Tag Archives: legislature

Update: Bonding bill up in air

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Hausman

By Danielle Killey

The future of a public works borrowing bill to fund state Capitol work, roads and bridges and other projects is in question after it failed in the Minnesota House.

Representatives voted 76-56 Friday on a bill to sell bonds to fund public works projects, five votes short of the 81 needed to pass.

“This is nothing short of tragic,” bill author Rep. Alice Hausman, DFL-St. Paul, said after the vote. But even with only three days left in the session the bill could resurface.

The $800 million bonding bill would fund projects such as state Capitol renovations, repairs at colleges and state parks and local bridge and road projects. The $109 million Capitol provision is the largest single item in the bill.

Republicans said they did not want to vote on the bill before the state budget is set.

“We need to get our priorities straight,” House Minority Leader Rep. Kurt Daudt, R-Crown, said.

“Why we would at this time borrow another $800 million to spend more money, before doing our budget work, is perplexing,” Rep. Matt Dean, R-Dellwood, said.

Various budget bills have begun to be heard by the House and Senate, but most major pieces remain to be debated.

Southwestern Minnesota Republicans said they were upset because aid to their area affected by storms last month was in the bonding bill and would have been more likely to pass on its own.

“I truly hope the Democrats aren’t going to play politics with an act of God,” Rep. Joe Schomacker, R-Luverne, said before the vote.

Rep. Rod Hamilton, R-Mountain Lake, also worried the disaster relief could be in danger as part of the bonding bill.

“Democrats are holding this funding hostage because we did not support $800 million in additional state borrowing,” Hamilton said. “We have always helped our disaster victims during their time of crisis, and I can only hope the Democrats will do the right thing and bring this bill forward in the next few days.”

Hausman argued that all the projects in the bill are important.

“Why is one community and its need more noble than anyone else’s?” she asked.

Hausman told reporters after the vote that the bonding bill is finished for the year. However, Gov. Mark Dayton and leaders of the Democratic-controlled House and Senate could bring the bill up for debate again.

Republicans have said they could accept a bonding bill that includes Capitol work and any disaster funding, but not other projects.

Hausman said she thinks a Capitol-only funding bill will not come up this year, though without it repairs will be delayed, she said.

“In today’s highly partisan political atmosphere, the bonding bill is one example where legislators can work together for their communities and the good of the state,” Hausman said. “A great disservice was done today by those who wanted to make a political point.”

She said the bill would have made a difference in communities throughout Minnesota.

“I couldn’t have asked the people of Minnesota for more help,” Hausman said, relaying letters, calls and emails from people throughout the state asking for projects to be included. “We’re all in this together.”

Hausman said the bill was an agreement among the Senate, House and governor’s office.

Hausman said at least eight Republicans promised votes, though she would not say who. Dean said no GOP members promised to vote for the bill. Three Republicans did join Democrats in the vote.

Next up for Minnesota gay marriage: Senate and then the governor

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By Don Davis

Minnesota is a Senate vote and a governor’s signature away from becoming the 12th state to allow gay marriage.

Same-sex marriage supporters are optimistic because the House was regarded as the biggest hurdle. After the bill passed the House surprisingly easily 75-59, they were euphoric.

The Senate is due to take up the bill Monday and Democratic Gov. Mark Dayton says he will sign it.

Standing for hours in the Capitol rotunda, bill backers sang “give love a chance,” their take on the protest ballad “Give Peace a Chance.” When the bill passed, they sang a line from a 1960s tune: “Goin’ to the chapel and we’re gonna get married.”

Inside the House chamber, instead of the chaotic atmosphere that usually accompanies House sessions, the gay marriage debate was quiet and polite. Hardly anyone moved from their seats.

“Same sex couples, we pay our taxes, we vote … we own businesses in Minnesota,” bill sponsor Rep. Karen Clark, DFL-Minneapolis, said. “Freedom is freedom for everyone.”

Clark and Sen. Scott Dibble, another Minneapolis Democrat, are two openly gay members and sponsors of the bills that would overturn existing law banning gay marriage. A crowd that waited outside the House chamber during the debate greeted them and their partners as heroes after the vote.

Clark said she has worked to legalize same-sex marriage for 20 years.

As she pushed her “yes” button, a picture next to it showed her parents at a 1993 Rock County parade. They carried signs promoting equality for gays.

An estimated 1,000 to 1,200 people crowded into the Minnesota Capitol Thursday, a smaller crowd than many expected.

“It’s incredible,” Shelley Medernach of Eagan said after the bill passed. “I’m 56 years old and I didn’t think I would live to see this day. It’s amazing to be here.”

Margaret Schow of Richfield said she made the trip to St. Paul to ensure lawmakers heard from same-sex marriage opponents.

“I wanted to show that there are a great number of Minnesotans who do not want them to pass this bill,” Schow said. “There are many people who do not want this.”

The bill that passed calls all marriages “civil marriage,” an attempt to allay fears that clergy would have to officiate at gay marriages.

