Bonding ‘like pushing boulder uphill’

Looking up to the heavens, Minnesota Gov. Gov. Mark Dayton wonders on Friday, Jan. 15, 2016, what his father would have thought about his funding of arts programs. Bruce Dayton, who died last fall, was a major arts supporter. (Forum News Service photo by Don Davis)

Looking up to the heavens, Minnesota Gov. Gov. Mark Dayton wonders on Friday, Jan. 15, 2016, what his father would have thought about his funding of arts programs. Bruce Dayton, who died last fall, was a major arts supporter. (Forum News Service photo by Don Davis)

For those who took a long weekend and missed Friday’s announcement:

Minnesota Gov. Mark Dayton knows his $1.4 billion public works project plan cannot happen as proposed.

“It’s like pushing a boulder uphill,” he said Friday in announcing his proposal, one of the largest such requests in history and a big target for Republicans who prefer spending much less.

Knowing the opposition he faces, he began a campaign for the measure saying this is a good time to borrow money, through the state selling bonds.

“Today is the day we talk about investing in the future of Minnesota,” Dayton said.

Even though the figure is among the highest in history, it would fund just 37 percent of the funding requested by state officials and local leaders.

Commissioner Myron Frans of Minnesota Management and Budget said that if the Dayton plan were enacted, it would attract $600 million in federal matching funds.

“If we short shrift these projects and others … we are going to incapacitate Minnesota in the years ahead,” Dayton said.

He said he anticipated Republican opposition, which came moments after his announcement.

“Gov. Dayton’s historically large borrowing proposal should be cut in half before we even begin talking about statewide priorities and specific projects,” Senate Minority Leader David Hann, R-Eden Prairie, said.

After hearing the comment, Democrat Dayton said that was “a good line,” but the governor suggested that Hann and other Republicans look over projects that would not be funded by such a cut.

House Majority Leader Joyce Peppin, R-Rogers, said she was disappointed that Dayton would fund few transportation projects.

“Fixing our state’s roads and bridges is a priority for Minnesotans in all parts of the state, and should be one of the first priorities in any bonding bill,” Peppin said.

Dayton said that transportation issues will come in a debate separate from  his general bonding bill.

Democratic lawmakers said the Dayton plan is a good start.

“The governor’s bill goes a long way toward helping support and revive our state’s aging infrastructure system,” said Sen. LeRoy Stumpf, D-Plummer, who leads the Senate’s public works committee. “Minnesota received around $3.5 billion in bonding requests, and by traveling the state for six weeks this fall it’s clear to me that there is a significant need for investments to maintain critical infrastructure systems like wastewater and safe drinking water, roads and bridges, colleges and universities and so much more.”

A bonding bill requires legislative approval, and since Republicans control the House the Dayton plan is expected to be a tough sell.

Security concerns were high on Dayton’s agenda.

The largest single project Dayton wants is $70 million to improve the St. Peter state hospital security. Staff members have been injured and Dayton said the public’s safety is threatened.

The hospital houses some of the state’s most dangerous mentally ill and sex offender patients.

Another security issue Dayton tries to address is spending $14.5 million on a St. Peter sex offender program and another $12.4 million to construct two new offender treatment centers.

A federal judge has ruled Minnesota no longer may hold sex offenders indefinitely in prison-like hospital wings. He said they need a chance to be released.

Although the judge’s ruling is under appeal, Dayton said it is right to try to move some offenders out of from behind barbed wire.

“There are a lot of things I would rather do,” Dayton said, other than building facilities for sex offenders.

He also deals with the fact that the state prison system is 500 inmates over capacity.

The governor proposes to spend $8.5 million to add room for 135 inmates in two existing facilities. He said new, shorter drug offender sentences and other measures could help fix the problem.

With North Dakota oil flowing through Minnesota on trains and in pipelines, Dayton proposes funds to improve safety in his state.

He calls for spending nearly $70 million to build overpasses or underpasses at railroad-road junctions in Moorhead, Prairie Island Indian Community and Coon Rapids. He proposed them a year ago, but no agreement was reached on transportation funding.

He also wants to spend $5 million to improve warning systems where railroads cross roadways.

A $3.5 million center for training public safety personnel who may deal with oil train or pipeline incidents would be built at the National Guard’s Camp Ripley and a Minneapolis training center would get a $2.5 million expansion.

As usual, colleges and universities would receive a large part of the bonding plan. The Dayton proposal would give them $306 million in state money, mostly for fixing facilities and adding classrooms.

The Dayton administration says that about a third of the money would go to the Twin Cities, a third to greater Minnesota and a third to statewide projects.

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Here is a look at a sample of $1.4 billion in Minnesota public works projects proposed by Gov. Mark Dayton (they need legislative approval and Republicans want a far smaller package):

— $21 million to repair and add to Capitol-area parking facilities, repair state buildings statewide and repair Capitol-area monuments.

— $35 million in loans for farmers who cannot get the money elsewhere.

— $53.8 million for prisons, including adding 135 beds at Willow River and Lino Lakes, fixing and updating buildings and other projects.

— $14 million to finish two Red Lake school projects.

— $21 million for greater Minnesota cities’ utility and street work to support economic development.

— $90 million for improving low-income housing.

— $70 million to fix security issues at the Minnesota Security Hospital in St. Peter, with another $14.5 million to renovate and add to the state sex offender facility there.

— $12.5 million to build two sex offender treatment centers as alternatives to the prison-like setting they now use.

— $20 million to construct and renovate early-childhood facilities.

— $5 million to build a chairlift at Giants Ridge ski area.

— $190 million for the Minnesota State Colleges and University system to repair facilities and renovate classroom space.

— $153 million for the University of Minnesota to repair facilities, build a chemistry building on the Duluth campus and health sciences classrooms in Minneapolis.

— $33 million to repair Department of Natural Resources facilities.

— $10.5 million for dam safety and avoiding floods.

— $3.5 million to develop a walleye fishery at Mille Lacs Lake.

