Commerce budget appropriations

The Senate approved budget appropriations for the Department of Commerce as part of the omnibus jobs bill. 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 FY 2018-19. Major provisions in the bill include:

Auto theft prevention account 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 (most recently, last session by Sen. Metzen) to return the funds to the insurance fraud prevention account.

Financial Institutions Division from general fund to special revenue fund

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 is included in the Governor’s budget recommendations.

Commerce-related 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 is 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 is 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 increase 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 is a significant consumer protection recommendation from the Governor on pay day lending regulation that would have closed the industrial loan and thrift loophole. Currently, 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. (SF 1937)

Sunday Sales

The Governor signed into law a bill 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 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 is outdated and limits 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 will 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 say allowing Sunday liquor sales will result in more alcohol-related accidents, more substance abuse throughout the state, and will negatively affect the finances of municipal liquor stores in rural area that depend on funds from these stores. (HF30)

Senate DFL Media