The civil marriage change helped Rep. Tim Faust, DFL-Hinckley, vote for the measure.

“Not too long ago, I probably would have voted ‘no’ on this bill,” Faust said.

But, he added, he got married last summer and cannot imagine living without his wife. He said he cannot imagine government forbidding others from living with the one they love.

“Give our fellow brothers and sisters of God the same rights we have,” said Faust, a Lutheran minister.

Two Democrats voted against the bill, Reps. Mary Sawatzky of Willmar and Patti Fritz of Faribault, who live in districts that strongly back the existing gay marriage ban. Republican Reps. Pat Garofalo of Farmington, Andrea Kieffer of Woodbury, David FitzSimmons of Albertville and Jenifer Loon of Eden Prairie bucked their party and voted for the measure.

Chris Kluwe, the just-released Minnesota Vikings punter who has worked for pro-marriage activists, said in a tweet that he lobbied Garofalo. “I talked with @PatGarofalo before the vote, and he made a tough choice. Glad he did.”

The marriage bill resulted in a continuation of a campaign that started almost two years ago when lawmakers put a proposed constitutional amendment on the ballot to ban gay marriage. That attempt failed last November, and the two campaigns immediately began ramping up for a legislative vote to remove an existing gay marriage ban in state law.

House Minority Leader Kurt Daudt, R-Crown, said Minnesotans are not ready for gay marriage.

“I’m not sure if this is the right thing,” he said, “but this is not the right time.”

The House turned down 111-22 a Rep. Tim Kelly, R-Red Wing, amendment that would have eliminated “marriage” from state law, replacing it with “civil union.”

Kelly said he supports equal rights for all Minnesotans, which he said the civil union concept would provide.

The Red Wing lawmaker said Democrats have complained about government defining marriage, adding that is what Clark’s bill does.

When Democrats said the Kelly plan would invalidate existing marriages, Kelly countered: “There is no way government can take my marriage away.”

Rep. Andrea Kieffer, R-Woodbury, became one of four on the GOP side to back the bill.

“I think this is a compromise,” she said of the proposal to define marriages as civil unions.

“I think this would be a good solution so we can heal and move forward as a state,” she added.

Rural Democratic lawmakers, especially, were on the spot because many of their districts oppose gay marriage.

“This is a difficult issue and I have had many heartfelt, respectful discussions with people on both sides of the issue,” Rep. Mary Sawatzky, DFL-Willmar, said. “Based on the feedback I’ve received from constituents, I feel that voting no is the best way to represent the people of District 17B.”

Rep. John Persell, DFL-Bemidji, came out in favor of the bill.

If gays cannot marry, he said, “we will deprive Minnesotans of their rights.”

Persell said that when he woke up Thursday morning, he thought of the biblical passage: “Do justice, love kindness, walk humbly.” That, he said, provided assurance that a “yes” vote was proper.

“It’s about liberty,” he said.

Some constituents of Rep. Joe Radinovich, DFL-Crosby, criticized his decision to vote for gay marriage.

A long-time friend recently told him he is gay, Radinovich said, which made him realize it is tough being gay in a small town. His vote, he added, was inspired in part by his friend.

Radinovich said he was voting for the bill because he wants all Minnesotans “to have family like mine.”

Rep. Carly Melin, DFL-Hibbing, said she marries her high school sweetheart next month, something all Minnesotans should be allowed to do.

“Now is the time we allow all Minnesotans to marry who they love,” she said.

Rep. Andrew Falk, DFL-Murdock, announced ahead of the vote that he would favor gay marriage.

“The bill does not force a religious institution to marry two individuals of the same sex.” Falk said. “Furthermore, language has been added to the bill to offer additional comfort that no religious institution will be forced to act in violation of its own religious beliefs.”

Falk released a letter late Wednesday indicating that he will vote for gay marriage. The lawmaker said “I don’t like it” is not a good reason to oppose the bill. “Marriage is about love. Marriage is about commitment. Marriage is about equality. Marriage is about finding the person that you cannot live without.”

Rep. John Ward, DFL-Baxter, was one of the first to hug Clark after the vote.

“In my seven years in the Legislature, this is the most difficult issue I have ever voted on,” Ward said. “I thought, prayed long and hard and listened to both sides before following my conscience and voting for freedom and equality.”

“As a legislator I believe that breaking down walls of injustice and inequality is part of my job,” Ward said.

Rep. Jay McNamar, DFL-Elbow Lake, was opening mail before Thursday’s debate began.

“The voices of my constituents are what carried most of the weight for me over the past few months,” McNamar said. “I said from the very beginning that I would make my decision based on what my constituents told me. Because of the number of constituents urging me to support the bill, and because of my personal commitment to respect everyone as equals, I voted in favor of the bill to allow same-sex marriage.”

The state should not decide “who gets to enjoy certain rights simply because they have differing religious beliefs,” Rep. Roger Erickson, DFL-Baudette, said. “This bill won’t take away anyone else’s rights. It simply allows same-sex couples to have equal rights under the law.”