— $220 million for various clean-water projects.

— $33 million to construct a new state emergency operations center, where government agencies work during emergencies such as floods.

— $78.1 million for oil train safety, including improving railroad crossings and building a training center for first responders.

— $40 million to repair transportation facilities.

— $6 million for Bemidji area dental facility.

— $5.3 million for Duluth airport runway work.

— $21 million for Duluth to change its steam heating system to hot water.

— $12.7 million to clean up the St. Louis River estuary and Duluth harbor.

— $16 million to complete Lewis and Clark water project in southwestern Minnesota.

Commissioner Myron Frans of Minnesota Management and Budget explains on Friday, Jan. 15, 2016, some of $1.4 billion in public works funding requests. Gov. Mark Dayton looks on.(Forum News Service photo by Don Davis)

Commissioner Myron Frans of Minnesota Management and Budget explains on Friday, Jan. 15, 2016, some of $1.4 billion in public works funding requests. Gov. Mark Dayton looks on.(Forum News Service photo by Don Davis)

 

Political chatter: Democrats seek to stop rural legislative losses

Minnesota Democrats hope the flip-flopping of state House control continues through one more election.

Democrats mostly dominated the House for years, until Republicans held control from 1999 to 2006. Since then, Democrats controlled two two-year sessions, Republicans won the House back in 2011 before Democrats took it in 2013.

Republicans control the current two-year Legislature after 10 seats flipped in last year’s election, mostly in rural areas.

Many of those rural legislators who lost in 2014 hope to be back on next year’s ballot, saying that Republicans did not fulfil their promise to help greater Minnesota in 2015.

The Hill newspaper branched out from its regular congressional and national political coverage to look at the Democratic-Farmer-Labor Party’s Minnesota Rural Initiative, which has enrolled 30 candidates in training sessions about how to run rural campaigns.

Running a rural campaign is far different than one in an urban area. An urban House district could be as small as 10 square miles, while in rural Minnesota districts can stretch to as big as 3,500 square miles, The Hill tells its heavily Washington, D.C., audience.

Writer Matt L. Barron quotes House Deputy Minority Leader Paul Marquart, D-Dilworth, about a national Democratic report that shows the party lost more than 900 legislative seats countrywide, many in rural districts, during the President Barack Obama years.

“I saw no strategy to turn around the decline of rural America, let alone rural Minnesota,” Marquart said.

Bemidji native Mike Simpkins, who ran Secretary of State Steve Simon’s campaign, added: “(National Democrats) don’t even seem to acknowledge they have a problem.”

Good time for Franken

U.S. Sen. Al Franken was a happy man in recent days.

In an interview, he regularly tossed out the word “bipartisan” when discussing the just-passed education policy reform bill that he watched President Barack Obama sign Thursday. The Minnesota Democrat, who placed several provisions in the bill, said its passage shows that Congress can work.

“I think this means that it is very possible to get things done,” Franken said. “When I look at the provisions that I have in this, which I say are very impressive, if I do say so myself, are very bipartisan.”

He gives some credit for his provision to expand American Indian language immersion programs to his Jewish heritage.

“Hebrew was a dead language until Israel came around,” Franken said, and knowing some of the language helps him in his religion. The same could be true for Indians, he said.

The bill was a big deal to Franken.

“I think it will make it in the memoir, yes,” he said to a question about a book he plans to write, a project that has received quite a bit of national attention.

Franken also took part in a television promotion before the Minnesota-Arizona National Football League game Thursday night, “debating” the teams with U.S. Sen. John McCain, R-Ariz. They both succeeded at being funny, but McCain struggled a bit.

While Franken remained in character, McCain could be seen cracking a smile when he should have looked serious. Of course, Franken carried an advantage into the comedy skit, having earned his stripes as a comedian, especially known for his work on “Saturday Night Live.”

Twin Cities the difference

Minnesota officials love to compare their state to Wisconsin.

The two states used to be equal on many levels, but the Twin Cities area has given Minnesota an economic advantage, Rick Barrett of the Milwaukee Journal Sentinel reports.

Taking his information from a Wisconsin Taxpayers Alliance report, Barrett reports that the Minneapolis-St. Paul area is thriving, driving Minnesota’s economy upward.

About two-thirds of the Minnesota economy is driven by the Twin Cities, while Wisconsin’s economy is fragmented.

“Since 2000, Wisconsin has increased employment faster than Minnesota in only three years: 2004, 2007 and 2008,” Barrett reports. “During 2004-2014, Minnesota’s job growth was more than double Wisconsin’s.”

The story says that while Milwaukee has been a drag on the Wisconsin economy, Twin Cities-driven Minnesota offers a model for other states.

The report echoes comments Commissioner Myron Frans of Minnesota Management and Budget made recently after announcing a big state budget surplus: “Minnesota is a success story. We have a balanced and diverse economy.”

Minnesota’s umbrella big

The Pew Charitable Trusts praise Minnesota for having one of the country’s largest “rainy day” funds, money set aside in case state revenues fall due to a souring economy.

“Minnesota follows the most rigorous process Pew found for determining the ideal level of rainy day fund savings,” a Pew report said, encouraging other states to follow the lead.

When state officials announced Dec. 3 a projected $1.9 billion surplus for the year and a half remaining in the state budget (with a similar-sized budget reserve), a reporter asked Commissioner Myron Frans of Minnesota Management and Budget if the state had enough set aside. He said he would like more than $2 billion sitting in the bank.

“Our ability to respond to changes really is dependent upon how much we have in these reserve accounts,” Frans said shortly after warning that some experts predict an economic downturn.

Updated: Budget surplus grows

Commissioner Myron Frans of Minnesota Management and Budget announces Thursday, Dec. 3, 2015, that the state has a $1.9 billion budget surplus. (Forum News Service photo by Don Davis)

Commissioner Myron Frans of Minnesota Management and Budget announces Thursday, Dec. 3, 2015, that the state has a $1.9 billion budget surplus. (Forum News Service photo by Don Davis)

Minnesota’s budget surplus has ballooned to $1.9 billion, state officials announced Thursday morning.

