Commerce

A commerce budget was passed as part of the Jobs, Energy, and Commerce bill. The bill was relatively small, containing a flat spending target and minor policy provisions, including (SF 1456):

Auto Theft Prevention Account

The auto theft prevention account was redirected to the insurance fraud prevention account. The auto theft prevention account is a special revenue account from the 50-cent surcharge collected by auto insurers on all vehicles with comprehensive insurance coverage every six months. The account is used to fund Minnesota’s Auto Theft Prevention Program to reduce auto theft in the state and provide grants for local law enforcement auto theft reduction projects. Under the bill, part of the revenue transfer must be used for compensation for two new employees, who may not be peace officers, in the Commerce Fraud Bureau to perform analytical duties.

Of the revenue currently collected in the auto theft account, $1.3 million each year must be transferred to the general fund. The bill redirects the $1.3 million from the general fund, and instead, transfers the funds to the insurance fraud prevention account. The transfer to the general fund was a Pawlenty-era budget transfer, and there have been several attempts in recent years to return the funds to the insurance fraud prevention account.


Sunday Sales

The Governor signed a bill into law to allow liquor stores to be open on Sundays from 11 a.m. to 6 p.m. The new law will go into effect this summer on July 1. Many senators heard from constituents that they want the option to purchase off-sale liquor on Sundays. Legislators have attempted to remove the ban on Sunday liquor sales over the course of the last several sessions. This year is the first year that the Legislature has heard the issue as a stand-alone bill rather than as an amendment on the Senate floor.

Prior to the passage of this bill, Minnesota was one of 12 states to prohibit the sale of liquor on Sundays. Supporters of Sunday sales argued that the law was outdated and limited the ability of Minnesota businesses to compete with neighboring states on the sale of Sunday spirits. Sixty percent of Minnesotans live within 30 miles of the border, and supporters of the bill were concerned with Minnesota tax dollars going to neighboring states.

Opponents of the bill argued that family-owned and municipal liquor stores will not necessarily generate any more profits by staying open on Sundays. Rather, small stores would have to compensate for the increase in operating costs by raising prices and further tilting the marketplace in favor of big-box retailers. Opponents also said allowing Sunday liquor sales would result in more alcohol-related accidents, more substance abuse throughout the state, and would negatively affect the finances of municipal liquor stores in rural areas that depend on funds from these stores. (HF30)


Commerce Bills that Did Not Become Law

VETOED: Commerce Budget

The Senate approved budget appropriations for the Department of Commerce as part of the omnibus jobs bill in April. The commerce and consumer protection portion of the bill had a flat spending target with a net general fund impact of $42.582 million in this biennium. Most provisions were ultimately included in the jobs bill that was passed without public input and sent to the Governor in early May, which he promptly vetoed. (SF 1937)

Auto Theft Prevention Account

The auto theft prevention account was redirected to the insurance fraud prevention account. The auto theft prevention account is a special revenue account from the 50-cent surcharge collected by auto insurers on all vehicles with comprehensive insurance coverage every six months. The account is used to fund Minnesota’s Auto Theft Prevention Program to reduce auto theft in the state and provide grants for local law enforcement auto theft reduction projects. Under the bill, part of the revenue transfer must be used for compensation for two new employees, who may not be peace officers, in the Commerce Fraud Bureau to perform analytical duties.

Of the revenue currently collected in the auto theft account, $1.3 million each year must be transferred to the general fund. The bill redirects the $1.3 million from the general fund, and instead, transfers the funds to the insurance fraud prevention account. The transfer to the general fund was a Pawlenty-era budget transfer, and there have been several attempts in recent years to return the funds to the insurance fraud prevention account.

Financial Institutions

The bill moves the Financial Institutions Division from the general fund to a financial institutions account. This allows the division the funding flexibility needed to maintain safety in Minnesota banks and lending institutions and match market wages. This provision was included in the Governor’s budget recommendations.

Fee Increases

Money transmitter renewal of license fee from $2,500 to $3,030: Generates $53,000 a year and is deposited into the financial institutions account. This proposal was included in the Governor’s budget recommendations.

Mortgage originator renewal of license fee from $500 to $780: Generates $154,840 a year and is deposited into the financial institutions account. This proposal was included in the Governor’s budget recommendations.

Broker-dealer agent fee from $50 to $60: Generates $1.402 million a year and is deposited into the general fund. The Governor’s budget recommendations increased this fee to $65.

Weights and Measures

The bill redirects revenue collected from weights and measures inspection fees by requiring that 10% of metrology fees and 10% of all other fees including scales, petroleum lab fees, and package checking be credited to the petroleum inspection fee account to fund the replacement of some critical weights and measures lab equipment. The Governor proposed transferring 10% of metrology fees and 20% of all other fees.

Notably absent from the bill was a significant consumer protection recommendation from the Governor on pay day lending regulation that would have closed the industrial loan and thrift loophole. Large pay day lending companies are obtaining their licenses through the industrial loan and thrift statute that allows them to charge significantly higher rates than allowed under the small consumer loan statutes. The Governor’s proposal would prohibit industrial loan and thrift companies from making short-term loans under any section other than the small consumer loan statute. This would generate one-time general fund revenue of $11,250 due to companies changing their registration. The proposal would also limit borrowers to no more than four short-term loans within a 12-month period and would limit their short-term loan debt to no more than 90 days.

Omnibus Liquor Bill

Minnesota has a strictly-regulated liquor distribution system which requires changes year to year as new businesses open and the liquor and brewing industries grow and adapt in our state. The Legislature typically passes an omnibus liquor bill to make these changes; the bill is usually bipartisan in nature and passes with little controversy. Unfortunately, this year the bill got caught up in the House. After an amendment was adopted on a strong bipartisan vote, the bill was tabled by the Republican author. It was taken back up a few days later and the amendment was reconsidered and removed by a party line vote. The bill was then sent to conference committee for the House and Senate to find compromise language.

This year’s bill included an extension of bar hours for the 2018 Super Bowl and issued special liquor licenses for municipalities. The Senate and House were unable to compromise on language and the bill died in conference committee at the end of Session. (SF 444)

 

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