Conservative religious groups were not happy with the vote.

“It marks a radical redefinition of marriage and will lead to lawsuits attacking the religious freedoms of Minnesotans,” Minnesota Family Council President Tom Prichard said. “This legislation means it’s no longer an expectation in state law that a child will have a relationship with his or her mother and father.”

Reporter Danielle Killey contributed to this story.

Rural hospitals worry about nursing standards plan

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Fossum

By Danielle Killey

Rural hospitals could suffer under a proposal aimed at improving patient care, some health care officials and lawmakers say.

Ely hospital administrator John Fossum said a bill that would set state standards for how many registered nurses are on duty “could kill people.”

He said hospitals that would be considered understaffed under the propposed standards might have to send patients to other facilities, and the closest hospital to Ely’s is 50 miles away.

“We’re small and we’re remote,” he said.

Bill author Rep. Joe Atkins said this version of a proposal that has been in the works for years does not set specific quotas for hospitals but focuses on general staffing standards. He said those are necessary to protect patients.

“We’ve got some folks who are doing a great job, but we’ve also got some situations that are downright scary,” the Inver Grove Heights Democrat said. “There’s situations that arise where the numbers are just so far off patient safety is at risk.”

The bill received support from some health organizations, including the Minnesota Nurses Association. Individual nurses also have said the bill will help them provide better care.

“The patients in our care deserve consistency,” Fairview Southdale registered nurse Julie Uzlik said.

Each hospital would be required to create a committee to handle staffing levels and the Minnesota Department of Health and some medical associations would weigh in on standards.

The bill would prohibit hospitals from laying off employees because of any staffing requirement changes.

Rep. Andrew Falk, DFL-Murdock, successfully made a change exempting critical care hospitals, which are smaller facilities often in rural areas, from the staffing requirements. Other rural hospitals still would be affected by the bill.

Atkins said he expects more discussion on the rural issues in upcoming committee hearings and the details of the bill, including the exemption, could change.

“I have not once heard from a single patient, a single nurse or a single hospital in a rural setting (about) the need for this,” Rep. David Dill, DFL-Crane Lake, said.

But, he added, he has heard from Duluth hospitals that there are staffing issues there.

Fossum and other opponents said the bill would increase costs for hospitals and might not reflect their individual needs and situations. Opponents also said patient care would not necessarily be better with more nurses working.

“This legislation would force us to schedule by headcount, not patient needs,” St. Cloud CentraCare chief nursing officer Linda Chmieleski said.

Rep. Steve Drazkowski, R-Mazeppa, said he thinks the bill gives too much power over hospitals to nurses. The Minnesota Hospital Association has said it will add to labor costs and could put the future of some hospitals at risk.

Atkins said he was not expecting many of the concerns he has heard to the plan.

“The idea of setting minimum standards for patient safety, I’m actually a little surprised at the level of opposition to that,” he said.

Dayton takes credit for seat license attention

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Gov. Mark Dayton’s complaints about the Vikings football team hints that it might sell seat licenses for $60,000 helped to sway the discussion to smaller figures, he says.

Dayton rushed a letter to Vikings owners when he learned the team was asking season ticket holders their opinions about buying licenses, which would give them better seats and give the Vikings money to help fund a new stadium. The governor said at the time that he supported a “people’s stadium, not a rich people’s stadium.”

He said that the attention he brought to the issue will convince the team and a governmental body that controls the stadium to lower the price tag.

“That will save Minnesotans a lot of money,” he told reporters.

The attention should take care of the situation, he said, so the Legislature will not need to get involved. “I don’t have any interest in reopening the stadium bill,” he said.

Democrats say they are ready to control, not overreach

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Meeting the press (Photo by David Oakes, Senate Media)

By Danielle Killey

Democrats will regain the majority in the Minnesota House and Senate and retain the governor’s office in the 2013 legislative session, but they said Monday they don’t plan to overreach.

“This is not going to be, as some fear and some hope, a sky’s-the-limit approach,” Gov. Mark Dayton said at a pre-session briefing for Minnesota reporters.

He said the focus should be on addressing the state’s projected $1.1 billion budget deficit.

Democrat leaders agreed the budget will restrict some of their actions.

“There’s going to be very little money to do anything new,” Senate Majority Leader-elect Tom Bakk, DFL-Cook, said. “People are going to have to restrain themselves some.”

House Minority Leader-elect Kurt Daudt, R-Crown, said he hopes the parties can focus on areas where they agree and on the budget.

“I think right now is not a time to look beyond solving our current problems,” he said. “We’re also keenly aware (Democrats) don’t need our votes to do what they want to do, with the exception of a bonding bill.”

Dayton and others have raised the prospect of a state public works borrowing bill in the 2013 sessions, funded by the state selling bonds, even though that typically happens on years opposite those focused on the budget. Lawmakers and Dayton must write a two-year budget next year.

