After blowing past their own self-imposed deadlines, Governor Walz and legislative leaders House Speaker Melissa Hortman and Senate Majority Leader Paul Gazelka finally reached an agreement on the state budget Sunday evening. See their signed agreement.
Although Monday was the final day of the regular session — per the State Constitution — a special session will be required for the Legislature to complete its work and pass bills. Governor Walz and legislative leaders have indicated preference for a one-day special session to be held this Thursday, but the exact timing and duration of the special session are still up in the air.
As all three stated during their joint press conference Sunday evening, the agreement reflects a compromise on all sides with no clear “winner.” The two major sticking points in negotiations were the gas tax (Governor and House wanted a 20 cent increase; Senate wanted no increase) and health care provider tax (Governor and House wanted to extend the 2% provider tax set to sunset this year; Senate wanted to eliminate it). Ultimately, the final agreement included no gas tax increase and a 1.8% provider tax with no sunset.
While there is an agreement on the broad budget numbers, the various conference committees were tasked with hammering out the details by 5 p.m. Monday. Reportedly most of them failed to meet that deadline. There is talk that now the bills will be pulled out of conference committee and the final details will be decided between Governor Walz, legislative leaders and the respective committee chairs.
What does it all mean for Local Government Aid (LGA)?
The prospects for an LGA increase — which, if there is one, will be included in the tax bill — are still up in the air.
The tax bill agreement includes only three specific items: a reduction in the second-tier individual income tax rate from 7.2 percent to 6.8 percent, $20 million for the Minneapolis Employees Retirement Fund and a $50 million reduction in the state general levy, which is a statewide property tax that primarily applies to commercial-industrial property. All other issues were left up the conference committee to decide.
The tax bill was given a $0 target, which means that any increase in tax revenues must be matched by an equivalent reduction in revenues or increase in tax aids and credits (e.g. LGA). Federal conformity, Minnesota’s response to the 2017 federal tax overhaul, will play a significant role in shaping what a final tax bill looks like as the plans put forth by Governor Walz, the House DFL and the Senate GOP all generate additional revenue that could be used to pay for other priorities within the tax bill, such as increases to LGA or an expansion of the Working Family Credit.
After the budget agreement was announced Sunday night, we quickly sent out a news release from CGMC President Ron Johnson reiterating that Greater Minnesota communities are counting on the Legislature to pass a $30.5 million LGA increase this year. The CGMC also sent a letter from Ron to all Greater Minnesota legislators arguing that an LGA increase is necessary to provide balance to the tax bill, because 73 percent of the property tax relief provided by cutting the state general levy will go to property located in the metro.
What about a bonding bill?
Governor Walz and the legislative leaders have agreed to a $500 million bonding bill, which includes $440 million in general obligation bonds and $60 million in housing infrastructure bonds. However, the details of what will actually be included in said bonding bill have yet to be determined. From the CGMC perspective, we are hopeful for dollars for clean water infrastructure (PFA $$$), the Greater Minnesota Business Development Infrastructure grant program and child care facilities grants. Several of our member cities also have important projects vying for funding.
It is important to note that unlike other bills, the bonding bill requires a supermajority to pass. That means that it will not pass in either the House or Senate unless some legislators in both chambers vote across party lines. In comments made to reporters following announcement of the budget deal, House Minority Leader Kurt Daudt threw some cold water on the idea of any House Republicans voting for a bonding bill. However, it is quite possible that some House Republicans may choose to break from their party in order to get funding for important projects in their districts.
And CGMC’s child care proposals?
At this point there is no news to report on our two child care priorities: funding for the Minnesota Initiative Foundations (MIFs) for provider training & business assistance and bonding money to build or expand child care facilities. The MIFs proposal is still being considered as part of the omnibus jobs bill, and child care facilities grants are part of the ongoing bonding bill discussions.
Any hope for transportation?
The gas tax was one of Governor Walz’s highest profile proposals this session. He talked about the need for new transportation revenues on the campaign trail and reiterated that commitment the day after his election as governor. This session’s House transportation bill was particularly promising for CGMC priorities. It included new funding for Corridors of Commerce, significant new funding for MSA cities, and a permanent, dedicated funding stream for small cities. When the final budget deal was reached, however, all of those priorities ended up on the cutting room floor.