The surplus, more than double what lawmakers had when they finished work in June, drops to $1.2 billion when $665 million is allocated to reserves and to make payments required by state law.

The money is projected to be available for the current budget, which ends June 30, 2017. The announcement gives state officials an idea about how much they can spend during the 2016 legislative session, which begins March 8.

Minnesota’s two-year budget funded by state taxpayers is $42 billion.

Most of the surplus came from $682 million in additional resources, mostly higher than expected tax collections, and $249 million less spending than had been planned.

Commissioner Myron Frans of Minnesota Management and Budget called the forecast sunny, like weather outside.

“The ship continues on course and we are improving the stability and control of the ship,” Frans said, continuing a marine theme that then-Finance Commissioner Pam Wheelock began years ago when she proclaimed, “We have a boatload of money” during another surplus year.

Gov. Mark Dayton said that when took office five years ago, he faced a $6.2 billion deficit and the state owed schools $2 billion.

For the change, he credited working Minnesotans and he said that “my first rule is to be responsible” with using the surplus.

Dayton said the surplus should be used, in part, for transportation funding, increasing early education spending and to provide $100 million in broadband high-speed Internet help for greater Minnesotans. He also said those in greater Minnesota should receive some property tax relief from the surplus.

Moments after the surplus number was released, Senate Minority Leader David Hann, R-Eden Prairie, gave the GOP’s priority for added money: “We should immediately approve the roads and bridges plan put forward by Republicans in the 2015 session and give the rest of the surplus back to taxpayers.”

He was joined by other GOP leaders in saying that the surplus means Minnesotans were overtaxed.

Republicans agreed with Democrats that more transportation funding is needed, and said they were happy to see the Democratic governor declared a gasoline tax increase was dead. They supported their plan from earlier this year to move money from other programs to transportation.

House Speaker Kurt Daudt, R-Crown, said Republicans would “look at all the proposals on the table” that would provide tax cuts.

The Coalition of Greater Minnesota Cities renewed its regular call for increasing Local Government Aid paid to cities.

“Because the Legislature failed to pass a tax bill last session, LGA is one of the few budget issues still up in the air,” coalition President Robert Broeder, Le Sueur mayor, said Thursday. “Today’s surplus announcement proves that legislators have no excuses – they need to finish this unfinished business and pass a modest increase in LGA funding.”

The coalition wants $45.5 million, to return LGA spending to 2002 levels. Senate Tax Chairman Rod Skoe, D-Clearbrook, said his chamber already has a bill that would do that.

Next year’s session will last less than three months, in part because nearly all of the Capitol building is closed for renovation, so the time to make budget changes may be limited.

Advocates of home and community-based care givers for the elderly and disabled and transportation supporters this week were among the first to announce their desires for more money. Other interest groups are expected to follow, especially in light of the growing surplus.

“Minnesota’s budget outlook has improved from previous estimates despite a weaker economic outlook,” Minnesota Management and Budget reported Thursday.

Exports fell and investments dropped in the wake of lower oil prices, Management and Budget reported. That has lowered the national economic outlook, but it has not reduced the Minnesota budget forecast.

Individual Minnesota income taxes fell $100 million from expectations a year ago, but revenues in sales, corporate and other taxes rose to offset lower income taxes.

While Management and Budget predicts a continued good budget outlook, it warned that budget changes made in next year’s Legislature could affect it.

Reductions in expected spending are driven by lower than planned health-care costs while other spending grew slightly.

A new budget and revenue forecast will come in late February or early March, giving lawmakers and Dayton an updated look at how much they have to spend.

 

‘I think we’re there’ on budget deal

Minnesota Gov. Mark Dayton said on Monday, June 1, 2015, that he and Republican leaders are "very close" to a deal that will allow him to call a special legislative session and resolve outstanding budget issues. (Forum News Service photo by Don Davis)

Minnesota Gov. Mark Dayton said on Monday, June 1, 2015, that he and Republican leaders are “very close” to a deal that will allow him to call a special legislative session and resolve outstanding budget issues. (Forum News Service photo by Don Davis)

A state budget deal is all done except for a few details, the chief negotiators said Monday, making a special session for lawmakers to complete their work possible as early as late this week.

The almost-deal came on the day when nearly 10,000 state workers were told they could be laid off if no budget passes before July 1.

“All of the points that are still outstanding, I would call minor points,” House Speaker Kurt Daudt, R-Crown, said late Monday afternoon. “We are really close right now. … I think we’re there.”

“We are very close…” Gov. Mark Dayton said. “We have agreed on the dollars; we have not agreed on the details.”

Daudt guessed that a formal announcement will come Tuesday.

It was not clear how much time it would take to wrap up details so a special session could be called, but Dayton and Daudt agreed that Thursday or Friday should be targeted.

The governor said that if he did not give in Monday, “I don’t see this changing right up until June 30,” the last day to pass budget legislation before a partial state government shutdown.

The near-deal came when Daudt and Dayton agreed on education legislation: Daudt’s Republicans gave up their wish to eliminate seniority as the primary method of deciding what teachers would get laid off and Dayton gave up the final $25 million he wanted in education spending. Dayton late last week abandoned, for this year, his proposal for state to pay for 4-year-olds to attend school.

The Democratic governor said he is not happy that Republicans would not increase education funding $25 million more. He accepted the GOP plan, but complained that with a $1 billion budget surplus Republicans should be able to pay more for Minnesota children.

“They view it as dollars,” Dayton said. “I view it as kids’ lives.”

Dayton said he compromised on several items so the state could avoid a partial government shutdown. “I’m not going to subject people to that.”

Daudt also was thinking shutdown when he made an offer to Dayton on Monday, recalling state employees who were receiving notices saying they might be laid off July 1 if the governor and lawmakers could not finish writing the state budget.