Dayton and Senate Minority Leader-elect David Hann, R-Eden Prairie, did not agree on much Monday. But they did find common ground on a few issues, including holding off significant bonding discussions until after a February budget forecast.

By February, it should be clearer how the state is affected by federal budget decisions; right now the unresolved so-called “fiscal cliff” facing the country should President Barack Obama and Congress fail to come to a budget agreement clouds Minnesota’s financial outlook.

Dayton said he plans to come forward with a bonding bill in 2013, but he will “set that one on the back burner for now.” If nothing else, he said, a bonding bill is needed to continue state Capitol restoration work, but he also said he would include civic center projects in Mankato, Rochester and St. Cloud.

Other priorities for the session Democrats highlighted Monday include tax reform, job creation and improving education.

Hann said that the Republicans want to reform the tax system as well. Their aim is to make the state more appealing to businesses and help create jobs, he said.

If those goals are shared by Democrats, “I think they’re going to find willing partners,” Hann said.

“We certainly want to be at the table,” Daudt said of tax reform discussions.

But Hann said Republicans are less open to the idea of raising taxes on Minnesota’s wealthiest 2 percent. Dayton has said he likely will include that as a revenue source in his budget proposal, due in January.

“It’s really a decision whether the DFL wants to have bipartisan legislation,” Hann said.

House Speaker-designate Paul Thissen, DFL-Minneapolis, said tax reform discussion needs to focus broadly on all areas, from property to income to sales taxes.

“It’s a choice among taxes about how we fund our government,” he said.

Democratic leaders acknowledged other DFLers likely will bring forward proposals on issues such as legalizing same-sex marriage, seeing an opportunity with Democrat control. Thissen said the fact that voters defeated an amendment to the state Constitution that would have outlawed same-sex marriage simply meant Minnesotans did not want to “stop the discussion cold.”

He, Bakk and Dayton would not commit to pushing through the proposal.

Legislative notebook: Lanning does not worry about electronic pull tab revenues

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Lanning at last committee meeting.

Minnesotans should not worry that a new Vikings stadium will fall short of funding, a key lawmaker says.

Wednesday’s state budget report included an item showing revenue from newly authorized electronic pull tabs is slow coming to the state. That set off fears that money from the new gambling form might not be enough to provide the state’s portion of new stadium cost.

The bill’s chief House author is not concerned.

“It’s not too surprising,” said Rep. Morrie Lanning, R-Moorhead. “We knew it was going to be slow.”

The problem is that so far just one company supplies iPads used for the new type of pull tab games. At least one more company is trying to get approved to sell the electronic devices, which Lanning said should help.

“I think it will grow,” said Lanning, who on Thursday attended his last House committee meeting before retiring.

While most of the attention has been paid to pull tabs, Lanning said he expects electronic bingo to be the big revenue-producer. “I think that is going to catch on more quickly.”

Gov. Mark Dayton told reporters that some bars with traditional pull tabs are waiting to see how the electronic version pays off before jumping in.

Budget, then bonding

The top Minnesota House Republican says he could accept a public works funding bill next year.

However, Minority Leader-elect Kurt Daudt, R-Crown, said that the state’s two-year budget would have to be written before the House can pass a public works bill, which would be funded by the state selling bonds.

In talking to a group visiting the Capitol, Daudt left open some questions when he said: “I don’t think we are going to try to hold things up on a bonding bill.”

But when reporters asked him later, he explained that the budget must wrap up first. Then, he said, a 2013 bonding bill is possible.

Daudt said that Republicans he leads will have little say in the outcome of most issues in 2013’s legislative session, but Democrats do need some GOP votes to pass a bonding bill, which requires more than a simple majority.

Bonding bills usually are passed in even-numbered years, but several Democrats say they would like one next year.

DFL looks at rural

House Democratic leaders are making attempts to make sure rural Minnesotans know they care.

The DFL caucus elected Minneapolis and St. Paul lawmakers as the two top leaders.

House Speaker-designate Paul Thissen, DFL-Minneapolis, said that upcoming Democratic caucus elections for assistant leaders likely will put more rural people in power.

“I suspect that will be much more representative of the state,” he told a group visiting the Capitol.

Later, House Minority Leader-elect Kurt Daudt, R-Crown, said concerns remain. “We are worried. … We feel a little bit that the rural area is getting left behind.”

However, Thissen said that 85 percent of the state’s budget will go through committees chaired by rural Democrats.

Property taxes up

Minnesota property owners may pay an average of 2.3 percent more in property taxes, the Revenue Department reports.

That is how much local governments propose to raise taxes, but those governments still must approve those figures.

If the proposed levies are approved, that would mean a $187 million property tax increase.

Overall, cities propose to raise taxes the most, 3.1 percent. Counties expect the lowest rate increases, 1.7 percent.

