2017 Session Playbook

These priorities are in no way fully comprehensive of all of the priorities of our 33-member caucus. This Session Preview is intended to act as a playbook to get members through the first few weeks of session as caucuses start rolling out priorities and legislation.

This document will profile high-level topics that receive frequent attention, and suggested talking points to help members in the near term. More detailed, specific previews will be developed for each committee in the coming weeks.

The 2017 Legislative Session kicks off on January 3 with Republicans leading the Senate with their first four-year term in decades. Although the state currently projects a $1.4 billion positive balance for the upcoming FY 2018-19 budget cycle, the story was very different only a few years ago. Six years ago, the state faced a $6.2 billion deficit for FY2012-13 – that’s three times what we currently have in our budget reserve.

Thanks to thoughtful leadership by the Senate DFL, the state has almost reached its reserve target of $2.1 billion. A robust budget reserve is a critical part of preparing for an economic downturn. The last time Republicans led the state, they drained the state’s reserves and, as a result, borrowed more than $2 billion from our schools with no plan to pay it back and relied on high-interest credit deals to stabilize the budget. Republicans also presided over a 20-day state government shutdown the last time they were in charge, which was the longest and most expensive shutdown in state history. Democrats worked very hard to build back the reserve account so that when another recession hits, the state can avoid drastic cuts in critical services and continue to serve Minnesotans’ needs. Democrats will not support gutting reserves and borrowing billions from our schools, nor will we support slashing taxes for just the wealthy few.

Given the intense emotions surrounding politics and policy in 2017, the Senate DFL will be committed to keeping the state on the right track and defending several accomplishments and priorities from the past few years. In addition to setting a fiscally responsible two-year budget, Senate Democrats are committed to the following priorities:

  • providing immediate relief to Minnesotans with skyrocketing health insurance premiums
  • passing a bonding bill to create thousands of jobs across Minnesota
  • finding a solution for our transportation system that balances the needs for all areas of the state
  • passing a fair tax bill to help working families, college students, farmers and veterans
  • building an economy that works for all Minnesotans, not just the wealthy few

Looking ahead, we will convene the 2017 session and continue to gather information from state agencies, listen to the priorities of our communities, and our constituents. DFL Senators will fight for economic policies and programs that improve incomes for all Minnesotans—no matter where they live in the state. Our policies will not pit Minnesotans nor regions against one another. DFL Senators stand ready to work with Governor Dayton and Republicans to formulate a budget. At the end of the day, it will be a bipartisan mix of legislators and Governor Dayton that will dictate what the state is able accomplish with the Senate Republicans having such a narrow majority.

Senate DFL Media


The last tax bill that was signed into law in Minnesota was in May of 2014. In 2015, the legislature could not find compromise between the House Republicans’ $2 billion bill and Senate Democrats’ more responsible $460 million investment, so the bill (HF 848) remained in conference committee. In 2016, the Senate passed a new, smaller tax bill that later merged with HF 848, and the reorganized conference committee passed a tax bill on May 22. Governor Dayton vetoed that bill via pocket veto after session adjourned because of a minor wording mistake related to bingo halls, which inadvertently would have caused up to a $101 million deficit in the stadium reserve fund.

As a result, there are a substantial number of must-do tax policies, such as federal tax conformity, that will need to be addressed in 2017. Republican leaders have said they would like to pass a similar version of the 2016 bill early in the year, but a new political landscape coupled with the outdated cost estimates in the previous bill means most items will need to be completely renegotiated.

  • In the past, the DFL-led Senate protected the state’s budget by ensuring tax relief was regionally balanced and targeted at working Minnesotans, small businesses, and property tax relief.
  • In contrast, the House Republicans’ initial tax bills focused on high-cost giveaways that benefitted corporations and wealthier Minnesotans more than small businesses and the middle class. In addition, they reduced state aid to large metropolitan cities and provided no increase in the property tax relief program for rural Minnesota cities and counties.
  • With a new group of Republicans in charge and eager to fulfill many tax-related promises, the DFL will once again need to stand up for financially sound, smartly-targeted tax investments that lift up our state and do not drain the bank account.


Republican Speaker Daudt had made it clear that he did not believe a bonding bill would transpire if an agreement was not reached for a special session in late December. He argued that the upcoming session is a budget year and as a result there likely will not be time for bonding.

  • Democrats remain committed to passing a bonding bill that will preserve our current facilities while meeting the demands of future generations.
  • Bonding bills are one of the most direct economic development tools we use to create jobs. Infrastructure projects funded through these bills employ thousands of Minnesotans across the state and in some instances, leverage federal matching grants or other private investment in communities.
  • The completion of a bonding bill is critical to communities across the state for basic needs such as water, sewers, roads, and bridges. The longer we wait to address our infrastructure needs, the more expensive it is to repair or replace the state’s resources.

Health Insurance Premium Relief

After the 2017 individual market health insurance rates were announced in October, the DFL Senate, Governor Dayton and, eventually, House Republicans supported an upfront, state-paid rebate on health insurance premiums to help Minnesotans absorb the massive cost increases. Despite their calls to immediately address the problem, House Republicans refused to agree to terms of a special session so this priority remains unaccomplished.

Speaker Daudt said in a public media briefing on Dec. 19 that he would like to pass some type of premium relief in the first weeks of session. Other Republicans have said they will not vote for anything that isn’t attached to broader solutions for the individual marketplace. Majority Leader Paul Gazelka has said Republicans may prefer to wait and see Congress’ plans for the Affordable Care Act before making sweeping changes at the state level.

  • Senate Democrats were the first lawmakers to present specific strategies to provide immediate financial relief to Minnesotans facing high premiums. We believe it’s critical to offer immediate financial relief to families facing exorbitant premiums in 2017, and we look forward to working together to find broader solutions for the individual market as session progresses.
  • It’s unfortunate that House Republicans forced consumers to purchase health insurance without knowing whether they would be receiving the much-promised payment relief, but we welcome their cooperation now and hope to pass this temporary assistance as soon as possible.
Senate DFL Media

Budget Reserve in Jeopardy

In 2014, legislation was passed that directs one-third of any projected November surplus to automatically be placed in the budget reserve. The budget reserve has a maximum funding level that is determined by MMB based on a formula. Speaker Daudt and others have implied that they would like to take some of the money deposited in the reserve account and put it back in the General Fund.

  • After facing budget multiple budget deficits prior to 2014, DFL members and the Dayton Administration wanted to restore the budget reserve in a meaningful way to hedge against future economic downturns. As a result, keeping the reserve intact is absolutely critical to the state’s fiscal health.
  • The state has a robust $1.4 billion surplus, yet Republicans are already looking to raid the state’s savings account to over-spend. Last time they were in charge, they drained the reserves, borrowed money from schools and left a $6.2 billion deficit. We won’t let that fiscal mismanagement happen again.
  • Since the statute was enacted, it has been used twice to increase the state’s budget reserve: $183.3 million was transferred in November 2014, and $594 million was transferred in November 2015. The state’s current budget reserve stands at $1.597 billion, or 3.8% of Fiscal Year 2016-2017 revenues. The most recent MMB report recommends a reserve of $2.052 billion.

Plans for dishonest budgeting

Republicans have floated the idea of using dynamic scoring to develop their budgets and spending goals. Dynamic scoring tries to estimate the long-term impact of a policy/fiscal change with a dollar figure. In doing so, they are able to book savings for other expenditures or cut programs to fit their budget goals. Essentially, MMB would attempt to predict the impact a tax cut or tax hike would have on consumer behavior. As an example, this type of policy forecasting could allow legislators to conclude that a tax cut would increase economic activity, and thus actually raise–not lower–tax revenues.

  • Democrats are committed to the current budget and tax scoring measures. Dynamic scoring would allow legislators to cherry-pick data to benefit a preconceived notion. This amounts to dishonest budgeting and creates serious risk within the state’s finances.
  • Alan Greenspan and Federal Reserve Chairman Paul Volker warned Congress in 1995 that dynamic scoring would impede their deficit-reductions because they could lose credibility in the financial markets, sending interest rates soaring. At the time Volcker said if Congress used dynamic scoring, “I won’t believe the numbers.” And Greenspan added that, given the current state of economic forecasting, dynamic scoring amounts to little more than an “informed guess.” – LA Times
Senate DFL Media


It’s likely that most MNsure-related legislation will originate in the Commerce Committee. However, please see the Health and Human Services section for more information.