“We thought today was a good opportunity to show those these folks who might be receiving layoff notices that we do care about them,” Daudt said.

Dayton’s commissioner in charges of state finances, Myron Frans, said Monday that the almost 10,000 layoff notices were being sent out, at a cost of more than $4,000, and state officials will continue to make plans for a possible partial government shutdown.

Dayton signed bills funding five parts of state government, but vetoed three because of individual provisions in each. He vetoed the bills after the regular legislative session ended, necessitating a special session.

Most of the differences that prompted the vetoes have been worked out, Daudt and Dayton said.

Issues remaining to be settled Monday night included:

— The House and Senate need to work on a public works funding bill that likely will include money for disaster relief to help victims of last year’s floods, disaster aid for flooding on Otter Tail County lakes, poultry-testing facilities and final funds for a major state Capitol building renovation. Other items also could be included, such as railroad crossing improvements, Daudt said.

— Daudt said it is doubtful that House Republicans would approve a Dayton demand that a provision allowing private audits of county government books be overturned. The governor signed a bill with the provision late last month, but says he feels strongly that it should be removed from law and the state auditor be the person conducting the audits.

— Red River Valley cities want a 15-year extension to meet clean water standards since North Dakota allows more pollutants than Minnesota. Dayton said that he does not understand how city officials can allow substandard water to flow from their taps.

Minnesota House Speaker Kurt Daudt and House Majority Leader Joyce Peppin say Monday, June 1, 2015, that only details remain before finsihing a deal with Gov. Mark Dayton for a special legislative session to finish the next budget. (Forum News Service photo by Don Davis)

Minnesota House Speaker Kurt Daudt and House Majority Leader Joyce Peppin say Monday, June 1, 2015, that only details remain before finsihing a deal with Gov. Mark Dayton for a special legislative session to finish the next budget. (Forum News Service photo by Don Davis)

With more budget vetoes, session and shutdown preparations begin

Minnesota Gov. Mark Dayton announces on Saturday, May 23, 2015, that he vetoed spending bills for several state agencies. A special legislative session will be needed to finish the state budget. (Forum News Service photo by Don Davis)

Minnesota Gov. Mark Dayton announces on Saturday, May 23, 2015, that he vetoed spending bills for several state agencies. A special legislative session will be needed to finish the state budget. (Forum News Service photo by Don Davis)

Minnesota Gov. Mark Dayton has vetoed legislation funding state programs ranging from education to the parks, setting up a special legislative session and launching preparations for a potential partial government shutdown.

On Saturday, Dayton vetoed spending bills for agriculture, environment, jobs, economic development and energy. He already had rejected an education spending bill, meaning nearly $17.5 billion of the state’s $42 billion, two-year budget that begins July 1 lacks funding.

Talks to pass the rest of the state budget begin Tuesday afternoon when Dayton hosts House Speaker Kurt Daudt, R-Crown.

No one had a prediction about when a deal could be reached and, thus, when a special session could be scheduled. Dayton earlier said he would like one by mid-June.

Dayton said he will insist that lawmakers pass a public works finance measure, known as a bonding bill, and that they OK the “legacy bill” to fund outdoors and arts projects.

The Democratic governor said he will offer a $260 million income tax cut, for one year, as an attempt to get House Republicans to agree to his special session wants. Republicans had proposed to cut taxes $2 billion, but dropped it when they stopped a proposed Democratic gasoline tax increase.

The special session agenda is becoming more complicated and raising questions about how a deal can be done in slightly more than a month when answers to the same questions eluded lawmakers and Dayton the past five months.

If no deal among Dayton and four legislative leaders is reached by June 1, an unlikely goal, 10,288 state workers will receive notices indicating that they could be laid off in a month. On June 15, if no deal is reached, state parks will stop taking camping reservations, Dayton said.

The agencies that would have been funded in the vetoed bills could shut down July 1, short of a court order to remain open, if a special session has not approved money for them.

Commissioner Myron Frans of Minnesota Management and Budget said an “incident team” has been formed to plan for a potential partial shutdown.

Dayton and Frans were not predicting a shutdown but, like in the past when budgets were not passed on time, state officials begin to prepare for one just in case.

The Legislature adjourned Monday night, passing all eight budget bills. Dayton vetoed the education bill as soon as he could because it did not contain as much money as he wanted to pre-kindergarten education.

On Saturday, he tied his proposed tax cut to a $250 million boost in education funding, for his pre-kindergarten plan and to raise per-pupil funding 2 percent each of the next two years.

His new proposal would provide less money than the original one, and there would not be enough money for all schools to participate in the pre-kindergarten program at first.

Dayton said it was “very, very difficult” to veto the agriculture-environment bill because he supports $19 million for farmers dealing with avian flu and establishing specific requirements for buffers around state water.

However, he said that he opposes raiding money from some funds, delaying water quality standards and eliminating the Minnesota Pollution Control Agency Citizen’s Board.

Most of his complaint about the jobs-economic development-energy funding measure was lack of funding for several programs. He specifically mentioned $12 million the bill set aside to expand broadband Internet service in rural areas; he wanted $30 million.

Frans said he has not figured out how much more money Dayton needs to accept the budget bills.

Republicans were not happy with the vetoes.

“The DFL-led Senate and Republican-led House made every effort to accommodate his requests, including his highly publicized land buffer initiative,” House Speaker Kurt Daudt, R-Crown, said.

Lawmakers representing areas where turkey and chicken flocks have been affected by bird flu were especially hot.

“Playing politics with the lives of farmers who have been devastated by the avian flu is simply wrong,” Rep. Dave Baker, R-Willmar, said.

As the session was winding down, Rep. David Bly, D-Northfield, several times tried to get the House to pass avian flu funding to help farmers repopulate flocks and to receive mental help assistance as a stand-alone bill instead of one that wrapped together hundreds of agriculture and environment issues. Republicans opposed him.

House Environment Chairman Denny McNamara, R-Hastings, said the governor’s office did not tell negotiators there were parts of their bill unacceptable to Dayton.