 

Minnesota leaders preview session

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Gov. Mark Dayton and Senate Majority Leader-elect Tom Bakk, DFL-Cook, listen to a reporter’s question during a pre-session briefing Monday in St. Paul. The governor and all four legislative leaders appeared in front of reporters, often saying it is too early to discuss details of what will happen in the legislative session that will begin Jan. 8. They often appeared on the same page, but at times Senate Minority Leader-elect David Hann disagreed with the Democratic governor, Bakk and House Speaker-designate Paul Thissen, who will be the top three Democrats running state government. (Forum Communications photo by Danielle Killey)

Dayton, legislative leaders to meet the press

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Gov. Mark Dayton and the four top legislative leaders for 2013 sit down at the same table Monday, perhaps they only time they will do that for some time.

They will answer questions from Minnesota reporters for an hour, and Senate Media Services will provide a live stream on line for the public at www.senate.mn/media.

Joining Dayton will be House Speaker-designate Paul Thissen, DFL-Minneapolis; Senate Majority Leader-elect Tom Bakk, DFL-Cook; House Minority Leader-elect Kurt Daudt, R-Crown; and Senate Minority Leader-elect David Hann, R-Eden Prairie.

The tradition of the five leaders meeting the press to preview the upcoming legislative session goes back years, with one noteworthy exception. Two years ago Dayton was involved in an election recount with Republican Tom Emmer and the outcome was not known early enough to schedule the briefing.

This year’s briefing will be different than most, with Dayton and the House and Senate leaders all Democrats. That has not happened in more than two decades.

The legislative session begins at noon Jan. 8.

Lawmakers to consider tighter methadone supervision

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Norrgard

Minnesota legislators likely will debate proposals next year to slap tighter supervision on the use of the potent drug methadone, used to treat pain and addictions to illegal drugs such as heroin.

However, key backers of the legislation say the Legislature should leave up to medical experts the controversial question of whether methadone ought to be prescribed.

Two Minnesota House health-care committees touched on the topic Thursday, with doctors saying methadone is the best treatment for drugs like heroin and others pointing out problems the drug causes when it leaves patients’ hands and ends up for sale on the street.

“It is a controversial therapy…” Commissioner Lucinda Jesson of the Minnesota Human Services Department told committee members. “You are using a legal drug to battle an illegal one.”

It is more than controversial, said Director Phil Norrgard of the Fond du Lac Band of Lake Superior Chippewa Human Services Department. When the drug gets into the wrong hands, it often is deadly.

“More addicts are fixing and mixing,” he said, meaning they get their drug fix by mixing methadone with other substances.

Thursday’s discussion will continue in the legislative session due to begin Jan. 8.

Rep. Tom Huntley, DFL-Duluth, and Sen. Tony Lourey, DFL-Kerrick, come from areas affected by methadone problems and they will lead legislative health committees. The two say that legislators have no business delving into the issue about whether methadone is the right treatment, but agreed that the state needs new laws to make sure the drug does not end up falling into the hands of those who would abuse it.

Lawmakers often heard about an in-depth report the Duluth News Tribune printed on methadone in September. Huntley said chief reporter on the series, Brandon Stahl, deserves a Pulitzer Prize for the stories that exposed methadone’s danger and problems encountered at a Duluth methadone clinic and elsewhere.

Among facts Stahl uncovered was that at least 392 Minnesotans have died from methadone-involved overdoses since 2001.

However, experts at Thursday’s hearing indicated the death toll could be far higher. One reason is that medical examiners vary greatly on whether they list methadone as a contributing cause to deaths. Also, some deaths may not be directly attributed to methadone, such as two Carlton County workers who were hit this fall by a vehicle driven by someone authorities believe was using methadone.

Norrgard said he is tired of hearing that drug addiction is a disease like diabetes and high blood pressure.

“High blood pressure and diabetes medications do not have any street value,” he said. “They are not dangerous narcotics.”

Methadone, on the other hand, “can be easily converted to cash,” Norrgard said.

A 30-day methadone supply could be sold for $3,600, he added.

Norrgard said Carlton County, which shares the Fond du Lac reservation with St. Louis County, has the highest rate of methadone deaths in the state.

Investigator Dan Daniels of the Carlton County Sheriff’s Department said crimes committed by methadone users “have gone through the room. It is almost epidemic.”

Daniels, Norrgard and others asked legislators to pass laws to better supervise methadone use. Jesson said her department will give lawmakers suggestions for bills.

Some Republicans suggested that methadone itself is addictive and people being treated for other addictions should use it only for a short period of time.

“How do we wean them off?” asked Rep. Mary Franson, R-Alexandria.

Dr. Gavin Bart of Hennepin County Medical Center said that patients who quit using methadone have a much greater chance of going back to drug use: “They do not do well.”

Bart, who indicated that many patients need to remain on methadone for life, presented evidence showing those who quit methadone treatment often die soon.

“Methadone patients are not addicted to methadone,” he said, and it is the best treatment for many drug addicts.

Norrgard rebutted Bart by saying that Fond du Lac is working with the Mayo Clinic on another treatment, not involving methadone, that shows a 95 percent success rate. The program includes behavior modification, which Bart said does not work.

Lourey did not take sides in that controversy, but said: “The drug needs to be used as prescribed.”

