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 firstname.lastname@example.org or 651-225-8840.
Below is a statement from CGMC President and Bemidji City Council Member Ron Johnson on the state budget agreement:
“I’m pleased to see that the Governor and legislative leaders have come to a bipartisan agreement on the state budget. As lawmakers continue to hammer out the details, I want to reiterate that there needs to be a $30.5 million increase in Local Government Aid in order for this session to be considered a success for Greater Minnesota. This has been our No. 1 priority since the first day of the session and we will continue to lean on our legislators to make it a reality.
“Gov. Walz campaigned on increasing Local Government Aid and leaders in the House have been vocal in their support for boosting the program. As we move into a special session, it is vital that they continue to fight for communities throughout the state and pass a $30.5 million LGA increase this year.”
Negotiations at the Capitol may be going at a snail’s pace (see next article for an update). In fact, with just days remaining in the legislative session, it is more important than ever that city officials speak up on key CGMC legislative issues like Local Government Aid (LGA), child care, clean water infrastructure and transportation.
Earlier this week, we issued an Action Alert in which we encouraged all CGMC members to contact Governor Tim Walz, Senate Majority Leader Paul Gazelka (R-Nisswa), House Speaker Melissa Hortman (DFL-Brooklyn Park) and your own legislators and urge them pass a $30.5 million LGA increase this year. This remains the CGMC’s top legislative priority. While the CGMC lobbying team has been persistent in advocating for an LGA increase, it is vital that lawmakers continue to hear from you about the importance of LGA and its impact on the strength and vitality of your city.
Also earlier this week, our economic development-focused sister organization the Greater Minnesota Partnership (GMNP) issued its own Action Alert regarding the need to pass legislation to help address the child care shortage. Specifically, the CGMC and GMNP are advocating for two legislative initiatives that aim to increase child care capacity in Greater Minnesota: we are seeking $10 million in bonding for grants to help build or expand child care facilities and $2 million to be divided between the six Minnesota Initiative Foundations for child care business assistance and provider training.
If you have not yet responded to these Action Alerts, please do so ASAP. Session ends May 20, so there is no time to waste.
Coalition of Greater Minnesota Cities
Contact: Julie Liew
As cities across Minnesota face billions of dollars in wastewater infrastructure costs, rural communities simply cannot afford to upgrade or rebuild aging facilities without additional financial assistance from the state
Who: Kelly Rasche, Lakefield city clerk; Chad Adams, Albert Lea city manager; Mark Larson, Glencoe city administrator; Bradley Peterson, CGMC executive director, and other Greater Minnesota city leaders
What: Press conference about the need for a bonding bill that addresses wastewater infrastructure costs in Greater Minnesota
When: 1:30 p.m., Wednesday, April 11, 2018
Where: Press Conference Room B971, Minnesota State Capitol
Things are starting to heat up at the Legislature, but lawmakers are still far from reaching agreements on top Greater Minnesota issues like LGA, bonding, transportation, workforce housing and broadband. It’s become apparent that we need to make an extra push in the last few weeks of session to demand that legislators take action to address the needs and concerns of Greater Minnesota communities. To relay this message, we are asking all Greater Minnesota city officials and community leaders to join us for a special CGMC Lobby Day on Wednesday, May 11.
What: CGMC Lobby Day
Who: Elected officials, city staff and other community leaders from across Greater Minnesota
When: 10 a.m.-4 p.m. on Wednesday, May 11
Where: Office of Flaherty & Hood, P.A. (525 Park St., Suite 470, St. Paul) and lobbying at the Senate Office Building and State Office Building
If you have any questions about the May 11 Lobby Day, contact Julie Liew at email@example.com or 651-259-1917.
Register today for the Coalition of Greater Minnesota Cities’ Legislative Action Day 2016! This year’s event will be held Wednesday, March 16. It will kick off with a brief legislative update in the morning, followed by lunch featuring speaker Senate Majority Leader Tom Bakk (House Speaker Kurt Daudt has also been been invited) at the Flaherty & Hood office in St. Paul. Members will then spend the afternoon meeting with their legislators at the House and Senate offices (members should make their own appointments for meetings with legislators between 1 p.m. and 5 p.m. that day). The daylong event concludes with a legislative reception and dinner at Mancini’s Char House & Lounge that evening.
Legislative Action Day is always a great opportunity to build connections between local officials and legislators and advocate for the priorities of Greater Minnesota cities. To RSVP, please fill out this registration form and email it to RSVP@flaherty-hood.com or mail it to the listed address. Please RSVP by March 2.
Below is a guest column by Owatonna Mayor Thomas Kuntz and Glencoe Mayor Randy Wilson, both of whom serve on the CGMC Board of Directors. As of Dec. 10, the column has appeared in the Rochester Post-Bulletin, Brainerd Dispatch, Faribault Daily News, Northfield News, Owatonna People’s Press, Marshall Independent, Winona Daily News and the Worthington Daily Globe.