“It seems the governor’s version of compromise is his way or the highway,” McNamara said. “Moving forward from this veto, which blindsided us, will be difficult.”

Besides the two vetoes, Dayton on Saturday signed a bill funding a variety of state agencies. However, before calling a special session, he said that he will insist lawmakers during that session remove a provision in the bill that allows counties to hire private auditors to check their books instead of using the state auditor.

Both chambers of the Legislature passed 80 bills this year, the least since Minnesota became the state.

The year with the second fewest bills was 2002, with 131. It was Gov. Tim Pawlenty’s first term.

Legislators introduced 4,612 bills this year, about an average number.

Among bills Dayton has signed recently:

— Social workers who deal with children will be required to receive more training and undergo background checks. They also must investigate more cases than they do under current law.

— Environment and natural resources programs will receive $46 million from Legislative-Citizen Commission on Minnesota Resources. Some of the money will go to study water, endangered species and biodiversity issues. Other funds are destined for fighting invasive species, reducing erosion and buying park and trail land.

— Uber and Lyft transportation services will be required to carry liability insurance for their drivers.

— Motorists may use electronic devices to provide proof of insurance.

— The state will join a compact that will allow doctors to practice in other states.

— Relatives of someone who died may object to an autopsy based on religious beliefs. There are restrictions.

— Some flame retardant chemicals believed to cause cancer are banned from certain products.

— Law enforcement agencies will be able to keep personal license plate reader data 60 days, longer if it is part of a court case.

One of the environmental provisions Dayton did not support, and led to a veto, would have delayed the requirement to build sewage treatment plants near the Red River until 2025.

Legislators approved the delay because North Dakota and South Dakota allow far greater amounts of some pollutants into the water than does Minnesota. The delay was meant to give officials time to work with the federal government to even out the requirements.

Dayton said that even though the states to the west do allow more pollutants into the Red River, Minnesota has an obligation to keep the water as clean as possible. He said that Canadian officials have been complaining to him about the polluted water flowing north.

North Dakota allows 12 times the federal limit for some pollutants into the water, Dayton said, while Minnesota is closer to three times.

“We’re both in violation of the standards,” Dayton said of rules the federal Environmental Protection Agency sets.

Dayton promised to talk about the issue with North Dakota Gov. Jack Dalrymple and EPA officials to see if the two states could meet the same standards. He said one problem is that Minnesota and North Dakota are in different EPA regions and they enforce federal rules differently.

City officials on the Minnesota side of the Red say they are being forced to spend millions of dollars to build or improve sewage treatment plants, when North Dakota pollution continues to harm the river. Dayton said he needs more information to decide if the state should provide more financial aid to the cities.

In his other Saturday veto, Dayton said one reason he took down the jobs-economic development-energy bill was that he provided no funding for a court case in which Minnesota is trying to limit air pollution from North Dakota electricity-producing plants.

Special session agenda

Dayton said he will insist on these items being addressed in a special legislative session:

— Rewrite and pass an education funding bill.

— Rewrite and pass a spending bill for jobs, economic development and energy.

— Rewrite and pass an agriculture and environment funding bill.

— Overturn a just-passed provision that would allow private auditors to check county books.

— Pass a public works funding bill.

— Pass the “legacy bill” to fund outdoors and arts projects.

— Pass a $250 million one-year income tax cut.

 

Bonding: Dayton for big spending as GOP backs little, if any

Dayton, Frans and bonding map

Dayton, Frans and bonding map

Hallock city officials in northwestern Minnesota want the state to borrow $255,000 to help replace a fire station, $360,000 to replace a swimming pool and $400,000 for sewage system improvements.

In southeast Minnesota’s Red Wing area, requests for state money include $14.8 million for a railroad overpass, $4.5 million for a downtown “renaissance,” $16 million for port improvements, $550,000 for Minnesota State Southeast Technical College repairs and $935,000 for the Minnesota correctional facility in Red Wing.

Minnesota Gov. Mark Dayton on Tuesday said he wants the state to fund those and nearly 180 more projects across the state by selling $842 million in bonds. Republicans and the Senate leader were not on board, but even GOP legislators who have talked against a 2015 bonding bill did not completely rule one out.

Dayton said that his proposal would help Minnesota’s economy by allowing the state to “do what every smart business does, to lay the foundation for a better a better future.”

The Democratic governor said that now is when the state should sell bonds to finance projects with low interest rates. “What better time do we have to make these investments?”

Even Dayton admitted that it is a stretch to think legislators will grant his wish, given Republican reluctance to borrow the money. However, in the hours after Dayton announced his bonding proposal, Republicans gave bonding supporters some hope.

House Speaker Kurt Daudt, R-Crown, said Republicans have no plans to pass a bonding bill this year but didn’t shut the door entirely.

“We are open to listening if the governor thinks some of these projects are timely,” Daudt said. “But we certainly are not planning for one right now.”

Sen. Bill Ingebrigtsen, R-Alexandria, said that he would consider a bonding bill, even if many Republicans want nothing. “I have been here nine years and I have never seen zero yet. This is pretty normal.”

The senator added: “Give it a little time to digest and see what happens.”

Senate Minority Leader David Hann, R-Eden Prairie, said that he fears if a big bonding bill like Dayton wants passes this year, the governor will push another big one next year (Dayton said that if his passes this year, he may propose a $200 million to $250 million one next year).

“I don’t know that we are going to see anything, but if there is (it must be) very, very modest,” Hann said.

Senate Majority Leader Tom Bakk, D-Cook, said he has instructed bonding Chairman LeRoy Stumpf, D-Plummer, to draw up a basic bonding bill that includes statewide needs such as college repairs, but not local projects such as Hallock and Red Wing officials hope to see.

“That is not the real work of this session,” Bakk said about a major bonding bill. “The budget is our priority for this session.”