For cities with populations greater than 5,000, the status quo will hold. With no additional funding coming into the transportation formula, larger cities will not see increases through the municipal state aid formula.
For small cities, the jury is still out, but the path forward is difficult. Without significant new funding for transportation and a relatively small general fund target for transportation, it is difficult to see how the House and Senate come up with a compromise plan that isn’t an abject failure for small-city street funding.
Further, without new funding in the transportation system, significant investments in Corridors of Commerce may not be possible this session. Since it appears that a comprehensive transportation package is now off the table for this year, the CGMC will shift in its focus in the upcoming special session to maintaining the $25 million/year base appropriation for Corridors of Commerce, which the Senate has proposed eliminating. While the Corridors of Commerce program is not perfect and could use some tweaks in the way it scores projects for funding consideration, it remains one of the few mechanisms for funding critical highway projects in Greater Minnesota.
How will the special session play out?
The legislative leaders have hinted at holding a one-day special session on Thursday. Accomplishing that in one day would require suspending the normal procedural rules in each chamber which require action on a bill take place over multiple days. A vote to suspend the rules requires a three-fifths majority, which would require six GOP votes in the House. The House GOP caucus has threatened to vote against such a motion. Failure to suspend the rules means a special session could take several days to finish.
It’s important to note that while there is a global agreement between the Governor, Speaker Hortman and Sen. Gazelka, there are still 199 other legislators to consider — some of whom may not be happy with the terms that were agreed upon or the “cone of silence” that surrounded the negotiations. So while there are just hours until today’s midnight deadline for the regular legislative session, the Legislature’s work remains far from over.
As the special session plays out, CGMC staff will be busy following all the action at the Capitol and continuing to advocate for Greater Minnesota priorities.
If you have any questions, please contact CGMC Executive Director Bradley Peterson at email@example.com or 651-225-8840.
With just less than three weeks left in the legislative session, it is vital that we work together to keep legislators focused on Greater Minnesota priorities such as Local Government Aid (LGA), child care, clean water infrastructure and transportation. To help advocate for these and other issues, we encourage all Greater Minnesota city leaders to join us for an End-of-Session Lobby Day & Ice Cream Social on Wednesday, May 8.
The event is FREE to attend, but please RSVP by sending an email to Meghan at RSVP@flaherty-hood.com (include your name, city and position/title).
We hope to get as many city officials to attend as possible! Share this Lobby Day Flyer and encourage other city officials and staff to join us.
Parking Info – Attendees may park for free in the lot located at 525 Park Street in St. Paul, just a block from the Capitol. However, a parking permit is required. Please print this parking permit in color, write in the event date (May 8) and place it on your dashboard.
If you have any questions, please contact Julie Liew at firstname.lastname@example.org.
With the Legislature currently on hiatus for the Easter/Passover break, CGMC staff members hit the road this week to meet with editors and reporters in Greater Minnesota to provide an update on our legislative priorities and discuss our hopes heading into the final month of the legislative session. Stops included the newspapers in Hutchinson, Willmar, St. Cloud, Fargo/Moorhead, Fergus Falls and Alexandria. (Here’s an article about our visit to the Fergus Falls Daily Journal.)
At the meetings, we shared this mid-session progress chart, which shows where the Governor, House and Senate each stand on the CGMC’s top priorities including Local Government Aid (LGA), child care, transportation and clean water infrastructure. As this end-of-session handout indicates, we also reiterated that we are calling on the Governor and legislative leaders to work together over the next few weeks to do more than simply pass a “lights on” state budget. We emphasized that in order the 2019 legislative session to be considered a success for Greater Minnesota, the Legislature and Governor must:
- Pass a tax bill that includes a $30.5 million increase in LGA.
- Pass a bonding bill that includes $67 million for Public Facilities Authority clean water grant and loan programs, as well as funding for child care facilities, the BDPI program and other infrastructure investments.
- Pass a comprehensive transportation bill that raises new revenues and provides funding for city streets and the Corridors of Commerce program.
We would like to extend a special thank-you to the local city officials who joined us for some of the media visits: Willmar City Councilor Audrey Nelsen, St. Joseph Mayor Rick Schultz, Moorhead City Manager Chris Volkers and Alexandria City Administrator Marty Schultz.