Sunday Sales

Sunday Sales does not fall on partisan lines. Every year Sunday Sales is an issue that receives a lot of attention and this session will not be any different. Significant opposition remains from municipal liquor stores, Minnesota Licensed Beverage Association, and the Teamsters. The business organizations opposing Sunday sales argue that small, family-owned, and municipal liquor stores would not generate more profits, but would still incur the costs of being open an extra day.

Minnesota is one of only 12 states that still do not allow the sale of alcohol on Sundays. Supporters argue we are leaving money on the table. Consumer choice and granting businesses more autonomy are the biggest themes for promoting repeal of the law.

  • Pro: Many Minnesotans want the option of shopping on Sundays when they are off work, and while they are shopping for other items for the week.
  • Pro: Minnesota is losing revenue from customers who want to buy liquor on Sundays, but have to travel to liquor stores in neighboring states due to current sales laws. Minnesota liquor stores are unable to compete with stores across the border due to the prohibition of Sunday Sales.
  • Anti: Allowing Sunday Sales essentially forces liquor stores to be open seven days a week because if they are not open, they could lose customers to competing businesses.
  • Anti: The small, family-run liquor stores would not be able to compete with the larger commercial liquor stores.

No-fault auto insurance

Minnesota is one of 12 states that currently has some form of no-fault insurance. No-fault auto insurance is intended to be quick, fair, and an inexpensive approach to compensating auto accident victims. However, questions have come to the forefront regarding its effectiveness and the cost of premiums.

A task force was formed to review and make improvements to the laws governing no-fault insurance. A challenge the taskforce faced was much of the data members needed in order to form an opinion was unavailable. Additionally, they wanted to extend the time period that the task force was able to meet to continue to address no-fault issues. The bill carrying these recommendations failed in the Judiciary Committee during the 2016 Legislative Session.

With a new legislative body, it is unclear how Senate Republicans will move forward, however, they may will re-examine this issue by extending the sunset of the task force or passing the recommended changes that were included in the task force’s report to the legislature in February 2016.

Senate DFL Media

Student Discipline

The GOP will likely attempt to implement a student discipline policy that will allow teachers to expel students who have threatened or attacked them with no plan on how to ensure the student will be re-admitted to the classroom.

  • The DFL helped defuse this issue last session by creating a 20-member working group to review Minnesota’s Student Fair Dismissal Act and present a report by February 1.
  • This compromise, crafted during 2016 conference committee negotiations, melded portions of the GOP “instant expulsion” language that allows a teacher to remove a student from class for specific behaviors but also allows principals to be instrumental in determining if/when a student can be returned to the classroom.

Charter Schools

It is unclear what changes the GOP wants to make, although they may want to prevent an MDE-supported rule change that would require charters to abide by the state’s integration rules. These rules outline academic and educational programming if the school meets a specific threshold of students of color. The House GOP introduced such legislation last session.

  • Charter schools have opposed this rule change and the discussions continue with MDE. However, in order to ensure that all students are treated fairly, including charters in the rule change is an important provision to be discussed.

Board of Teaching/Tiered Licensure changes

The GOP desperately wants to change the current Board of Teaching (BoT), cutting the power of the teachers and the BoT’s rulemaking and licensing authority. They also want to change how teachers are licensed, and the GOP feels that we discriminate against teachers trained in other states. The Senate GOP designed a BoT reform proposal last summer, but according to our counsel, their ideas may be unconstitutional as structured.

The Legislative Auditor last winter also suggested the current licensing governance structure be changed and to design one that has all licensing functions in one entity. The options are to include it all under the Department of Education or the Board of Teaching. At this point it appears the GOP may be willing to allow the Board to remain aligned with a DFL proposal, and have all functions transferred to it.

  • Last session, legislation passed creating a teacher licensure working group to study BoT governance and a proposal that would create different tiers of licenses for teachers, making it easier for licenses to be issued. These changes are meant to simplify the licensing process and help alleviate the teacher shortage.
  • The Senate DFL has suggested a new Professional Educators Licensing Board that would be comprised of a group that included a majority group of teachers and would combine current BoT and the Educator Licensing (MDE) functions.
  • The House would like the DFL to agree to their tiered licensure proposal. However, their ideas have met resistance from Education Minnesota and the current Board of Teaching.

Property Tax Equity

The GOP wants to find funding (roughly $40 million) to help school districts (mainly for suburban school districts) level the playing field for local property tax payers. This is called referendum equalization.

  • Last session, the DFL introduced a similar $40 million funding proposal. It was introduced to make changes to referendum equalization and provide property tax relief to larger school districts.

Basic Funding Formula

The GOP wants to put more than 2% a year on the funding formula, claiming that the funding allocated the past few years did not provide “direct funding to Minnesota classrooms.”

  • The 2016 Supplemental funding bill provided $79 million in ongoing funding for E-12 education and $78 million in one-time funding. The House GOP provided a $0 target for education in 2016 and used a change to the Maximum Effort School Loan program to provide $53 million to schools.
  • The 2015 Special Session bill provided a 2 percent/year funding formula increase for FY16-17 (total $350.47 million). The House GOP in 2015 had a $156 million budget target compared to the Senate’s $400 million target.

Teacher Seniority

The GOP will likely introduce legislation to repeal current teacher seniority provisions (Last In, First Out or LIFO). This would follow their 2011-12 priorities (the seniority provisions were vetoed by Governor Dayton) and bills introduced 2013-16.

  • In 2012, the legislature passed on a bipartisan basis the Teacher Training and Development provisions designed to ensure that school administrators were adequately reviewing teachers’ performance and providing necessary measures to ensure quality teachers were staying in Minnesota classrooms.
  • School district administrators and teachers have countered that the TDE provisions are worthwhile, but the legislature has not provided adequate funding for school districts.

Early Learning Scholarships funding

This proposal would require all Early Learning Scholarships be provided directly to families to spend wherever they want to send their children rather than have some of the funding go to public schools to provide early learning programs. The GOP has wanted to change this for a number of years, and some DFL members also support the position.

  • More than $100 million is appropriated for scholarships in the current biennium, and about one-half are currently controlled by non-public providers. Because the scholarship amounts do not cover enough of the cost of early childhood programs, this GOP change could potentially hurt program quality and access for families.
  • In 2016, $25 million in pre-k grants were made available to Minnesota school districts for free, voluntary pre-k programs. The need was much greater than the offer: 60% of districts applying for the grants did not receive aid. Early childhood education funding is still a critical need in Minnesota, particularly as we look for ways to close the achievement gap and grow a successful workforce for the future.

Education Tax Credit and Subtraction Expansion

This legislation increases the current state education income tax subtraction, allows families to use the current education tax credit for tuition expenses at non-public schools, and expands the credit to more middle-income families.

  • This proposal will likely be discussed in the Tax Committee, and has a large price tag. Please see Tax Committee preview section for further information.
  • Once again, the GOP wants to siphon money away from public schools and undermine their quality.

Minneapolis School District Changes

In 2015 Sen. Hann introduced a bill that would have divided the Minneapolis School District into six separate districts. Saying that this new structure would help close the achievement gap, Hann did not consult Minneapolis lawmakers on his bill, and the proposed process would likely provide a racially segregated school district for the city’s 36,000 students. The GOP may again try to make dramatic changes to the Minneapolis School District.

  • Undermining local control under the guise of closing the achievement gap is a radical step that may only prove to exacerbate problems in the urban school districts.
  • There are 10 school districts in the country that are under mayoral control (mayoral-appointed boards and in some cases, mayoral appointed school chiefs):  Jackson, Boston, Chicago, Baltimore, Cleveland, Harrisburg, Philadelphia, New York, Providence and Washington, D.C.
Senate DFL Media

Voter ID

Republicans may attempt to revive Voter ID in Minnesota. Sen. Kiffmeyer, the chair of the committee with oversight over elections, believes that Voter ID is something that she and her caucus will support in the upcoming biennium.

