the bill requires the state Public Safety Department to study oil transportation safety — including trains, pipelines, trucks and boats — and provide information next year to legislators about what else needs to be done.

The House wanted the pipeline safety provision, but the Senate included no funding. Budget negotiators opted to include pipeline safety after Dayton piped up and demanded it.

The bill containing the oil pipeline safety items was an overall budget bill that increases spending $262 million in a $39 billion, two-year budget. Among its other provisions:

– Home and community-based health care workers and rural nursing homes all will get more state funding.

– Public education will receive $54 million more, including funds to increase early-childhood learning for more than 1,000 youths.

– Broadband high-speed Internet expansion efforts will get a $20 million boost.

– More than $31 million will be spent on a road program known as Corridors of Commerce.

– Another $10 million will be spent to fix potholes.

Dayton told lawmakers that he wanted money for the Lewis and Clark water system to serve southwestern Minnesota. Legislators obliged by approving $22 million from the state budget reserve to build the pipeline from the South Dakota line to Luverne and giving local governments authority to borrow $45 million to extend the system through several counties, with the state paying two-thirds of the loan costs.

“It is very important to the governor, first of all,” Thissen said of Lewis and Clark. “He gets a lot of credit for this making its way through.”

Thissen said the Lewis and Clark funding deal opened the door for adjournment.

“The main thing that happened in the last 24 to 36 hours is we put our heads together and figured out a better way to fund Lewis and Clark …” Thissen said. “It broke everything loose and everything fell into place.”

Also as the session neared its end, lawmakers voted to restrict online sales of state lottery games. While lotto-type tickets would remain available, the online version of scratch-off games the lottery introduced in February would disappear if the governor opts to sign the bill into law.

Conferees wrap up $283 million supplemental budget

By Charley Shaw, Session Daily

The House and Senate early this morning wrapped up negotiations on the supplemental budget bill.

Led by Rep. Lyndon Carlson Sr., D-Crystal, and Sen. Richard Cohen, D-St. Paul, negotiators decided to distribute $283 million in budget surplus money for programs ranging from higher education to corrections.

The conference report was adopted at 2 a.m.

An education funding agreement advanced by the committee would boost spending $54 million in the current biennium.

The deal features a compromise that would increase the per-pupil funding formula by $25. The formula increase, which would be permanent, would cost $23.4 million in 2015.

The House initially budgeted a $54 million formula increase while the Senate’s position heading into conference didn’t include an increase.

Rep. Paul Marquart, D-Dilworth, said increased funding will provide school districts with the “flexibility they need to get to the world’s best workforce.”

When the committee turned to agriculture and environment, a couple of differences between the House and Senate were unresolved and, as a result, $1.95 million of its $12 million target was still up for grabs.

Agriculture Commissioner Dave Frederickson testified that he had three concerns about the bill. Lacking, he said, was $350,000 in the department’s base for retail food handler inspections in St. Paul, $310,000 for the Board of Animal Health for a new inspection program for dog and cat breeders and $200,000 for research into porcine epidemic diarrhea virus.

The committee recessed and lawmakers haggled over their differences well into the night before reconvening. The committee later in the evening adopted the administration’s three requests.

A controversy then ensued over the Toxic Free Kids Act, which would require companies to report to the state if they sell products that contain certain toxic chemicals as determined by the Department of Health. Rep. Jean Wagenius, D-Minneapolis, spoke in favor of the proposal, stating the state “can’t give children the best education we can if we don’t protect their developing brains.”

Cohen noted the proposal would have a “domino effect” in the larger end-of-session negotiations to the point that House Republicans wouldn’t support the bonding bill on the House Floor if it advanced. No motion was made to add the Toxic Free Kids Act to the bill.

 

Shaw writes for the nonpartisan Session Daily (www.house.leg.state.mn.us/sessiondaily) in the Minnesota House Public Information Office.

Minnesota Legislature’s end is near

By Don Davis

The Minnesota House takes up medical marijuana today in what could be a debate lasting well into the night while pieces fall into place on tax and spending bills as the Minnesota Legislature nears the end of its 2014 session.

Debate on the much-discussed proposal to allow children with seizures and adults with extreme pain to use marijuana extracts is expected to begin in the early afternoon, and could last hours. Senators overwhelmingly approved a more liberal bill earlier in the week, but it may go too far for Gov. Mark Dayton to sign it into law.

On Thursday, Dayton would not commit to backing a more restrictive marijuana bill by Rep. Carly Melin, D-Hibbing, that only allows one medical marijuana manufacturer, instead of 55 in the Senate-passed bill. Allowing 55 centers around the state “seems to be quite unworkable,” said Dayton, who has required medical and law enforcement support before signing off on any marijuana plan.

The Democratic governor said that Health Department staffers have been working the last several days to make sure any medical marijuana bill that passes is workable.

“Legislators’ hearts are in a good place,” he said. “They want to do something, but it has to be functional.”

If the House passes Melin’s bill today, House and Senate negotiators will take up the complex task of merging the two different bills into a compromise proposal. And it must be done in just a few days.