About 5,000 Minnesotans receive methadone treatments a year, Jerry Kerber of the Human Services Department said. About half are funded by the state, at an $8.5 million annual cost.

Most clinics that supply methadone are in the Twin Cities, but others are in St. Cloud, Rochester, Willmar and Brainerd. The state is trying to close the Duluth clinic for multiple rule violations.

Huntley said that people using methadone are not just a danger to Minnesotans’ well-being. “There is a huge cost to the community from those who are out of control.”

Budget notebook: Tax reform discussed, tax increases not so much

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By Danielle Killey and Don Davis

Democrats and Republicans said tax reform should be part of a plan to tackle the state’s deficit and create a budget, although on Wednesday they were light on specifics.

Senate Majority Leader-elect Tom Bakk, DFL-Cook, said in discussions with people across the state it has become evident that “a growing reliance on property taxes is a problem.” But he was reluctant to say that tax changes would mean higher payments.

“I think tax reforms and raising taxes are different things,” Bakk said.

House Speaker-designate Paul Thissen, DFL-Minneapolis, said taxes cannot solve everything.

“Taxes are only one component” of a state budget, he said.

Bakk said he has talked with Sen. Rod Skoe, DFL-Clearbrook, who will chair the Tax Committee, about tax goals for the coming year. He said when it comes to tax reforms, the idea is to “not make us an outlier.”

Gov. Mark Dayton said the Legislature likely can expect his budget proposal to include higher taxes on the wealthiest 2 percent of Minnesotans.

Senate Minority Leader-elect David Hann, R-Eden Prairie, said when Democrats bring up the idea of tax reform, they likely instead mean tax increases. Republicans are open to “genuine reforms,” he said.

“We think the talk about tax increases is grossly premature,” House Minority Leader-elect Rep. Kurt Daudt, R-Crown, said.

Union and liberal groups called for higher taxes, while conservative organizations mostly were quiet after a state budget deficit was announced.

“Raising revenue responsibly by asking corporations and the wealthiest Minnesotans to pay their fair share is as essential to budget stability as reforming the tax code and championing government efficiency,” said Executive Director Jim Monroe of the Minnesota Association of State Employees.

School payment a plus

State leaders said one positive of the budget forecast is the opportunity to begin paying back money owed to Minnesota schools.

“The good news is we are able to repay the schools,” Dayton said.

Bakk said Democrats made that a key priority while campaigning this year.

Thissen pointed out the issue is not done.

“We still owe our schools over $1 billion,” he said.

Legislators and governors in recent years have delayed payments to schools to help solve state budget problems.

Under current law, surplus money in the two-year budget that ends June 30 must be used to repay schools. On Wednesday, Dayton and lawmakers learned that $1.3 billion will be spent to lower the state’s debt to schools.

Half of the $1.3 billion is to be sent to schools on Dec. 15, with the rest following in the coming months.

Housing an economic key

The Minnesota housing market could help bring back the state economy.

If officials in Washington fix federal fiscal woes, State Economist Tom Stinson said, the housing market and its related forestry and lumber industries would benefit.

“That’s the area that was hurt the worst,” he said.

Stinson said Congress and President Barack Obama need to take meaningful action or the economy probably will drop into a recession.

“If they kick the can down the road or allow us to go down the fiscal cliff, that probably costs us money,” Stinson said.

Such inaction would cost individuals who are caught in a recession, which would cost the state in terms of lower revenues.

Stinson’s staff produced a report about what would happen with no fiscal cliff solution, including Minnesotans holding 45,000 fewer jobs than expected by the end of 2013 and 70,000 fewer a year later.

Personal income would drop 4 percent, the report shows, and the state unemployment rate would jump to 7.1 percent from the current 5.8 percent.

Even with the Minnesota problems, however, the state would do better than other states. Stinson said, because defense spending would take the biggest hit and Minnesota has few military bases or suppliers.

Pull tabs lagging

Revenues from electronic pull tabs are lower than anticipated, but Dayton said that is due to a lag in getting the program off the ground.

“It is taking longer than expected to ramp up,” he said.

Money from the new program is earmarked to pay for a new Vikings football stadium.

Once the program is fully implemented, there is no expected fund shortage, Dayton said.

“The lower revenue collection is a result of the pace at which this new technology can be implemented, not an underlying problem with electronic gaming as a source of revenue,” a Dayton spokesman said.

Dayton said many vendors are waiting to see if it is worth entering the field of electronic gaming. Establishments that are using electronic pull tabs seem to be happy with the results so far, Dayton said.

No more ‘gimmicks’

Democrats said the next state budget needs to focus not just on filling the immediate deficit, but preventing more in the future.

“Each time we’ve faced a deficit we have failed to take the long view,” Thissen said. “We need to have a budget that doesn’t rely on the gimmicks of the past.”

Dayton said he is committed to producing a balanced budget.

“We’re done with the gimmicks, we’re done with the games,” he said.