  • Democrats have opposed such changes in state law. Leading up to the Republicans putting the issue on the ballot and it failing, Democrats had attempted to curtail its prospects in committee.
  • Democrats stand with a majority of Minnesotans who rejected a constitutional amendment in 2012 that would have implemented Voter ID by a 53% to 46% margin.

Restrict early voting

Some Republicans voiced their dislike for early voting in the past and may try to put new limitations on early voting.

  • Authored and supported by Democrats, a total of 678,336 voters – or 22.85% of all voters – took advantage of early voting, which is more than double of any previous election. Democrats will protect early voting to ensure people still have access to the added convenience they enjoy.

National Popular Vote Compact

Efforts to enter into the National Popular Vote Compact may be discussed this legislative session, in part due to the outcome of the 2016 presidential election. Instead of amending the U.S. Constitution to abolish the electors, the bill would require Minnesota’s 10 electoral votes to be cast for the winner of the national popular vote, instead of reflecting the popular vote within the state. Currently, 10 states and the District of Columbia have entered the compact, which constitutes 165 electoral votes. Once enough states enter the compact to provide 270 electoral votes, the compact will become active.

  • National Popular Vote legislation has been bipartisan in the past, with Republicans and Democrats proposing legislation to join the compact. This dynamic may change this year, given most of the people pushing for change are those disillusioned with the Presidential vote outcome.
  • The DFL is open to discussions about whether the National Popular Vote Compact is in the best interest of Minnesota voters.
Senate DFL Media


Clean water is widely supported by Minnesotans and it cannot be taken for granted.  Currently 40% of the state’s waters are listed as impaired or polluted. Aquatic invasive species have infested more than 550 lakes statewide. Initial testing shows that 60% of the wells in Central Minnesota may not provide safe drinking water.

  • Buffers. Republicans will likely attempt to weaken measures that were put into place to improve water quality by establishing perennial vegetation along waterways and ditches. These buffer strips are one of the most effective ways to improve water quality.
    • In 2015, the DFL Senate supported legislation to designate tens of thousands of acres for new water quality buffer strips across the state.
    • In 2016, the DFL Senate supported clarifications and adjustments to buffer rules to ease implementation and financial support to help landowners comply with buffer rules.
  • Groundwater. Republicans may attempt to undermine the state’s program to regulate groundwater. Groundwater is vital to Minnesota’s prosperity, but it is at risk of overuse and contamination in several parts of the state.
    • Under DFL leadership, Minnesota has made excellent progress in ensuring that use of groundwater is sustainable and does not harm ecosystems, water quality, or the ability of future generations to meet their needs.
  • Agricultural Water Quality Certification Program. Republicans may attempt to roll back Minnesota’s Agricultural Water Quality Certification Program.
    • Passed in 2013 under DFL leadership, this voluntary program is an opportunity for farmers and agricultural landowners to take the lead in implementing conservation practices that protect water. Those who use approved farm management practices are certified and given regulatory certainty for ten years. In 2015, the program expanded from four pilot areas, allowing farmers to participate statewide.
  • Minnesota Pollution Control Agency Rules. Republicans may call for such proposals as requiring cost-benefit analyses of the impact of new or amended water quality regulations, and requiring independent peer review of regulations that impose costs.
    • These proposals were part of the controversial environmental bill that was vetoed in 2015 (H.F. 846), and that strongly divided urban and suburban legislators from those representing Greater Minnesota.

Environmental Permitting

Republicans will propose measures to further shorten the timeline and reduce the cost of environmental permitting.

  • In 2014, legislation passed with strong bipartisan support to streamline environmental agency regulation and permitting. Changes included new tiered environmental permitting goals (90 days and 150 days), flexibility in voluntary expedited permitting, and a simpler administrative penalty order process.
    • Long, unnecessary delays cost businesses time and money. Since passage of the 2014 legislation, 99% of priority permits and 94% of all permits are being issued within 150 days.
    • Further efforts to streamline the environmental permitting process should reduce timelines and costs without sacrificing environmental goals.


Republicans will push back on efforts to restrict uses of neonicotinoid pesticides to help reverse the decline of bee and other pollinator populations, saying they are burdensome and expensive  for farmers.

  • The national crisis surrounding pollinators has hit Minnesota hard, with beekeepers reporting a 50% loss of their colonies in the 2014-15 season alone.
  • In 2014, the DFL legislature passed a bill that prohibited plant nurseries from marketing plants as bee- and butterfly-friendly if they are grown with the use of neonicotinoids.  (In 2015, the final Agriculture and Environment Finance Bill included a measure that scaled back the 2014 legislation, allowing plants sold as “pollinator friendly” to include some insecticide use.)
    • In August, 2016, Governor Dayton issued an executive order with requirements and recommendations to limit the use of neonicotinoids, and has said he will ask the legislature for authority to regulate neonicotinoid-treated seeds before they are planted.
    • Other legislative proposals could include the establishment of a dedicated pollinator protection account to support research and education on pollinators and pesticides, and state review of neonicotinoids.


Republicans may advance proposals to roll back Minnesota’s progress on renewable energy.

  • Renewable Energy Standard. Republicans may try to alter the state’s Renewable Energy Standard.  In 2007, legislation was enacted with strong bipartisan support to set Minnesota’s Renewable Energy Standard at 25% renewable energy by 2025.  Republicans have expressed support for an approach that includes continued use of nuclear and coal-based electricity generation and more hydroelectric power.
    • In 2015, Minnesota generated 21% of its electricity from renewable energy, up from 6% a decade earlier. 17% of Minnesota’s electricity was generated by wind energy, compared with 3% in 2005. Coal-fired electricity dropped from 62% in 2005 to 44% in 2015.
    • Many metro/suburban Democrats argue that Minnesota needs to make better progress toward climate change goals, and the Renewable Energy Standard should be strengthened.
  • Nuclear Moratorium. Republicans are likely to want to repeal the state’s 22-year moratorium on building new nuclear power plants, saying the state needs this source of reliable power.
    • Opponents have argued that Minnesota’s utilities have not been asking for more baseload power, there is no long-term solution for storage of toxic nuclear waste, and Minnesota needs to move away from nuclear energy.
  • Conservation Spending. Republicans may try to undermine the state’s energy savings goals.
    • Minnesota’s Conservation Improvement Program (CIP) is recognized nationally as a leader in utility-administered efforts to achieve energy savings. It reflects the state’s long-standing commitment to energy efficiency – saving consumers and businesses money, creating jobs, and benefiting the economy.
  • Renewable Development Fund. Republicans may try to cap and/or eliminate the state’s obligation to fund the Renewable Development Fund.
    • For many years the Renewable Development Fund has served as a key resource to expand Minnesota’s renewable energy markets and support emerging renewable energy technology.
    • At a time when Minnesota needs to continue moving forward on renewable energy, this proposal would derail important energy initiatives and Minnesota’s significant progress.
  • “Made in Minnesota” Solar Program.  Republicans are likely to propose a redesign of the “Made in Minnesota” solar program. Proposals could include diverting the program’s funds for building electric car infrastructure.
    • Democrats have supported this popular program, which encourages solar panel manufacturers to locate in Minnesota through subsidies that encourage the solar industry while helping residential and business owners afford solar energy.
  • Oil Pipelines. Republicans may propose to exempt oil and natural gas pipelines from the Public Utilities Commission’s Certificate of Need requirement.
    • DFLers and the Department of Commerce argued in 2015 that this proposal would not speed up the permitting process and would eliminate crucial public review of the need for pipeline projects.
Senate DFL Media

The ACA and Minnesota’s Health Care System

Much of what will happen in the upcoming session is dependent upon what the new President and Congress will do in regards to the Affordable Care Act. Currently, the ACA provides funding for the expansion populations in Medical Assistance, the Advanced Premium Tax Credits available on MNsure, and a large portion of funding for MinnesotaCare though the Basic Health Plan. If the ACA is repealed in its entirety, it is unclear what will happen to these large programs and other smaller grant programs.