Although this year’s legislative session is five months long, it’s no secret that the final two weeks of session are especially critical. This is when negotiations really heat up and final decisions are made. As we countdown to the Legislature’s May 20 deadline, it is vital that that you continue to speak up about important CGMC issues such as Local Government Aid, wastewater infrastructure, child care and transportation. To help keep legislators’ attention focused on our top priorities, we invite all Greater Minnesota city leaders to join us for an End-of-Session Lobby Day & Ice Cream Social on Wednesday, May 8.
The tentative schedule for the day is as follows:
- 10:30 a.m. – Legislative update and messaging (Room 500 North in the State Office Building, located across the street from the State Capitol)
- Lunch on your own
- Afternoon – Meetings with legislators (attendees should make appointments with their own legislators; we may also ask some attendees to participate in additional meetings with key legislators)
- 2-3 p.m. – Ice cream social with legislators and legislative staff (L’etoile du Nord Vault Room in the Basement of the State Capitol)
Lobby Day is FREE to attend, but we ask that you register by sending an email to Meghan at RSVP@flaherty-hood.com (please include your name, city and position/title).
We hope to get as many city officials to attend as possible! Please share this Lobby Day Flyer and encourage other city officials and staff to join us.
If you have any questions, please contact Julie Liew at email@example.com or 651-259-1917.
Gov. Tim Walz unveiled a $1.27 billion bonding proposal this week. The package of capital improvements includes $350 million for transportation, $300 million for projects at the University of Minnesota and Minnesota State, and $150 million for housing. You can read the full list of proposed projects here.
While various CGMC priorities receive funding in the proposal — including the Greater Minnesota Business Development Public Infrastructure (BDPI) Grant Program, wastewater infrastructure programs, and grants to local governments for road and bridge improvements — many of the proposals fall short of what is needed to address the various infrastructure challenges in Greater Minnesota.
The Governor proposed $67 million for Public Facilities Authority (PFA) programs: $40 million for the Water Infrastructure Fund, $22 million for Point Source Implementation Grants, and $5 million for the Clean Water and Drinking Water Revolving Funds. In making this proposal, the Governor has assumed that the $59 million in PFA funding which was included in last year’s bonding bill but is currently tied up in a lawsuit will be resolved before this bill moves forward. The CGMC is advocating for legislation that would provide $128 million in funding for the PFA water programs. If the Legislature is able to resolve the dispute over the money that is being held up from last year’s bonding bill, then the Governor’s PFA proposal is only $2 million less than the CGMC’s request.
The Governor’s bonding proposal of $3 million for BDPI would likely not be enough to fund the program through FY2021 due to the program’s popularity and high demand for the funds. In order to ensure cities can continue to access this successful program, the CGMC is seeking $20 million in BDPI funding.
Gov. Walz’s bonding plan also includes $100 million each for the Local Bridge Replacement Program and the Local Road Improvement Program. While this funding could help cities in Greater Minnesota address critical transportation infrastructure needs, these two programs have often been used to earmark projects in the metro area, leaving little for communities outside the Twin Cities.
Following the release of the Governor’s bonding proposal, Senate Capital Investment Committee Chair Dave Senjem (R-Rochester), who has not held a committee meeting this session, said if the Senate were to pursue a bonding bill at all, it would be closer to the $265 million amount included in the state’s November budget forecast. In the House, Speaker Melissa Hortman (DFL-Brooklyn Park) commented that she would prefer a $3 billion bonding bill, but will put a proposal together closer to half that.
Gov. Walz has talked openly about his intention to propose a comprehensive transportation package that includes a gas tax increase, tab fee increase and other new revenues for transportation. His administration made good on those promises in Tuesday’s budget release by proposing a package that would result in a net increase in funding by more than $8.5 billion over the next 10 years from a variety of sources. The proposal would undo past statutory dedications of general fund revenues to transportation and replaces them with constitutionally dedicated funding sources.
Here are the major highlights, courtesy of MnDOT:
- Initiates a 20-cent gas tax increase (phased-in over two years) and indexing the gas tax to inflation (beginning in FY 2023) to raise approximately $6.5 billion over 10 years
- Increases the registration tax (increased tax rate from 1.25 percent to 1.5 percent and base tax fee from $10 to $45; change the depreciation schedule) to raise approximately $4 billion over 10 years
- Increases the motor vehicle sales tax from 6.5 percent to 6.875 percent to raise approximately $300 million for roads and bridges over 10 years, with additional funds raised for transit purposes
- Authorizes $2 billion in trunk highway bonds over eight years starting in 2022
- Proposes an increase to the Working Family Credit of $100 for each single or head of household recipient and $200 for each married filing jointly recipient to offset gas tax increases for low-income Minnesotans
More information can be found at dot.state.mn.us/transportationfunding/.