Rep. Rod Hamilton, R-Mountain Lake, said he was happy to see Dayton included $48 million to complete southwest Minnesota’s Lewis and Clark water system. He said that Lewis and Clark should be in a bonding bill unless lawmakers and Dayton opt to pay cash for it.

Lewis and Clark is the largest single project Dayton put in his plan. The proposal also includes $65 million to build four railroad overpasses or underpasses in Willmar, Prairie Island Indian Community, Moorhead and Coon Rapids, places where trains transporting crude oil travel.

Dayton’s office said that $360 million of the projects would be in greater Minnesota, $321 million in the Twin Cities and $161 million for statewide programs. A quarter of the money would go to education facilities.

Dayton said that his office received $1.9 billion in project requests and many items that he included in his plan could use more money. “We could spend $800 million on rail safety,” Dayton said.

“This bonding bill addresses high-priority needs,” Commissioner Myron Frans of Minnesota Management and budget said.

Dayton said that projects like the Hallock pool and the southwest water system are important: “It makes a lot of difference to the people.”

St. Paul Pioneer Press reporter Doug Belden contributed to this story. The Pioneer Press is a Forum News Service media partner.

 

Updated: Minnesota surplus rises $832 million

Frans

Frans

Minnesota’s real budget debate began today when state finance officials announced a $1.9 billion surplus, an increase of $832 million from a report less than three months ago.

Gov. Mark Dayton said he has been told it is the largest-ever state surplus, but Minnesota Management and Budget officials worked to confirm that this afternoon.

The governor, a Democrat, said that he will propose using the new money for education and transportation programs, along with adding to nursing home funding and providing money to make payments to borrow $850 million for public works projects.

House Speaker Kurt Daudt, R-Crown, appeared to say he wants at least $900 million of tax cuts, as well as increasing spending on some programs such as nursing homes. He was not specific about tax cuts.

“Today’s news is very good news,” Commissioner Myron Frans of Minnesota Management and Budget said in announcing the surplus. “Over the last few years, we have righted the ship.”

Added Dayton: “This surplus comes from more Minnesotans working than any time in Minnesota’s history.”

The surplus did not influence Dayton to reverse his desire for a $6 billion, 10-year transportation plan, funded in a large part by a new gasoline sales tax.

“They are still proposing a huge tax increase on Minnesota families in the form of a gas tax increase,” Daudt said. “I am going to challenge Democrats in the Legislature and the governor to take this off the table.”

Instead of raising taxes, Daudt promised to push a plan to lower them. However, he had no specific proposals.

The surplus will allow lawmakers and the governor to spend more money, use it to cut taxes or increase the state’s reserves — or a combination of them. State legislators and interest groups already have announced desires to increase spending on a variety of programs.

Dayton said that spending for education and transportation “will pay off for Minnesota for years to come,” and it makes sense to spend the money in good economic times because it will not last forever.

Revenues are expected to be $616 million higher than expected in December and spending is predicted to be $115 million less. Other changes add $107 million more to the surplus, Minnesota Management and Budget reported this morning.

Dayton released his first budget proposal Jan. 27, based on an early December budget prediction showing a $1 billion surplus. Now he will tweak that $42 billion, two-year plan about how to spend state tax revenues to reflect today’s refined numbers.

Also, today’s announcement gives legislative leaders information they need to write their own budget plans, which will come out in the next few weeks.

Legislators have until May 18 to write a two-year budget and send to Dayton for his signature.

Today’s report was based on national economic forecasts and altered to fit anything different in the Minnesota economy.

Minnesota’s economy has shown good signs in recent months, including a lower unemployment rate than the national average. It is doing better than rival Wisconsin, which faces a $2 billion budget deficit this year.

After releasing his budget plan on Jan. 27, Dayton told reporters that if more money were available, nursing home funding would be at the top of his list for increased spending.

When state officials announced their budget forecast in December, they said that the $1 billion surplus would be eaten up if inflation were factored in. However, Dayton said that he would expect things such as higher salaries to be handled by his commissioners within existing budgets, not in higher budget requests.

Republicans slap back at commissioner raises

Minnesota House Republicans took a swat at Democratic Gov. Mark Dayton Monday for giving his commissioners what one called “luxurious, gold-plated salaries.”

Rep. Steve Drazkowski’s remarks echoed those of other Republicans who criticized Dayton for giving raises that in some cases are $35,000 a year.

“I don’t think there is a citizen in the state of Minnesota that thought the surplus is going for raises for commissioners,” Rep. Sarah Anderson, R-Plymouth, said about a projected $1 billion surplus in a two-year budget that will top $40 billion.

The criticism came as the House Ways and Means Committee discussed a bill to plug $15 million of holes in three state departments’ budgets.

Ways and Means Chairman Jim Knoblach, R-St. Cloud, said Dayton’s agencies would not have needed to ask for as much money in the budget that ends June 30 had he not given commissioners raises.

Dayton ignited the debate late last week when he sent legislative leaders a letter to let them know about the raises. Pay hikes ranged from $22,407 to $35,000.

The biggest raises sent salaries from $119,997 to $154,992 for some of his two dozen commissioners.

“The raises I approved were to salaries that had remained stagnant for over 12 years and thus were well below the amount paid to people with comparable responsibilities in other states,” Dayton said in a new letter he sent to legislative leaders Monday.

The governor said that he places a high priority on providing Minnesotans with “the very best government services,” and one way to do that is to bring the best-qualified people into the administration.

However, Rep. Greg Davids, R-Preston, said that Dayton’s commissioners are quality people and they accepted the jobs “at the old price.”

Dayton said none of his commissioners asked for higher pay or said they would leave if they did not receive a raise.

The 2013 Legislature, controlled by Democrats, approved a law to allow the governor to set commissioner salaries, but on Monday Rep. Roz Peterson, R-Lakeville, introduced a bill to require the Legislature to approve them.

Monday’s Ways and Means slap at Dayton was a potential preview of what is to come.

The GOP-dominated committee voted to remove $40,000 from three departments contained in a bill seeking appropriations for things not included in the current budget.