MinnesotaCare and the Provider Tax

Currently, MinnesotaCare is funded through the Health Care Access Fund (HCAF) and the federal Basic Health Plan. The HCAF receives a vast majority of its revenue from the Provider Tax, which is set to expire on January 1, 2020. If allowed to expire, funding for MinnesotaCare would be in jeopardy as the Basic Health Plan funding does not cover the entire cost of the program.

In 2015, the House GOP proposed to eliminate MinnesotaCare and have enrollees purchase private health plans through the exchange with Advanced Premium Tax Credits (APTCs). Democrats successfully fought against this and preserved MinnesotaCare. However, given the makeup of the new Legislature, MinnesotaCare will most likely be on the chopping block again this session, especially as the GOP seeks to cut the Health and Human Services Budget.

  • Democrats successfully prevented Republicans from eliminating affordable health insurance from 95,000 working Minnesotans in 2015. We will once again block any attempts to dismantle a program that is working well and is vital to the lives of farmers, small business owners and other working Minnesotans.
  • The 25 counties with the highest percentage of MinnesotaCare enrollees are in Greater Minnesota. This program is critical to the well-being of our state and must be preserved.

MNsure’s Future

Note: It is likely that MNsure-related legislation will originate in the Commerce Committee, but it is included here, as it will dictate much of the health care conversation this year. Republicans have attacked MNsure since its inception, so it should come as no surprise that the agency will most likely be the first entity to come under fire with new legislative leadership. If MNsure is eliminated, Minnesota would have to move to the federal exchange at healthcare.gov until the federal government changes current ACA requirements. Any other option involving private exchanges, or no exchange at all, would first require action by the federal government, which could happen.

Moving to healthcare.gov would also jeopardize MinnesotaCare, as the federal eligibility system is not built to determine eligibility for a Basic Health Plan like MinnesotaCare. However, if the Republicans eliminate MNsure and MinnesotaCare simultaneously, then the incompatible eligibility systems would not be an issue.

  • Although the unstable nature of the individual market is not a result of MNsure’s slow start, Republicans will try to tie the two issues together. In 2015, the Senate passed off of the floor a total reform of MNsure’s governing structure, turning the Board into a state agency and placing a Commissioner in charge of operations. However, the House Republicans refused to compromise, instead calling for a full-repeal or nothing.

Individual Market Premiums

Across the country and in Minnesota, premiums on the Individual Market have increased to the point where some Minnesotans have chosen to pay the penalty and forgo health care insurance for the upcoming year. As negotiations for a special session to provide premium relief did not lead to a compromise, providing immediate assistance to those on the individual market will most likely be one of the first issues Republicans will try to tackle in the upcoming session.

In addition to short-term relief like rebates or tax credits, Republicans will also look at long-term changes to the individual market. Options may include a reinsurance program, where health insurance companies are provided funds to help buy down the cost of providing care for this high-risk population, or Republicans could use the elimination of MinnesotaCare as a means to spread the risk across a larger section of the population.

  • Last session, the Senate DFL proposed to study a reinsurance program, a possible merger of the small group and individual markets, and providing additional transparency to the rate review process. All attempts at reform were blocked by House Republicans. We stand ready to offer our solutions once again, and hope for a greater level of cooperation and compromise than was received during the election year.

Abortion-related Legislation

Proposals intended to limit or eliminate access to abortions in Minnesota are likely to be introduced and heard this session. The following proposals have been popular with anti-choice groups nationwide and have introduced as bills or amendments in recent years.

  • Prohibition of state funding for abortions. This proposal would prohibit Medical Assistance funds from paying for abortions except when necessary to comply with the Hyde Amendment, which only allows federal funding in cases to save the life of a woman or in cases of rape or incest. This legislation was passed through the Republican-led Legislature in 2011, which Governor Dayton vetoed.
  • De-fund Planned Parenthood. Public funding for Planned Parenthood largely comes from two sources: Department of Health Family Planning grant dollars and Medical Assistance reimbursements. De-funding Planned Parenthood on a state level would involve cutting funds from both of those sources. Eliminating Medical Assistance dollars presents an issue for states, because federal Medicaid regulations requires states to provide enrollees with a free choice of providers.
  • Licensure Standards. The legislation would subject clinics providing abortion care to the licensure standards of the Outpatient Surgical Center Act, which essentially classifies them as small hospitals. Under the Republican-controlled legislature this language was passed as a stand-alone bill and was vetoed by Governor Dayton in 2012. The evidence of unsafe practices within these clinics to warrant this type of heightened licensure is not present in the clinics that operate in Minnesota.
Senate DFL Media

Investing in Higher Education

Over the past four years, the DFL-led Senate has invested more than $443 million over base funding into our higher education systems. The DFL used 60% of this funding to freeze tuition at our state schools during the first biennium and freeze MnSCU’s tuition for parts of the next biennium. However, this progress could be reversed without continued investment. As we have seen over the past decades, when the systems do not receive needed funding they often raise tuition rates to make up for the funding difference.

  • These strong funding levels have been passed with bipartisan support, however the DFL will need to hold Republicans accountable to ensure these investments continue to be a priority.

Student Debt

Despite investments into higher education, increases in state grant funding, and freezing tuition, student debt continues to be a major hurdle facing many graduates. Minnesota averages $31,526 in student debt, the sixth-highest in the nation.

  • One way the DFL helped address this issue is by creating a state program to refinance high interest student loans. This program can lower payments immediately and save a borrower thousands over the duration of a loan.

We also created a first-of-its kind tax credits for graduate and parents paying off student loans. That was vetoed as part of the larger 2016 tax bill.

  • We need to continue to fight student debt or it will continue to be a drag on the larger economy and prevent many hard-working Minnesotans from starting a family, buying their first home, or taking a risk and starting a new business in our community.

Fetal Tissue Research at the U of M

Issues surrounding the U of M’s use of fetal tissue for research came up in the press throughout 2016 and the university is now being sued over the institution’s use of fetal tissue from elective abortions. There are three state statutes that address the legality of fetal tissue research and this has created the disagreement about whether it is legal to use the tissue for research purposes.

There may be attempts to add clarity to the statutes, possibly explicitly prohibiting the use of the tissue in research, or attempting to further restrict the procurement processes in place at the U of M. The fetal tissue issue came up during the 2016 session when, as part of the House’s higher education omnibus bill, the House included provisions regarding fetal tissue research practices at the U of M.

The DFL actions on this issue:

  • The DFL-controlled Senate allocated $4.5 million in 2014 to fund a partnership between the U of M and the Mayo Clinic for regenerative medicine research.
  • In 2015, we requested the U of M hire additional faculty to conduct additional research in regenerative medicine.
  • Regenerative medicine research is used to fight diseases and disorders including brain and spinal cord injuries, diabetes, heart disease, and retinal disorders. It also includes inherited diseases like Alzheimers’s, Parkinson’s, and Lou Gehrig’s disease; and many types of cancers.
    • These diseases impact Minnesotans and their families on a daily basis.

Minnesota Prosperity/Dream Act

In 2013, the Legislature passed legislation allowing undocumented immigrant students to be eligible for in-state tuition and state grant money. Republicans may attempt to repeal this legislation. Some believed at the time that it is not fair to use Minnesota tax dollars for students who are in Minnesota illegally. However, we know Minnesota’s economy will be facing a labor shortage in the coming decades and this is one way to ensure hard-working students are given the opportunity to succeed and contribute to the state’s economy.

The DFL supported this issue because:

  • There is a very low percentage of Minnesota high school graduates who are undocumented and only a fraction of that would attend college, even with in-state tuition. Therefore, the cost of this provision is minimal.
  • Granting undocumented students in-state tuition gives these students an incentive for completing high school, attending college, and contributing to the state and the economy.

University of Minnesota Regents

This year there are four Regent seats up for election.

These are located in the second, third, and eighth congressional districts as well as an at-large seat. Also, Laura Brod has not submitted an application for reappointment.