What the Walz plan means for city streets
The large increase in revenues flowing through the constitutionally dedicated system will have immediate benefits for Municipal State Aid (MSA) cities—those with a population over 5,000. Cities over 5,000 can find what the budget proposal would mean for them by clicking HERE.
For cities under 5,000, the answer is a little more nuanced. The bill does not currently include funding for the Small Cities Assistance Program, but the administration has communicated to us that they would like to work actively with the Legislature and stakeholders to find a sustainable, dedicated funding source for all cities. The primary reason small cities don’t appear in this proposal is that the Walz Administration chose to avoid putting general fund dollars toward transportation purposes, opting to rely on existing dedicated sources instead. There is not currently a constitutionally dedicated source for small city streets.
What the Walz plan means for highway expansions
While the Walz plan does not mention Corridors of Commerce by name, the total transportation funding package would fund the state’s transportation system at a level that would allow for expansion projects to be addressed in MnDOT’s regular program, not a special program like Corridors. In fact, shortly after the budget release, MnDOT released a list of projects—including some expansion projects—that the agency would intend to add to its 10-year construction plans if this full package is adopted. You can find that project list HERE.
If you have any questions about the Governor’s transportation plan and how it could impact Greater Minnesota communities, please contact CGMC transportation lobbyist Shane Zahrt at firstname.lastname@example.org.
Below is a statement from CGMC President and Bemidji City Council Member Ron Johnson on Governor Tim Walz’s budget proposal:
“The Governor’s budget proposal makes key investments that will go a long way toward strengthening Greater Minnesota communities.
“City leaders have long been seeking to bring the LGA program back up to its 2002 high-water mark, and the Governor’s proposal would finally get us there. We’re grateful that Gov. Walz recognizes the vital role LGA plays in making sure that all Minnesota communities can continue to provide the same great opportunities to work, raise a family and start a business. We’re hopeful the Legislature will follow the Governor’s lead to restore funding for this critical program.
“I also want to thank the Governor for acknowledging other important issues that impact Greater Minnesota. Not a day goes by when I don’t hear from a constituent about the need for better roads, so it’s encouraging that Gov. Walz is exploring ways to put additional revenue into our state transportation system. Child care is another issue that in recent years has emerged as one of the top impediments to economic growth in rural communities. I’m glad to see that the Governor’s budget plan includes funding to help address this need.
“I look forward to joining other city officials to work with Gov. Walz, legislative leaders and our local legislators to make sure that Greater Minnesota’s priorities continue to be a major focal point of discussions and are hopefully included the final budget.”
Although many people understandably canceled their registrations due to the subzero temperatures and icy road conditions, more than 50 city leaders from across the state still made the trek to St. Paul for Legislative Action Day on Wednesday. Thank you to everyone who helped make our annual “day at the Capitol” a success!
The day kicked off with a welcome from CGMC President and Bemidji City Councilor Ron Johnson and a legislative update from CGMC Executive Director Bradley Peterson, followed by presentations on our top issues (LGA, water infrastructure, child care, the Greater Minnesota Business Development Public Infrastructure Grant Program and transportation) by CGMC staff.
After the crowd enjoyed lunch and listened to Gov. Walz’s speech, they spent the rest of the afternoon meeting with legislators. Although much of the state was shut down due to the weather, offices at the State Capitol remained open. The cancellation of most of the legislative committee hearings that day ended up working out in our favor as CGMC members were able to get more time than usual to talk to their legislators about important issues. A copy of the lobbying packet that was given to CGMC members and shared with legislators can be found here.
As is CGMC tradition, the day was capped off with a legislative reception and dinner at Mancini’s, where a bipartisan mix of more than 70 legislators representing both rural and urban districts mingled with CGMC members over a meal of steak or walleye.
You can see more photos from Legislative Action Day here.
Thank you to everyone who attended the CGMC Fall Conference last week at Arrowwood Resort & Conference Center. More than 100 city leaders representing 50 cities attended the conference — setting an attendance record for the second straight year!