The state Constitution requires the Legislature to adjourn no later than May 19. While some legislative leaders had predicted a pre-Easter adjournment, the final day now looks to be no earlier than mid-week next week.

“The sooner we are done the better,” Rep. Pat Garofalo, R-Farmington, said. “I would really like to get done this week. … No one is safe until the Legislature adjourns.”

Formal and informal negotiations continue on several unresolved issues. Prime among them are how to spend a budget increase and what public works projects get state money.

Legislative leaders sent four key lawmakers into a room Thursday to negotiate a public works bill, to be funded by the state selling bonds. The hope is that the four can work out the bonding bill so it is acceptable to the House and Senate, thus avoiding after-the-fact negotiations.

“It’s good to see cooperation and coordination, even beforehand,” Sen. Kent Eken, D-Twin Valley, said.

House Speaker Paul Thissen, D-Minneapolis, said leaders did not give orders to the four bonding negotiators about specifics that must be included in the bill. However, House Minority Leader Kurt Daudt, R-Crown, said there is an understanding that all four legislative leaders expect funding for the hot-button bonding issue: southwestern Minnesota’s Lewis and Clark water project.

The project, to bring water in from South Dakota, has produced by far the most bonding discussion.

Daudt said he hopes Lewis and Clark can get the $20 million needed to bring water to Luverne and a like about to fund the next phase. However, money may not be approved for the third phase, to extend the pipeline to Worthington, the minority leader said.

Rep. Rod Hamilton, R-Mountain Lake, said he is pushing for the entire $69 million Lewis and Clark funding.

While debate continues on how to spend money, a tax bill has been negotiated. It features an average $200 property tax break for farmers, as well as cuts for renters and homeowners.

Minnesota revenue falls

Revenues flowing into Minnesota state coffers slowed in February.

While individual income tax revenues exceeded earlier expectations, other revenues fell from what was predicted in February.

Minnesota Management and Budget reports that some of the change comes from lower taxes paid on tobacco product sales. Various other smaller revenue sources also fell.

Overall, total February revenues were $2.6 billion, down $67 million from expectations. Income taxes were up $28 million.

Sales taxes were $4 million below predictions, which state officials said may due to lower spending during a harsh winter.

State officials warn not to draw long-term conclusions from monthly revenue reports.

House budget bill leans toward greater Minnesota

Anzelc lobbies Fabian

By Don Davis

Much of the money in the Minnesota House’s plan to tweak the state’s two-year budget would go to greater Minnesota.

“We focused on rural Minnesota and greater Minnesota,” House Majority Leader Erin Murphy, D-St. Paul, said, because many rural parts of the state have not recovered from the recession as well as the Twin Cities.

The House passed the bill 70-59 late Thursday to add $322 million to the $39 billion, two-year state budget enacted last year.

House Minority Leader Kurt Daudt, R-Crown, said the budget plan is one “Democrats are pushing like drugs on the House floor. They can’t spend enough.”

Provisions aimed at areas outside the Twin Cities include those giving a 5 percent increase to home health care providers, pumping more into rural nursing homes that pay employees $14 an hour or less, adding money to elderly meal programs that mostly serve rural Minnesotans, setting up grants to develop high-speed Internet connections, putting $6 million more into greater Minnesota economic development efforts, increasing spending more for highway repairs and creating a center to fight invasive plants and animals moving into the state.

When they were briefing the media on the budget bill, Democratic House Speaker Paul Thissen of Minneapolis and Murphy Paul frequently pointed out items that would help rural or greater Minnesota.

For instance, they said, in approving $25 million for broadband Internet improvements, a fraction of what supporters wanted, businesses in areas of slow Internet coverage could become competitive with places that enjoy faster service.

“Expanded access to broadband Internet access is critical for greater Minnesota,” said Rep. Erik Simonson, D-Duluth. “If we want businesses to set up shop and expand in our communities, we need to provide them the resources they need in order to be successful. But in many areas of the state, high-speed Internet access just isn’t an option.”

Murphy denied that the rural emphasis is an attempt to improve Democratic chances in this year’s elections. At least seven rural House districts now held by Democrats are considered to be in play this year.

Overall, the bill divides the $322 million it spends several ways:

– $92 million for education, including raising public school funding $58 per pupil, adding money to school lunch programs and reducing special education paperwork.

– $91 million to health needs, including increasing funds 5 percent for care providers who serve patients at home, raising rural nursing home payments and assisting mostly rural elderly meal programs.

– $37 million for economic development, including the broadband grants and $6 million for six greater Minnesota economic development programs.

– $50 million for transportation, half of which would go to fill potholes after a winter that has been tough on roads.

– $36 million for public safety, especially sending more to the Corrections Department.

– $16 million for agriculture and the environment to fight invasive species moving into Minnesota and help fund locally grown food for food shelves.

The Senate Finance Committee plans to finish its budget proposal today. It could come up for debate early next week.

Added money for home health care providers follows last year’s 5 percent increase in nursing home funding.