The Regent Candidate Advisory Council (RCAC) will meet in early January to interview candidates. The RCAC has to make their recommendations to the Joint Legislative Committee (House and Senate members from the higher education committees) by Jan. 15. The Joint Committee must meet by Feb. 28 to consider the RCAC nominees. At this time, candidates who have not gone through the RCAC process may be considered. In order to be considered at Joint Committee meeting, the candidate needs the support of two Senators and three Representatives. The Joint Committee must recommend one candidate for each open position. Once the recommendations are made, there is a Joint Convention of the two bodies where a majority vote decides the winner. There is also an opportunity at the Joint Convention for candidates to be recommended.

MnSCU v. U of M

Over the past biennium, we saw a growing divide in the appropriations going to Minnesota’s two higher education systems. In 2015, the U of M received $53.2 million, whereas MnSCU received $101 million. There was little progress toward parity in 2016. This trend may continue as the majority of MnSCU campuses are located in Greater Minnesota and the U of M is thought of as being only in the metro, despite having four campuses in Greater Minnesota.

  • The DFL has been a champion for all college and university students, not just the ones going to school in their districts. This is why the Legislature, under DFL control, froze tuition and invested in all of our public college and university students.
Senate DFL Media


There could be legislation altering gun regulations in Minnesota. While Minnesotans with conceal and carry permits are not required to conceal their firearms in many cases, there could be attempts to clarify that it is legal to openly carry a firearm. Additionally, there may be attempts to reduce the places where Minnesotans are prohibited from carry a gun.

  • Attempting to grant reciprocity with all other states so that someone with a permit to carry in another state could carry in Minnesota. The issue with this is that states have different standards for allowing people to carry a weapon. So, someone may be allowed to carry a firearm in one state but under Minnesota law would be ineligible. The Department of Public Safety does have reciprocity with some states, but the list is reviewed annually.
  • Pursuing “Stand Your Ground” and “Castle Doctrine” laws. These kinds of laws expand the presumption of immunity in many self-defense situations.
    • Stand Your Ground laws specifically do not require a person to retreat from a situation before using deadly force. Minnesota has a “Duty to Retreat” law which means that deadly force may only be used if there are no other options.
    • Castle Doctrine laws do not require people to retreat from situations on real property, like your home or yard and, in some states, your car, before using deadly force. Minnesota’s Justifiable Taking of a Life statute allows deadly force in situations where someone reasonably believes they are being exposed to great bodily harm or if they are trying to prevent a felony in their home, but it does not include other personal property such as a person’s car. However, once the threat is eliminated a person must stop the deadly force.
    • There could be attempts to create Castle Doctrine protections in Minnesota. This has been vehemently opposed by law enforcement in the past. Republicans attempted to change Minnesota from a duty to retreat state into a stand your ground state in 2012. Gov. Dayton vetoed that bill.

Minnesota Sex Offender Program (MSOP)

What to do with the Minnesota Sex Offender Program (MSOP) has been an ongoing legislative issue since 2012 when a group of individuals committed to the program sued the state in U.S. District Court for violations of their constitutional rights. In 2015, Judge Frank issued his ruling on the case, concluding that the program on its face and as applied violated the due process clause of the Constitution and he issued a number of remedies for the state to address the issue. The state immediately appealed the decision, a stay on the remedies was issued, and the case is now awaiting a decision by the U.S. Eighth Circuit Court of Appeals.

The Senate has worked continuously on legislation to balance the public safety issues with due process and fairness under the law, and in 2013 passed bipartisan legislation that would have provided a fairer process for how offenders are admitted and released from the program. Unfortunately, the House was unwilling to let go of the politics of the issue and did not take up the bill on the House floor.

The sex offender program began with good intentions. It was intended to be a rehabilitation and treatment program for the worst of the worst sex offenders, but over time it has become a second prison of sorts, holding people indefinitely without the possibility of being released. There are major public safety concerns with possibly releasing clients of the program, but the state must manage the issue within the confines of the Constitution. The Court has the capacity to impose any number of conditions on our State including, ordering closure of the entire program or taking over the program at the State’s expense. It’s in the state’s best interest for the Legislature to act on this issue; however, Republicans are likely to wait for the appeals court decision before any MSOP reform legislation is introduced.

Private prisons

There could be attempts during the legislative session to open a private prison in Appleton, Minnesota. The House Public Safety and Crime Prevention Policy Committee passed a bill supportive of opening a prison in 2016, despite a large outcry against the bill. Supporters of opening a private prison argue there is already an overcrowding issue in Minnesota prisons and this would be an effective solution. A prison would also mean many new jobs to a struggling area of Minnesota. However, opponents argue there is human cost to profiting on citizen incarceration, and private prisons have actually increased the cost of housing criminals. There have also been many news stories highlighting failures associated with private prison operations across the country.

Department of Human Rights cuts

The Minnesota Department of Human Rights (MDHR) is the state agency with the responsibility of enforcing the Minnesota Human Rights Act. This act protects all Minnesotans from discrimination in the state. While hate crimes in general are decreasing, crimes against certain segments of our society have been on the rise according to the Bureau of Criminal Apprehension (BCA).  The last time the GOP controlled both the House and the Senate, they proposed cutting the agency’s budget by two-thirds.  Some feel that other agencies like federal Equal Employment Opportunity Commission or city departments of human rights could take on the responsibilities the state agency performs with. However, the MDHR has much broader authority and capacity to investigate claims of discrimination. Also, only Minneapolis and St. Paul investigate claims of discrimination and almost two-thirds of the claims come from suburban and Greater Minnesota.

Email data storage

Earlier this year, the Hennepin County Sheriff’s Office announced a new policy of deleting emails after 30 days. This announcement is coupled with a countywide administrative order slated to take effect in 2017 where all county emails would be deleted after six months. Hennepin County is not the first government entity to create this kind of policy: St. Paul reduced its email storage policy from three years to six months; Anoka County keeps its emails for three months; Carver County keeps its for six years. Hennepin County’s move raised the ire of government transparency advocates who worry the policy will decrease openness and reduce public scrutiny. The County argues this is a cost-saving measure that could save millions on data storage costs. There could be bills aimed at standardizing or altering the amount of time government entities are required to save emails.

Senate DFL Media

Minimum wage

In 2014, Democrats passed legislation to raise the state’s minimum wage to $9.50 per hour over a phased-in period. Minimum wage will begin to be indexed to inflation in 2018. If economic indicators are suggesting a downturn in the economy, the commissioner has the discretion to suspend the inflation increase after consulting with the commissioner of management and budget.

Remove the minimum wage inflator

The Minnesota Chamber of Commerce has argued that the inflation adjustment is government on autopilot. The Chamber also believes that an important issue like the minimum wage should be reviewed by the legislature, not enacted by an agency.

  • By including inflation, the DFL eliminated the need to revisit this issue and allow businesses to plan long term for their expenses instead of making knee jerk adjustments to the minimum wage rate.
  • Before the passage of the minimum wage increase Minnesota had one of the lowest minimum wages in the nation. In fact, Minnesota’s minimum wage, at $6.15 per hour, was one of only four states in the country with a minimum wage below the national rate of $7.25 per hour which is why an inflation adjustment is so important when the costs of goods are increasing.
  • The DFL recognized that the cost of goods and services increase every year. Yet, rarely do political leaders have the stomach to adjust the minimum wage to ensure workers can meet their basic needs to keep up with the cost of goods and services.

Tip credit

Republicans will attempt to establish a tip credit in Minnesota at the behest of the Minnesota Hospitality Association. Organizations supporting business interests, especially in the hospitality industry, may push to include a tip credit in the minimum wage calculation. A tip credit allows an employer of tipped employees to pay a rate less than the minimum wage by considering all or a portion of tips received to be counted toward an employee’s total hourly wage.

  • The DFL understood that previous proposals have not just affected the restaurant industry but would have hurt all tipped employees (cosmetologists, hair stylists, barbers, etc.). The legislature needs to contemplate what a tip credit would mean beyond the restaurant industry.
  • Servers pay their bills or go to college using tip money. Given the increased costs of higher education, many Minnesotans are dependent on these types of jobs to pay expenses related to college or making ends meet.