Update: Only thing certain in budget is uncertainty

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Kelly, Showalter

By Don Davis and Danielle Killey

Minnesota’s budget future includes uncertainty, spending cuts and tax increase proposals.

Especially uncertainty.

State officials Wednesday announced a $1.1 billion budget shortfall, but warned that number could grow to $2.8 billion if Congress and the president fail to solve a federal budget problem by year’s end. The so-called federal fiscal cliff, a combination of tax increases and spending decreases, could have a major impact on the Minnesota economy, including fewer people holding jobs and personal income dropping 4 percent by 2015, State Economist Tom Stinson said.

Without a federal fix, the state would join the rest of the country in a recession early next year, Stinson said, even though the last recession has not quite ended.

If federal officials fix budget issues, Stinson and Commissioner Jim Schowalter of Minnesota Management and Budget said the state economy will continue to grow, although slower than they would like.

“There’s no relief in sight for our fiscal woes,” Schowalter declared as he announced the deficit.

Senate Majority Leader-elect Tom Bakk, DFL-Cook, said the numbers Schowalter’s staff released do not show the full problem. He said that the $1.1 billion deficit grows to $2 billion when inflation is considered.

State leaders will use Wednesday’s budget forecast to write a budget for the two years beginning July 1, but the so-called federal “fiscal cliff” leaves what Bakk said is the most uncertain fiscal future he has seen.

“Forecasters are warning it won’t be pretty,” Stinson said.

Democratic Gov. Mark Dayton told reporters that it is likely he will propose tax increases on Minnesota’s richest 2 percent. He did that two years ago, but Republicans who controlled the state House and Senate rejected the idea.

Dayton said the forecast provides a starting point for forming a budget to present to the Legislature next month.

“We haven’t made any decisions on anything at this point,” Dayton said.

With Democrats in charge of the governor’s office and both legislative chambers for the next two years, a tax increase has a better chance than when Republicans controlled the Legislature the past two years.

Incoming Democratic legislative leaders would not discuss tax and spending specifics.

House Speaker-designate Paul Thissen, DFL-Minneapolis, said the next budget forecast, planned for February, will be more helpful when it comes to nailing down specifics about the state’s spending and revenues.

“The fiscal cliff makes our path a little more murky,” Thissen said.

Minority leader Sen. David Hann, R-Eden Prairie, said the forecast shows Republican fiscal policies have worked. The policies included spending cuts.

“To suggest that we need to grow spending … is not productive,” Hann said.

In other news from the budget forecast, state officials said that a better financial outlook for the two-year budget that ends June 30 means the state can begin repaying $2.4 billion it borrowed from school districts.

State Budget Director Margaret Kelly said the first half of a $1.3 billion payment will go to schools on Dec. 15, with the rest coming early next year.

The added money in the current budget comes from one-time sources, such as borrowing against a late-1990s lawsuit settlement with tobacco companies. Money that helped the current budget does not continue into the next one.

The budget report showed drops in state health-care spending, including some lower costs, reduced enrollment and cost-saving changes, Kelly said.

The current savings in health programs is $196 million, with $185 million expected in the next two years.

Those savings pale compared to the overall state budget. Wednesday’s forecast indicates the next two-year budget will include nearly $36 billion of state revenues.

With federal budget cuts and more than $500 billion in tax increases beginning Jan. 1 unless Congress and President Barack Obama act, the national economy could face a recession.

State unemployment could rise to 7.1 percent in 2014, while national employment would be 9 percent, Stinson said.

The economic slowdown would result in the state losing $1.7 billion beyond the already-projected $1.1 billion deficit.

Here is a look at Minnesota’s budget forecast for the past decade:

– February 2012, $323 million surplus.

– November 2011, $876 million surplus.

– February 2011, $5 billion deficit.

– November 2010, $399 million surplus.

– February 2010, $994 million deficit.

– November 2009, $1.2 billion deficit.

– February 2009, $4.6 billion deficit.

– November 2008, $426 million deficit.

– February 2008, $935 million deficit.

– November 2007, $373 million deficit.

– February 2007, $1 billion surplus.

– November 2006, $1 billion surplus.

– February 2006, $88 million surplus.

– November 2005, $701 million surplus.

– February 2005, $157 million surplus.

– November 2004, $700 million deficit.

– February 2004, $160 million deficit.

– November 2003, $185 million deficit.

– February 2003, $11 million deficit.

– November 2002, $356 million deficit.

 

 

Update: $1.1 billion state deficit could grow to $2.8 billion

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Minnesota’s budget will face a $1.1 billion shortfall, state officials announced today, but that number could grow to $2.8 billion if Congress and the president fail to solve a federal budget problem.

While saying today’s budget announcement was not gloomy, Commissioner Jim Schowalter of Minnesota Management and Budget declared: “There’s no relief in sight for our fiscal woes.”

Senate Majority Leader-elect Tom Bakk, DFL-Cook, said the $1.1 billion deficit grows to $2 billion when inflation is considered.