Rep. Tom Huntley, D-Duluth, said funds for rural nursing homes need to increase because the expected passage of a $9.50-an-hour minimum wage would affect them since many workers do not receive the minimum wage.

Some new money the Corrections Department would receive is to pay county jails to house up to 500 prisoners. Rep. Michael Paymar, D-St. Paul, said the department underestimated the number of prisoners it would house this year.

As a snowstorm headed toward St. Paul, Rep. Frank Hornstein, D-Minneapolis, said his transportation funding provisions include $15 million to help local governments fill potholes after a rough winter, with another $10 million destined for the state to do the same.

Hornstein’s bill also provides $10 million for the Corridors of Commerce highway repair program that mostly would go to greater Minnesota roads.

Also in the bill is a provision to increase an assessment on railroads and add one on pipelines to fund $2.5 million worth of more training that first responders such as firefighters need to battle crude oil accidents.

The House voted to ban state funds for abortions and to prohibit an abortion of a fetus more than 20 weeks old. Most of the nearly 100 amendment proposals were rejected.

Republicans repeatedly tried to pass amendments to change the MNsure health insurance exchange, but Democrats would not allow most to be debated.

Dayton would limit surplus spending to $162 million

By Don Davis

A $1.2 billion budget surplus does not mean massive new state spending.

Gov. Mark Dayton made that clear Thursday when he unveiled his plan for election-year budget changes: About half of the projected surplus would go to tax cuts, $162 million would be spent on what he called “essential” needs and the rest would go into the state budget reserve.

Lawmakers and Dayton last year approved a $39 billion, two-year budget and Thursday’s announcement centered on how the governor would deal with the $1.2 billion surplus announced Friday. Legislators will draw up their own budget proposals and negotiate with the governor before the legislative session ends by May 19.

New spending Dayton suggests includes a boost for those who care for the elderly and disabled, and $20 million legislators already approved to increase heating aid, especially for those who cannot afford propane after big price spikes earlier this year. He also wants to add $3.5 million to the school lunch program to help students that cannot afford to buy meals.

The Democratic governor remains confined to home after hip surgery and released his budget tweaks in a conference call with reporters.

He said he wants to cap spending increases at $162 million so the state can put $455 million more in the budget reserve in case the economy goes sour. That would leave the reserve at $1.1 billion.

After his announcement, Dayton took hits from both sides: some criticized him for not recommending spending on their pet projects while Republicans were not happy with his suggestion to increase spending at all.

“Gov. Dayton is squandering the opportunity for real reform, using the surplus to adjust his 2013 tax increase and adding millions more in spending, even after his budget spent 10 percent more than the last two years,” Senate Minority Leader David Hann, R-Eden Prairie, said.

Dayton’s biggest spending increase request is $64.3 million for people who serve the elderly and disabled.

There is widespread support for increasing worker pay, but soon after Dayton released his budget plan a key organization supporting the added pay was critical.

The Long-Term Care Imperative issued statement saying the Dayton plan “takes a good first step toward restoring the funding of long term care for older adults,” but said the governor did not go far enough.

Dayton said he knows not everyone got what they wanted.

“Most of the agencies have had to restrain, if not cut, their operating expenses,” Dayton said.

An example is the Department of Natural Resources. A February story in the West Central Tribune of Willmar reported the department has a $1.5 million shortfall in its parks account, forcing some jobs to remain empty.

Dayton said the DNR did not seek more parks money, and said that state agencies need to watch their spending.

“There are a lot of needs out there that I am not addressing,” Dayton said. “There are people who are going to be unhappy with that.”

A rural issue that Dayton lists as a priority also did not get extra money: statewide high-speed Internet.

“I wanted to see border-to-border cell phone and high-speed Internet coverage by the end of my first term,” Dayton said. “We are going to fall short of that, but that still is my goal.”

The governor said he did not put broadband funds in his Thursday budget plan because those who want to increase coverage and speed have asked for up to $100 million, but have not spelled out specific details about how the money would be used.

Glencoe Mayor Randy Wilson, president of the Coalition of Greater Minnesota Cities, was not happy that Dayton left out broadband.

“Given the importance of the issue and years of talk, it is perplexing that Gov. Dayton failed to dedicate a portion of the surplus to enhance broadband speed and accessibility across Minnesota,” Wilson said.

Wilson also criticized Dayton for not recommending that the state increase aid it pays to cities.

Dayton proposed increasing Minnesota State Colleges and Universities system spending $17 million so it will not be forced to lay off faculty.

He also wants to up the University of Minnesota budget $5 million. While he and the Legislature cannot tell the university specifically how to spend the money, he said that he wants the money to go to the University of Minnesota Duluth.

“It is my intention of providing an additional $5 million … so they will not have to lay off faculty there,” Dayton said.

Also getting more money under Dayton’s plan would be the Minnesota Sex Offender Program, which is under a federal court order to fund an expert review of its services. A federal judge could take over the program if the state does not change it from a program that looks more like a prison to something that treats offenders.

Dayton wants more than $30 million new money for the Corrections Department to keep staff as prison populations grow.