Pre-emption (State overrides power of cities)

Republicans will attempt to eliminate the ability of cities to establish their own employment benefit requirements for business operating within its jurisdiction. Businesses with operations in multiple localities argue that the new mandates developed by Minneapolis and St. Paul place a heavy burden on them.

  • The DFL believes that workers deserve adequate benefits to live healthy lives and raise a family. Without these minimum standards, workers would suffer and would further stress the fragile safety net taxpayers’ fund.
  • The DFL trusts local units of government and their citizens to make their own decisions regarding these important issues. At this time, only Minneapolis and St. Paul have established benefits sets outside of what the state requires.
  • It would be imprudent for the legislature to weigh in when there is an ongoing court case that will address this very issue.
    • The Minnesota Chamber of Commerce and other business groups have sued the City of Minneapolis arguing, “Plaintiffs bring this action seeking: (1) a declaration that the recently enacted “Minneapolis Sick and Safe Time Ordinance” (the “Minneapolis Ordinance” or “Ordinance”) is invalid because the Ordinance conflicts with and is preempted by state law; and (2) an injunction prohibiting the Ordinance from going into effect or being enforced.
    • As a result of the Chamber’s argument it is unclear why further clarification or law changes are warranted.

Prevailing hours

The Republicans have always had an interest in eliminating the eight-hour work day or more than 40 hours a week overtime pay requirement to only include a 40-hour work week. The Minnesota Chamber of Commerce has supported this change in the past, calling it financially prudent.

  • The DFL has opposed this measure in the past because it is something that can be bargained for as part of a labor contract. Additionally, the DFL has always supported employees being compensated for their work.
  • The DFL never instituted this change because it harms the paycheck of workers for the benefit of the bottom line of a company. Growing businesses and increasing the pay of workers does not have to be an adversarial relationship.

Right to work

Republicans across the country, and even in Minnesota, have attempted to enact legislation to become right to work states.

A “Right to Work” law would make all union dues voluntary (including fair share), which would result in workers freeloading by receiving the same benefits as those who pay dues to negotiate a labor contract. If a worker decides to not join a union, the union is still obligated to represent the employee in any grievance or wrongful termination case. In effect, it is getting something for nothing.  Financially, it will starve unions.

  • The DFL and labor unions have opposed “Right to Work” because it would hurt all families across Minnesota, even those who do not belong to a union. States that are “Right to Work” generally have lower hourly wages, salaries, and benefits. In many cases, states with “Right to Work” laws do not perform as well in education, income equality, and health care coverage.

Dislocated Worker Program

The Republicans will try to amend the law to ensure certain workers (party campaign staff) are not allowed to receive dislocated workers benefits. The Department of Employment and Economic Development (DEED) makes the eligibility determination for the Dislocated Worker Program based on law. DEED has determined that some campaign workers may qualify for the Dislocated Workers Program. Senators had no input into this decision and have not been involved at any level.

  • All workers terminated from their employment at no fault of their own should have access to these important services (job training, skills enhancements, and resume assistance) to ensure they do not end up needing the state safety net that all taxpayers fund. Getting people gainfully employed after a separation is beneficial to everyone including the worker, taxpayers and the state.
  • The DFL believes citizens, regardless of their political beliefs, should be able to participate in government and its services as our laws dictate. This upcoming session, we look forward to debating Republicans about services being withheld from workers because of their political beliefs.

Paid Family Leave

Please see State and Local Government section.

Senate DFL Media

Public Pension Restructuring

The Legislative Commission on Pensions and Retirement will be chaired by the Senate this upcoming session, but it is still unclear who will be the new chair. With the Commission controlled solely by Republicans this biennium, it is possible drastic pension restructuring will be brought forward despite the high costs associated with converting defined benefit pensions to defined contribution pensions. Republicans generally oppose defined benefit pensions because they have the potential to incur future liabilities for governments (that require state aid) and are unsustainable.

  • The Senate DFL understands the need for both defined benefit and defined contribution pension plans. Defined benefit plans provide guaranteed benefits for retirees, while defined contribution plans provide more flexibility when transitioning from job-to-job.
  • Previous nonpartisan studies have concluded the cost of transitioning defined benefit plans to defined contribution plans is prohibitively expensive and the process would be destabilizing.
  • Any efforts to attack retirees due to the type of plan they have or attempts to transition defined benefit plans to defined contribution plans will be opposed.

Pension State Aid

Currently, all of the major state pension plans receive state aid to supplement active member contributions, employee contributions, and investment returns. These payments are due to various financial issues for the pension plans, including aid to the Public Employee Retirement Association because they agreed to take on management of the Minneapolis Employee Retirement Fund. The General Fund aid payments to the Teachers’ Retirement Association and the St. Paul Teachers’ Retirement Fund Association may be targeted for reductions, since each plan receives $29 million and $9.8 million per year, respectively.

  • The DFL supports healthy and sustainable pension plans, and will fight to block unnecessary and inequitable cuts to Minnesota retirees.
  • State aid payments to pension plans are provided for various reasons and are not due to the current management of the pension plans.
  • Cutting annual pension aid payments will hurt retired teachers, along with state and municipal retirees, due to no fault of their own, since they paid into their plans what was asked of them.

Pension Plan Sustainability Measures

The 2016 Pension Bill was vetoed by Gov. Dayton in part due to the lack of shared sacrifice from all stakeholders involved in public pensions. The initial sustainability packages from the major pension plans included increased employee and employer pension contributions in addition to COLA reductions, but these reforms were not included in the final bill. The Governor did not sign the bill because it only required retirees to shoulder the financial burden of the increased pension liabilities due to retirees living longer than previously assumed. Further attempts may be undertaken by the Republican majority to criticize the sustainability of state pension plans but only require employees and retirees to be responsible for measures to improve the plans’ financial stability.

  • The DFL supports shared-sacrifice relative to pension plan sustainability measures, which includes increased employee and employer contributions, and cost-of-living-adjustments from retirees.
  • The pension sustainability plans from 2016 were supported by all stakeholders before employers were removed from the solution.
  • Efforts to blame or force retirees to shoulder the entire burden of pension sustainability will be opposed by the DFL.
Senate DFL Media

U.S Bank Stadium Suites

Republicans will likely seek further details on the use of the two Norseman suites controlled by the Minnesota Sports Facilities Authority (MSFA). Although the MSFA recently prohibited the distribution of suite tickets to commissioners’ family and friends, the GOP majority may require the MSFA to publicly disclose all recipients of suite tickets in the future, propose the suites be privately sold, or require suite tickets be distributed to members of the public during Vikings games and other events.

  • The DFL supports transparency with regard to the use of public space at U.S. Bank Stadium, especially the suites owned by the MSFA.
  • The DFL awaits the recommendations of the Office of the Legislative Auditor, which has opened a special investigation into the use of the suites.
  • The two suites controlled by the Authority were not written into the original stadium legislation, they were negotiated between the Authority and the Vikings.
  • Profits from event spaces, including the suites, cover the costs of amateur soccer, baseball, and football games, as well as U of M home baseball games.

Met Council Restructure

Republicans have supported reforming the Met Council for many years. Most GOP critics contend that the work of the Council amounts to taxation without representation, and that the solution to this unaccountability is to require all Met Council members to be locally elected officials. Proponents of the Met Council contend this reform would open the organization to parochial interests instead of working toward the best interests of the entire metropolitan area.

  • The DFL has supported numerous reforms to the governance structure of the Met Council to make it more accountable to the public: staggered terms for members, adding more citizens and locally elected officials to the nominations committee, and making the nominations process more transparent.
  • The DFL supports the authority of the governor to appoint members to the Met Council, who are accountable to the governor’s administration instead of the interests of a local government or county.
  • Requiring Met Council members to be locally elected officials would defeat the purpose of the Met Council and prevent the best interests of the entire Twin Cities area from being served.

State Government Budget Cuts

Republicans contend state government is full of unnecessary employees, performing duplicative work, and wasting taxpayer dollars. Due to this, the state government budget is a common target for Republican cuts, despite being a relatively low percentage of the overall budget. Common areas for scrutiny may include funding for the Ethnic Councils, public broadcasting grants, arts and humanities funding, and Gov. Dayton’s constitutional offices.