Most of the $15 million in the “deficiency bill” would allow the state security hospital in St. Peter, where the most dangerous mentally ill patients are sent, to improve its security in light of recent attacks and a death there.

The bill also would deliver $2 million to four hospitals that geared up to treat any Minnesota Ebola patients. Less than $1 million would go to the state for its Ebola duties.

Also in the bill, due for a full House vote within a week, is more than $1 million for the Minnesota Zoo and $568,000 for the Department of Natural Resources law enforcement arm.

Drazkowski, R-Mazeppa, said the deficiency bill showed mismanagement by the Dayton administration because his agencies could not live within their budgets.

Knoblach complained that the raises came a couple of weeks after Dayton introduced his budget proposal for the next two years. The governor did not mention commissioner raises in his budget plan, Knoblach said.

Commissioner Myron Frans of Minnesota Management and Budget said in an interview that while the raises are retroactive to Jan. 5, when Dayton began his second and final term as governor, decisions about the size of some raises came throughout January, delaying a letter notifying lawmakers about the pay hikes.

“I earn my salary,” said Frans, among those making the top amount of $154,992.

But Rep. Tony Cornish, R-Vernon Center, did not buy the argument about the need for higher pay. “You can’t make this right with any explanation.”

Minnesota taxpayers may file

Minnesota officials say they are ready to accept tax returns again and software companies have updated their products to take into account newly approved state tax breaks.

Revenue Commissioner Myron Frans and Gov. Mark Dayton this morning said work is completed after lawmakers late last month provided tax breaks that will give thousands of Minnesotans lower income tax bills.

The Revenue Department reports that all software companies have been provided updates, but taxpayers using desktop software should update their programs before filing returns. Tax preparers are being told to file returns that have been stacking up while their systems were updated.

Frans said a million taxpayers still need to file. The deadline remains April 15 even though several new tax cuts are available.

For the 1.5 million who have filed, he said that no action is needed. At some point after April 15, the Revenue Department will review all returns to determine if taxpayers are eligible for any of the new tax breaks. The state eventually will notify taxpayers if they are to receive larger refunds.

Ten new tax breaks were provided in the bill signed last month. They range from larger working family credits for families earning up to $40,000 a year to new mortgage insurance premium deductions to higher deductions for teachers who buy their own supplies.

Update: Tax officials suggest many taxpayers wait until April 3 to file

By Don Davis

Minnesotans entitled to share in $49 million of new individual income tax breaks should wait a week and a half to file tax returns, state revenue officials say.

“It will allow them to get their refunds quicker,” Assistant Revenue Commissioner Terri Steenblock said Monday.

If taxpayers who qualify for one of 10 new breaks file returns now, Revenue Commissioner Myron Frans added, it could be months before they get their refunds. If they wait to file until April 3, tax officials expect software and tax preparers to be ready to handle law changes state legislators and Gov. Mark Dayton approved Friday.

April 15 remains the income tax deadline.

On Friday, Frans urged people to wait until Monday to file returns if they might qualify for new tax breaks. On Monday, he and Steenblock said that waiting for everything to be ready is in the best interest of taxpayers and their department.

Steenblock said that even if taxpayers wait until April 3 to file, “we cannot guarantee every software vendor will be able to update their software.”

After April 3, she said, taxpayers filing returns electronically via software that does not include updates from the new law will be notified quickly that their returns were rejected. Returns will not be rejected if filed before April 3, but any refunds due taxpayers could be delayed for months.

Frans said he hopes to have a better idea Thursday about how long his department will need to finish the work reviewing tax returns for missed breaks.

In many cases, Revenue Department employees hope to make changes themselves and increase refunds for those who qualify, without taxpayers taking any further action. In other cases, the department will notify taxpayers they must file an amended return to take advantage of the law.

“This is a very complex task we are undertaking,” Steenblock said.

Steenblock said the Revenue Department is working to change tax forms and instructions and briefing software venders on the changes. Next, she said, internal department processes will be updated, eventually followed by the department reviewing returns already filed to see if taxpayers may qualify for the new tax cuts.

The tax bill lawmakers passed and Dayton signed on Friday set aside $1 million for the department to undertake the job.

While tax cuts overall amounted to $443 million, just $49 million of them affect individual income tax returns being filed now.

“About 1 in 10 taxpayers probably will be able to benefit,” Frans said, meaning that up to 275,000 people will split the $49 million in new tax breaks.

Taxpayers who do not qualify for the new tax breaks can go ahead and file returns now.

Frans said that he expects Minnesotans to have a lot of questions, so his department is increasing the number of operators at its call center: (651) 296-3781 and (800) 652-9094.

Minnesotans will benefit from two tax changes when filing returns next year, Frans said.

A working family credit for people earning up to $40,000 a year was expanded a bit this year, but Frans said that it expands much more next year.

Also, he said, about half of Minnesota taxpayers will benefit next year from a change in how the state treats married couples. The change comes when the state conforms to federal law that gives married couples a tax break.

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New Minnesota tax breaks
Minnesotans may take advantage of 10 newly enacted tax breaks. All are designed to more closely match state tax law with federal law, which results in taxpayer savings.
— Working family credit: New law moves the credit closer to the federal earned income tax credit for families earning $25,000 to $40,000 annually.
— Mortgage insurance deduction: Minnesotans making less than $110,000 a year may deduct mortgage insurance premiums.
— Mortgage debt forgiveness exclusion: Homeowners whose mortgage lenders agreed to accept less than they owed on their homes may exclude the amount of debt the lender forgave.
— Educator expenses deduction: Kindergarten through 12th grade school employees who buy classroom supplies with their own money may deduct up to $250 of the purchases.
— Higher education tuition deduction: Those who paid tuition and fees to a post-secondary school may be able to deduct up to $4,000 if income is below $80,000 for individual returns or $155,000 for joint returns.
— Student loan interest deduction: Students may be able to deduct up to $2,500 of student loan interest if returns show incomes below $75,000 for individual returns or $155,000 for joint returns.
— Education savings account exclusion: Taxpayers with a child in grades K-12 who used distributions from a Coverdell Education Savings Account may exclude those payments from income.
— National Health Corps scholarship exclusion: Taxpayers who received a National Health Service Corps scholarship or Armed Forces Health Professions scholarship and financial aid may be able to exclude those payments from income.
— Employer-provided education, adoption and transit assistance exclusion: Those whose employers provide education, adoption and transit assistance may be able to exclude some of those benefits from income.
— Tax-free individual retirement account exclusion: Taxpayers 70.5 years old and older who donate to charities from their IRAs may exclude up to $100,000 from income.
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More information is available at www.revenue.state.mn.us. Click on orange “tax law changes” button to reach a page with several fact sheets.