The conference kicked off Thursday afternoon with a presentation by Minnesota Management and Budget Commissioner Myron Frans, who shared insights into his past eight years as a member of Gov. Dayton’s administration and the ups and downs our state budget faced during that time. He also provided information on the state’s current economic outlook and what could be in store for the budget in the near future. You can read Frans’ presentation here.
Following Frans’ presentation, we delved into a panel discussion on the rural/urban divide and the role city leaders can play in helping to bridge the gaps between the various and diverse communities in Minnesota. Panelists included Ben Schierer, mayor of Fergus Falls; Suzanne Hilgert, mayor of Olivia; Peter Lindstrom, mayor of Falcon Heights, and Brad Tabke, former mayor of Shakopee and a newly elected state representative. The panelists shared examples of ways they have learned from leaders in other parts of the state and discussed the issues in which they wish there was better understanding between rural and urban communities. Conference attendees also participated in small group discussions where they brainstormed ideas on steps they can take within their cities to help bridge the rural/urban divide.
With the conference being held just a little over a week after the midterm elections, it would not have been complete with a good ‘ole CGMC election recap. CGMC Executive Director Bradley Peterson provided in-depth analysis of the 2018 election results — particularly the race for governor and the Minnesota House — and what they could mean for CGMC priorities and other issues in the upcoming legislative session. You can read Bradley’s presentation here.
After the election analysis, we welcomed several legislators for a panel discussion on one of the most critical issues currently impacting Greater Minnesota: the child care shortage. Nicole Griensewic Mickelson, executive director of Region Nine Development Commission and president of the Greater Minnesota Partnership, moderated the discussion featuring Sen. Kent Eken (DFL-Twin Valley), Sen. Mark Johnson (R-East Grand Forks), Sen. Erik Simonson (DFL-Duluth) and Rep. Joe Schomacker (R-Luverne). You can watch video of the discussion here.
Annexation is another important topic explored at the conference. CGMC lobbyist Elizabeth Wefel informed attendees about some looming concerns, particularly the possibility that the CGMC and cities may need to play defense on legislation being proposed by township groups that could thwart cities’ ability to pursue annexations. You can read Elizabeth’s Power Point presentation here.
In the evening, attendees enjoyed a cocktail reception and dinner followed by an excellent presentation by Emmy-award winning reporter Tom Hauser of ABC 5 Eyewitness News. A veteran political reporter, Hauser shared his take on the national and state election results and some of the issues that could be on the horizon in the future.
Friday morning kicked off with a presentation/discussion led by Brandon Fitzsimmons, a labor and employment attorney with Flaherty & Hood, on how to effectively evaluate the performance of city administrators and managers. Waite Park City Administrator Shaunna Johnson and Mayor Rick Miller shared their stories on this issue and provided advice on how to help performance evaluations run smoothly. You can read Brandon’s Power Point presentation here.
In addition to speakers and presentations, the conference also included a membership meeting Friday morning during which members discussed and adopted the CGMC’s 2019 legislative policy positions. To review the adopted positions, click on the following subject areas:
Members also discussed the CGMC’s legislative priorities for 2019 and learned about our initial messaging and strategy plans for the upcoming legislative session.
Thanks again to everyone who attended our 2018 Fall Conference. We look forward to seeing you again at our next CGMC event – Legislative Action Day on Jan. 30 in St. Paul. We will send out registration information for Legislative Action Day soon!
The American Society of Civil Engineers (ASCE) released a report card on Minnesota’s infrastructure this week, and it’s not one we’ll want to take home and display on the refrigerator. Overall, Minnesota’s infrastructure received a “C” grade from the group, with grades in the nine individual categories ranging from a “B” in aviation to a lowly “D+” in roads.
When comes to our roads, CGMC In Brief readers are familiar with the surprising statistic that despite ranking 22nd in population and 12th in land mass, Minnesota is home to the fifth-most road miles of any state. Maintaining that large of a system is a huge challenge, the ASCE notes, and Minnesota’s funding shortfall continues to grow with no clear or easy answers in sight.
Other grades in the report included a “C” in wastewater and “C-“ in drinking water, which further highlights one of the CGMC’s top goals in recent years — the need for more state investment in clean water infrastructure.
You can see all of the grades and the full report card here.