  • The DFL supports the work of state employees and understands the need for quality staff to perform the work of taxpayers.
  • The DFL believes in finding efficiencies in government but will not allow the vilification of state workers just to score political points.
  • Broad layoffs of state employees or slashing the budgets of important boards and councils will be strongly opposed by DFL members in the upcoming session.

Public Employee Contracts/Paid Family Leave

Recent changes to public employee labor contracts through Memoranda of Understanding (MOU) provide six weeks of paid family leave to most full-time state employees. This benefit is supported by Gov. Dayton and was made public last February prior to the 2016 session. MOUs have been agreed upon between MMB and most collective bargaining units to incorporate the benefit beginning in 2017 since the Legislative Coordinating Commission Subcommittee on Employee Relations (SER) did not disapprove their adoption in the interim.

Republicans on the SER strongly criticized the MOU process and argued Gov. Dayton and MMB did not have the authority to issue MOUs for a major benefit like paid family leave. GOP members contend public employee bargaining agreements must be opened and renegotiated to allow paid family leave. It is likely the Republican Legislature will disapprove the agreements to provide paid family leave once the session begins and characterize the benefit as a giveaway to already overcompensated public employees.

  • The DFL supports paid family leave for all Minnesota workers and believes that providing the benefit to its own employees is a step in the right direction.
    • As Gov. Dayton stated last February, “It is time for the state to lead by example.”
  • Many major privately-owned Minnesota companies already provide paid family leave, including the Mayo Clinic, U.S. Bank, and Target.
  • Minnesotans should not be punished for choosing to start families or be forced to choose between caring for a newborn versus keeping their job.
  • Providing modest paid leave will help to attract and retain top talent to work for the state.

Legislative Salary Council

By the end of March this year, the new 16-member Legislative Salary Council will prescribe the salary of legislators to take effect July 1. The amendment was approved by voters in the 2016 election and removes the conflict-of-interest for legislators to set their own pay. While the process is no longer legislators’ responsibility, there is still a question of whether legislators will accept any potential pay increase provided by the Council.

  • DFL senate members broadly supported the passage of legislation to ask voters whether an independent council should set salaries of legislators.
  • Republicans used this issue in the 2016 campaign to contend the Council would be a way to raise legislator salaries without taking responsibility for the issue; it remains to be seen how the new Republican majority will respond to the actions of the Council over the next few months.

Local Government Pre-emption.

Please see Labor section.

Senate DFL Media

Federal tax conformity

Each year, Congress makes changes to federal tax code and states must consider whether to adopt the same changes for state income taxes. In strong budget years, Minnesota typically conforms to many, if not all federal changes. Because the legislature hasn’t approved a tax bill since 2014, however, the state’s tax code has not conformed to federal code since Tax Year 2014. This causes confusion and frustration for individuals and businesses affected by the changes. Without an early bill, millions of taxpayers with tuition costs, teacher expenses, business expenses and other issues will face confusion, higher tax bills, and potentially a need to file amended returns after the April 15 filing deadline.

Taxing Social Security benefits

Excluding Social Security benefits from Minnesota income taxes has been a top GOP priority for several years. In 2015, House Republicans included the policy in their tax bill but phased it in over five years to spread out the $1 billion cost of fully exempting these benefits. The state still does not have money to absorb this sweeping change that would mostly benefit wealthier seniors – a 2015 estimate noted 39% of the tax benefit would be claimed by Minnesotans with income over $100,000 a year – but Senate Republicans have noted this will once again be a priority in their tax bill.

  • The DFL has not closed the door on some tax reform related to Social Security benefits. We are always supportive of ways to reduce financial burdens on our aging seniors, but we will ensure the benefits are targeted at those that need them most.
  • If we are going to commit $1 billion to the state’s senior citizens, we need to ensure the money is being spent effectively. Spending $1 billion every two years solely on tax relief that largely benefits well-off seniors exhausts state resources that could be used to bolster other important priorities, such as improved health care and long-term care options, housing assistance, or property tax relief.
  • Because Minnesota follows the federal government’s tax standard for Social Security benefits, we already forego about $489 million every two years to exempt a minimum of 15% of benefits for all recipients. In fact, many Minnesota beneficiaries don’t pay any tax at all on their Social Security benefits.
  • Generally, a married couple with an average Social Security benefit and total income (including benefits) under $44,000 does not pay taxes on their benefits.
  • In 2012, about 65% of Social Security benefits received in Minnesota were fully exempt from taxes.
    • Note: this reflects total benefits received in Minnesota are included in taxable income. On a personal basis, about 50% of Minnesotans pay taxes on at least a portion of their benefits.
  • About 90% of taxable Social Security benefits in Minnesota are concentrated in the top four highest-earning income brackets – which means that’s where the biggest share of tax relief would go if we were to spend $1 billion every two years to fully exempt all benefits.
  • About one-third of Social Security beneficiaries in Minnesota have incomes below $50,000. However, about 88% of the tax reductions delivered by a full exemption would go to Minnesotans with incomes over $50,000. More than 39% of the tax reductions would be realized by taxpayers with incomes over $100,000.
  • More Social Security beneficiaries reside in Greater Minnesota, but 52% of the tax benefits would go to the seven-county metro area because those seniors have higher incomes and, therefore, are more likely to pay taxes on their benefits.

K-12 tax credit

Minnesota currently offers a K-12 tax subtraction and K-12 tax credit to offset education-related costs for Minnesotans. The subtraction is available to taxpayers of any income level who itemize expenses. Tuition for non-public education qualifies for income that may be eligible for a subtraction. The credit is based on income and number of children – a taxpayer with two children cannot have household income exceeding $37,500 – and tuition payments are not eligible to be used toward the credit calculation.

Sen. Chamberlain has long been an advocate for allowing non-public school tuition payments to count toward credit amounts, and the policy was included in the 2015 House tax bill. In 2016, the Republicans offered this change as virtually their only idea for addressing the opportunity gap facing minority communities in this state. It is very likely this will once again be a priority.

  • Quick refresher: a tax subtraction reduces a person’s taxable income. A tax credit directly reduces a person’s tax liability. Some credits, including the K-12 credit, are refundable, meaning the credit amount may be added to tax refund totals and even taxpayers with no tax liability (many low-income earners) may receive the credit amount in the form of a refund.
  • Adding private school tuition to the K-12 credit is controversial and potentially unconstitutional, and would likely lead to litigation and associated costs to the state.
    • In 1983, the U.S. Supreme Court upheld the Minnesota dependent education deduction, but an earlier Minnesota tax credit that applied to private school tuition was invalidated by the Minnesota Supreme Court in 1974.
  • This proposal is incredibly expensive. A Sen. Chamberlain bill from 2015 had an estimated $52 million/biennium cost attached. Investing $52 million into public education that is accessible to everyone would have a much broader impact.

Local Government Aid (LGA) and property taxes

The vetoed 2016 tax bill included a $45 million base increase to Local Government Aid (LGA) and a $10 million increase to County Program Aid (CPA).

This was a hard-fought effort by Senate Democrats, as the former and current House Property Tax chair has made public statements decrying LGA, particularly the amounts provided to Minneapolis, St. Paul and Duluth. The House tax bill originally provided no increase in LGA or CPA and actually cut amounts to the three large cities by $85 million.

In addition to protecting LGA, Democrats may be asked to vote on levy limits. The House Property Tax Committee chairman has voiced support for restricting the ability of local government officials to increase local levies over a certain amount.

  • Democrats worked hard to invest more than $500 million into property tax relief during the past four years, including LGA increases, property tax refund increases, agricultural homestead credit increases, and other forms of relief. Last time Republicans controlled the legislature, they increased property taxes by $1 billion. We will not let them forget about homeowners, renters, small businesses and farmers again.
  • Democrats strongly believe in local property tax relief supported through the city and county aid programs. The funding helps municipalities provide quality, equitable local services across the state without relying on property tax payers to fund all of the needs.