 

Qualify for new tax breaks? Wait to file

Frans

By Don Davis
Minnesota revenue officials will not be ready to pay Minnesotans for newly enacted tax breaks until April 3.

Revenue Commissioner Myron Frans today advised Minnesotans who may qualify for one of 10 new individual income tax breaks not to file income tax returns until then. He said that is when tax preparers, software companies and his Revenue Department should be ready.

Taxpayers who do not qualify for the new tax breaks can go ahead and file returns, he added.

“About 1 in 10 taxpayers probably will be able to benefit,” he said, meaning that up to 275,000 people will split the $49 million in new tax breaks.

Minnesotans who already have filed their returns and qualify for one of the new breaks do not need to do anything, Frans said. The Revenue Department will contact them and let them know about their new, and bigger, refunds and whether they need to file an amended return.

However, Frans said, the department does not know how soon employees will be able to comb through returns to find those who are owed bigger refunds.

In many cases, Revenue Department employees hope to make changes themselves and increase refunds. In other cases, the department will notify taxpayers they must file an amended return to take advantage of the law.

“This is a very complex task we are undertaking,” Assistant Revenue Commissioner Terri Steenblock said.

The tax bill lawmakers passed and Gov. Mark Dayton signed Friday set aside $1 million for the department to undertake the job.

Tax returns must be filed by April 15.

New and newly expanded state income tax cuts are:
— Working Family Credit.
— Mortgage insurance deduction.
— Mortgage debt forgiveness.
— Educator expenses deduction.
— Higher education tuition deduction.
— Student loan interest deduction.
— Education savings account exclusion.
— National Health Corps scholarship exclusion.
— Employer-provides education, adoption and transit assistance exclusion.
— Tax-free individual retirement account exclusion.

State advice: Don’t file income tax returns this weekend

Bakk, Dayton

By Don Davis

Minnesotans who have not filed their state income tax returns should wait until next week.

State Revenue Commissioner Myron Frans said that will give tax officials time to provide more specific advice about how a tax-cut bill legislators approved Friday will affect taxpayers. He said Minnesotans who already have filed returns, about half of taxpayers, will be notified if their taxes fall because of the newly minted law.

“If you have not filed your tax return yet, I would advise you to wait until Monday,” he said.

People who have yet to file may want to learn what tax breaks could affect them, Frans said, but warned: “Regardless of the little delay, they have to meet the April 15 deadline.”

He said some returns can be modified by the department with no further action by taxpayers. In other situations, Frans’ department will notify taxpayers who need to file an amended return to take advantage of the tax breaks.

Frans plans to announce more specifics Monday, but on Friday said that taxpayers especially may want to delay filing returns if they may have deductions or credits related to mortgage insurance and education. Up to 16,000 more families who earn up to $45,000 a year also may qualify for an expanded Working Family Credit.

During the weekend, Frans’ department will make adjustments to account for the changes. The Revenue Department also will work with tax preparers and tax software companies to help them make needed changes that they hope will be incorporated by April 1.

The scramble is needed because Minnesota legislators approved $443 million of tax cuts Friday, 10 months after they raised taxes more than $2 billion and less than a month before the tax deadline. Many of the tax breaks, which could affect up to 500,000 Minnesotans, can lower taxes on returns now being filed.

Senators approved the bill 58-5, with the House following 126-2.

Sen. Patricia Torres Ray, D-Minneapolis, said she voted against the bill because she favors more education spending instead of the tax cuts.

The votes came a day after Republican senators delayed debate on the bill, saying they only received the bill an hour before debate was to begin.

Even before the Thursday delay, senators waited two weeks after the House passed its tax bill.

“We took a little bit of time to look at the ramifications so we could make some improvements,” Senate Tax Chairman Rod Skoe, D-Clearbrook, said. “And we did.”

More cuts may be coming. “We are not done yet,” Skoe said, adding that he expects a second tax bill.

Skoe argued against deeper tax cuts now, and in favor of putting more in the state budget reserve, because the last time the state was in good financial condition then-Gov. Jesse Ventura led the charge to send tax rebate checks to Minnesotans. Soon after that, Skoe said, the state began running into financial problems.

The chairman’s provision adds $150 million to the state budget reserve, which Senate Majority Leader Tom Bakk, D-Cook, said is important. He said it “assures fiscal stability for the state going forward.”

The tax bill rewrites some state tax laws to conform to federal law, which would lower thousands of Minnesotans’ income taxes. That will save taxpayers more than $200 million.

Saving businesses more than $200 million are the canceling of business sales taxes approved last year as well as a warehousing tax that was to take effect April 1. The sales taxes included those placed on farm equipment and other commercial repair work and on some on technology sales,.

“I call it a good start,” said Rep. Paul Anderson, R-Starbuck, who like many Republicans wanted more taxes lowered.

Republicans frequently reminded Democrats that they increased taxes more than $2 billion last year, but only want to cut taxes $443 million this year (a figure that grew slightly Friday as last-minute changes were made to the bill).

“It is not often that we get a second chance to recover once we have jumped off the ledge,” Sen. Paul Gazelka, R-Brainerd, said, adding that many mistakes were made last year when business taxes were increased.