The budget forecast is used by state leaders to write a new budget for the two years beginning July 1, but the so-called federal “fiscal cliff” leaves what Bakk said is the most uncertain fiscal future he has seen.

Schowalter and State Economist Tom Stinson said there is some good news. The national and state economy continues to grow, they said.

If officials in Washington bridge the fiscal cliff, Stinson said, an improved housing market could spur the state economy.

The other good news to many was that the state will begin paying back $2.4 billion owed schools.

State Budget Director Margaret Kelly said the first half of a $1.3 billion payment will go to schools on Dec. 15.

Legislators and governors in recent years have delayed payments to schools to help solve state budget problems.

Under current law, surplus money in the two-year budget that ends June 30 must be used to repay schools. However, legislators could delay repayment if they act soon after they return for a new session beginning Jan. 8.

Today’s deficit forecast adds to a cloud of uncertainty hanging over the state budget because of action, or inaction, on federal budget issues.

With budget cuts and more than $500 billion in federal tax increases beginning Jan. 1 unless Congress and President Barack Obama act, the national economy could face a recession.

“So you are going to have to do something to stop the tax increases from coming about,” Stinson said in an earlier interview. “You can’t just say, ‘We won’t do anything and it will go way.’ If you don’t do anything you are over the cliff.”

The impact could be gradual, Stinson said, but Americans would begin noticing the higher taxes in their first 2013 paychecks. If nothing is done, he said, consumers gradually will stop spending and businesses will hire fewer people.

“You get started on that vicious spiral,” he said.

Stinson’s staff prepared a report not part of the official budget forecast that showed if the fiscal cliff occurs that Minnesota’s personal income could fall 4 percent in 2015. State unemployment could rise to 7.1 percent in 2014, while national employment would be 9 percent, Stinson said.

The economic slowdown would result in the state losing $1.7 billion beyond the already-projected $1.1 billion deficit. That is about 5 percent of the 2014-2015 state budget.

Gov. Mark Dayton last month said that while he must submit a budget proposal in January, he would be forced to revise it if the fiscal cliff occurs.

A new budget forecast is due out in late February or early March, which likely will mean that Dayton will revise his budget then. Schowalter said that forecast will be more accurate because more will be known about congressional action.

The 2013 legislative session begins Jan. 8, and relatively little budget-related work is expected in the first two months while lawmakers await the later budget report.

The budget forecast provides figures for state officials to craft a budget. The current two-year state budget spends $34 billion in state taxes and fees.

A budget must be in place by July 1 or there could be a government shutdown like in 2011.

Republican legislative leaders took credit for the current budget’s surplus was their frugal budgeting action when they controlled the state House and Senate the last two years. Senate Minority Leader-elect David Hann, R-Eden Prairie, said tax cuts would spur economic growth better than what he expects to be DFL-backed tax increases.

Minutes after the deficit was announced, the state’s largest government employee union asked for higher taxes.

“If Republicans are looking for massive spending cuts, they’ve already done that with a decade of disinvestment,” said Eliot Seide, director of AFSCME Council 5. “We need $6 billion to dig ourselves out of the hole and pay for the things Minnesotans care about – brainpower schools, middle-class jobs, safe transportation and property tax relief.”

To fund state spending, taxes will be debated.

There is widespread expectation that higher taxes, at least on the state’s richest residents, will be favored by the new Democratic-Farmer-Labor Party legislative majority. Democrat Dayton has been a strong advocate of that, and the 2013 Legislature will mark the first time in two decades that a governor of his party has had a DFL House and Senate.

DFL legislative leaders today would not say if they support tax increases, but Bakk said he expects Dayton’s budget proposal to include more spending cuts.

While twice annual budget forecasts are reported as showing surpluses or deficits, the Minnesota Constitution actually does not allow a deficit. More accurately, the forecast shows what would happen to the state budget if the governor lawmakers made no change from current law.

A budget surplus could have allowed more spending on other programs without raising taxes.

A deficit, on the other hand, must to be fixed by the state raising more revenue or cutting spending. Revenues may mean higher tax rates or just eliminating what politicians like to call loopholes, those tax cuts and credits politicians often approve to help certain classes of businesses and citizens.

Here is a look at Minnesota’s budget forecast for the past decade:

– February 2012, $323 million surplus.

– November 2011, $876 million surplus.

– February 2011, $5 billion deficit.

– November 2010, $399 million surplus.

– February 2010, $994 million deficit.

– November 2009, $1.2 billion deficit.

– February 2009, $4.6 billion deficit.

– November 2008, $426 million deficit.

– February 2008, $935 million deficit.

– November 2007, $373 million deficit.

– February 2007, $1 billion surplus.

– November 2006, $1 billion surplus.

– February 2006, $88 million surplus.

– November 2005, $701 million surplus.

– February 2005, $157 million surplus.

– November 2004, $700 million deficit.

– February 2004, $160 million deficit.

– November 2003, $185 million deficit.

– February 2003, $11 million deficit.

– November 2002, $356 million deficit.