Statewide business property tax

The 2016 tax bill exempted the first $100,000 of commercial/industrial property value from the statewide business property tax, at a cost of $31 million in 2016-2017, and $115 million in 2017-2018. This would have benefited all businesses, but especially small businesses with lower values. There has been bipartisan support for attempting this type of relief once again this year.

Republicans also are interested in removing the annual inflator on the statewide business property tax levy. A bill to do so was introduced in 2015 and cost an estimated $98.5 million in 2018-2019. Other Republicans have pushed for a full elimination of the statewide business property tax. That was included in the House’s 2015 tax bill, at a cost of nearly $1 billion a year.

  • The DFL supports property tax relief for all Minnesotans. If we pursue specific relief for businesses, we should ensure the resources are first used to ease property tax burdens on our small businesses.
    • Fully eliminating the statewide business property tax would cost more than $1 billion and would disproportionately benefit large, out-of-state businesses.
    • According to the Minnesota Tax Incidence Study (nonpartisan Department of Revenue), 53% of the statewide business property tax is paid by non-resident corporations, meaning most of the tax benefit of eliminating the levy would go to companies not headquartered in Minnesota.
    • In other words: for every $1 spent to eliminate the statewide business property tax, Minnesota-based businesses would only see 47 cents of that reduction.
  • When these types of proposals have been considered in the past, it’s been noted that the Chamber supported the tax when it was enacted in 2002 because it was coupled with significant class rate reductions. The Minnesota Chamber of Commerce predicted a 10.3% reduction in C/I property taxes resulting from the change in 2002.

Fourth income tax tier

Many Republicans have denounced the fourth-tier income tax rate of 9.85% on the wealthiest 2% of Minnesotans, but there seems to be little support for actually repealing the rate. Such a move would likely cost about $1 billion and would only affect married couples earning more than $256,511 or single filers earning more than $156,911 in 2016. Instead, Republicans could push a bill to exempt pass-through entities from the fourth tier. Those would include S-corporations or other businesses that pass income through the individual income tax system. In 2015, this effort had bipartisan co-authors in the Senate but did not make it beyond a first committee hearing.

  • Only 2.5% of Minnesota tax filers in 2014 were impacted by the new income tax bracket – the wealthiest in the state. 97.5% of Minnesotans were completely unaffected by the new income tax bracket, aside from the improved tax fairness and new tax relief for the middle-class that came along with the 2013 law changes. Any effort to undo this progressive tax change would be a giveaway to the wealthiest Minnesotans and an irresponsible use of state resources.
Senate DFL Media

Real ID

Minnesota has yet to allow the Department of Public Safety (DPS) to implement REAL ID standards for our driver’s licenses. According to the Federal Department of Homeland Security, Minnesotans will need a REAL ID compliant driver’s license, unless they have other acceptable forms of identification, by January 2018 in order to board a domestic commercial airplane. Although, people are already having difficulty entering military bases with their Minnesota driver’s licenses.

According to recent news reports the House and Senate Republicans have differing opinions on the urgency of this issue. Sen. Limmer does not feel any rush to implement the REAL ID law because he believes the Trump administration may extend the deadline again. Limmer also remains concerned about the amount of data the government will be collecting. Rep. Smith, the House REAL ID author, is worried about the upcoming deadline and wants to pass the implementation bill during the 2017 session. He worries about the effects that not implementing the licensing standards would have on commerce and the ability of people to travel by plane.

In 2016, the Senate passed a REAL ID implementation bill with bipartisan support by a wide margin. The bill ultimately failed during conference committee largely because the House bill specifically barred undocumented immigrants from obtaining the second-tier driving-only licenses. The Senate bill upheld current law, which also does not allow undocumented immigrants to obtain driver’s licenses. There were fears from some that without the specific language barring undocumented immigrants from obtaining driver’s licenses, a Governor’s administration could allow it without legislation. The Dayton administration does not believe it has or would have this authority. Further adding the undocumented driver’s license prohibition unnecessarily adds another layer of controversy to this already contentious issue.

  • The DFL passed a REAL ID implementation bill that protected people’s privacy concerns while also giving the public the ability to continue traveling without additional documentation.
  • The DFL left controversial issues such as undocumented immigrant driver’s licenses out of its implementation bill and prioritized ensuring Minnesotans could freely travel and do business around the country.

Transportation Funding Proposal

The House, the Senate, and the Governor all said a transportation funding proposal would be a top issue for them last biennium. Unfortunately, the Legislature failed to pass a comprehensive funding proposal. The plans that passed the Senate and the House were vastly different approaches on how to fund roads and bridges and whether to increase funding for transit. The GOP plan relied on shifting sales tax revenue, making cuts to transit funding, and borrowing to fill the growing transportation funding gap, whereas the Senate plan increased revenues to invest in Minnesota’s transportation system now and over the long term.

It seems like the likely path forward for the Republicans will be a similar proposal to the House plan from last biennium. The Senate Majority Leadership-elect and the Speaker indicated at a pre-session briefing that a transportation bill will not include a gas tax, likely will use existing general funds, and potentially include “reasonable” transit funding.

The DFL prioritized this issue by:

  • Passing two comprehensive funding bills over the last two biennia that raised enough revenue to fix Minnesota’s roads and bridges and improve transit services around the state.
  • Passing funding proposals that paid for transportation projects over the long-term without shifting money away from our E-12 system or our most vulnerable Minnesotans.

Removing State Funding for Light Rail Projects

The GOP may author bills to stop the expansion of light rail in the Metro. They may attempt to make it more difficult or impossible for state funds to be used on light rail construction or its operations. Additionally, taking state funds out of the picture combined with a county regional rail road authorities’ inability to fund more than 10 percent of a project’s capital costs could restrict future light rail projects. As part of the bonding bill that the Senate passed, there was a provision allowing county regional rail authorities to fund up to 20% of light rail projects. This change essentially took most of the state’s money out of the equation.

  • The DFL has supported expanding our transit systems whether by rail or bus because these systems ensure that students can get to school, seniors can get to medical appointments, and all Minnesotans can remain active in our communities.
  • The DFL also supported giving local control for funding LRT projects, taking the state’s funding share out of the equation.
    • This was ignored by the House GOP, and failed as part of the bonding bill.

Metro Transit Funding Gap

The Met Council is facing a funding gap over the next two years of around $89 million. The main causes behind the funding gap are a projected decline in motor vehicle sales tax revenue, increased use of Metro Mobility, inflationary pressures, and the cost of potentially using certificates of participation to fund SWLRT. This funding gap could renew Republican interest in raising the price to ride Metro transit buses and trains. The rate was most recently raised in 2008. The gap could also prompt calls to reduce transit service, despite growing demand.

  • The DFL Senate passed two comprehensive transportation funding bills over the last four years with an increase in the seven-county metro transit tax. This tax revenue would have funded Metro transit operations and expansion for years to come.
    • A half-cent seven-county transit sales tax would raise around $280 million and eliminate the funding gap.

Car2Go and rental taxes

This fall, Car2Go – a short-term car rental company operating in Minneapolis and St. Paul – announced it was leaving the market, largely due to Minnesota’s high rental-car taxes. There has been some interest in changing the statute related to these types of vehicles to improve transit options in the core cities.

Short-term motor vehicle rentals are defined in statute as a lease or rental of no more than 28 days. The combined sales tax rate for these vehicles is at least 21.075%: they are subject to the state’s general 6.875% sales tax, a 9.2% “rental” tax, and a 5% fee. The rentals also are subject to any local sales taxes in effect within the rental jurisdiction. Of these taxes, only 16.075% of this is paid to the state. The 5% fee is retained by the rental companies to offset payments of motor vehicle registrations, and local sales taxes are retained by the local governments.

Current law provides an exemption from the 5% motor vehicle rental fee (but not the 9.2% rental tax or applicable local taxes) for certain nonprofit car-sharing entities whose members pay the organization for the use of a motor vehicle, if the organization meets certain conditions. There may be an effort to expand the current exemption to include Car2Go, which is not a nonprofit. The cost would have a large effect on whether Republicans would support the change.

Senate DFL Media
Senate DFL Media