Republican Mayors: House Republicans need to reverse course and support LGA
By Thomas Kuntz and Randy Wilson
As 2015 winds down and we prepare to welcome a new year and a new legislative session, the time has come for us to speak out. As mayors of cities in Greater Minnesota—and as Republicans—we have waited more than a year for the new House Republican majority to show leadership on a key issue affecting communities across Greater Minnesota: Local Government Aid (LGA).
However, the only message House Republicans have sent on LGA has been far from a positive one. Last spring, the House—with support from every rural Republican—passed a tax bill that would reduce funding for the LGA program by $84 million. This is in stark contrast to the Senate’s version of the tax bill, which includes a $45.5 million increase in LGA funding—the amount needed to get the LGA program back to its 2002 benchmark level.
Minnesota had a nearly $2 billion surplus last session (and it was recently announced that the current surplus remains just as high), which makes it all the more unbelievable that House Republicans voted to cut funding for a program that is the cornerstone of many Greater Minnesota cities. The House Republicans’ stance is wrong for LGA and wrong for Minnesota.
We thought the days of LGA being a political football were behind us. As rural mayors and Republicans ourselves, we can’t fathom why the House would threaten the LGA program like this. LGA helps cities pay for essential services like police and fire protection and street repairs, as well as important quality-of-life amenities like parks and libraries. For many Greater Minnesota cities, LGA is the difference between being a thriving attractive community and being a hollowed out ghost town.
While cutting $84 million out of the LGA program when Minnesota has a significant budget surplus is unjustifiable in its own right, the House’s method of doing so is downright dangerous to the future of the entire program.
The proposed $84 million in cuts are targeted solely at the “first class” cities of Minneapolis, St. Paul and Duluth. The House GOP’s argument for the cuts is that LGA “was never intended” for Minneapolis and St. Paul, that they get “too much” LGA and that they don’t need it because of their large tax bases.
These arguments are completely unfounded. The original 1971 statute on LGA specifically refers to how Minneapolis and St. Paul’s share of aid is calculated. Since the beginning of the program, Minneapolis, St. Paul and Duluth have received a fair share of LGA funding under a formula that is based on a city’s need and tax base. In fact, the percentage share of LGA going to those cities has actually decreased in recent years.
You may be wondering why two mayors from Greater Minnesota are defending Minneapolis and St. Paul. Shouldn’t we be happy that the House is going after the giants rather than us little guys? The fact is that if successful, the House’s attack on LGA severely undermines a program that is vital to many Greater Minnesota communities. If the House GOP succeeds in cutting LGA from the first-class cities, what’s to stop our cities from being on the chopping block next?
We are given hope by the fact that there is still time for the House Republicans to change direction on LGA. They have six months, from now until the end of the legislative session, to show their support for Minnesota cities and the families and businesses who reside in them. It’s time for legislators who say they support LGA and Greater Minnesota communities to start showing it.
State officials announced today that Minnesota’s budget surplus has increased to nearly $1.9 million, up almost $900 million from the previous budget report released a few months ago. You can read more about the surplus and lawmakers’ response in this article from Forum Communications.
In response to the surplus announcement, CGMC President and Ely City Councilor Heidi Omerza released the following statement to the media this afternoon (click here for a PDF version):
“Today’s announcement that the state’s economic recovery has produced a nearly $2 billion surplus is good news for Minnesota. It is important that our lawmakers take this opportunity to position our entire state for continued growth and long-term stability by making strategic investments in local government aid, broadband expansion, workforce housing, job training and other critical needs for Greater Minnesota.
Communities, families and businesses in all parts of the state will be able to reap the benefits of an even stronger economy if lawmakers seize this opportunity to make smart investments in key areas.”
Registration is now open for the CGMC Fall Conference! To register, please fill out this registration form and submit it electronically or mail it to the listed address. (Note: If you have trouble opening the interactive form on your computer, please choose the option to “open with a different viewer.”)
We have a great program lined up! Since it will be just days after the election, the event will kick off with an election re-cap in which we will explore the results from a Greater Minnesota perspective. That session will be followed by a transportation panel discussion featuring legislators who are leaders on the issue. Later in the afternoon, policy expert and former gubernatorial candidate Tom Horner will discuss his study titled “Finding the Voice for Rural Minnesota,” which explores Greater Minnesota’s role and influence in the state’s decision-making process. That evening, attendees will join members of the League of Minnesota Cities-Metro Region group for a social hour reception, followed by a dinner featuring veteran WCCO Political Reporter Pat Kessler as the keynote speaker. Kessler will share his insight and observations from his 30 years of experience covering Minnesota politics, as well as provide advice on how interest groups like the CGMC can stay relevant and be effective in shaping public policy.
On Friday morning, the CGMC will hold a membership meeting in which members will review and vote on the CGMC’s 2015 policy positions, as well as receive updates on the recent legal challenge to MPCA water quality standards and other CGMC initiatives.
The CGMC has reserved a block of rooms at the Ramada Plaza for $105 (plus tax). The rate is guaranteed until Oct. 30. Attendees are responsible for making their own hotel reservations. Call the Ramada Plaza at 612-331-1900 to make reservations.