What to watch for in Minnesota’s coming legislative session

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The path through any budget session leads to a negotiating table at which the governor and legislative leaders work out the most politically palatable taxing and spending deal they can muster. But the budget is never the only game in town. Before the session endgame gets played out, a network of committees will play host to various and sundry dramas involving policy issues before state government.

Here’s a guide to key policy matters that are likely to be addressed and heavily lobbied in the 2013 legislative session.

Education

School districts are increasingly seeking revenue from local property taxpayers, and students of color are facing a wide achievement gap with their white peers. Proposals geared to those two problems figure significantly in the K-12 education finance and policy discussion in 2013.

A blueprint of sorts was handed down on Nov. 27 in the form of recommendations from the Education Finance Working Group. The group of education stakeholders, including school superintendents and labor officials, was assembled by state Department of Education Commissioner Brenda Cassellius. Their recommendations pointed out that state funding for K-12 education has not kept track with the rate of inflation. Another crucial element of the report consisted of data showing the rising incidence of school districts seeking to increase local property tax levies.

One of the working group’s recommendations calls for the state to go back to a general education school levy, which would turn back the clock to the sort of statewide levy that funded schools before the 2001 property tax reform package signed into law by Gov. Jesse Ventura. The plan would distribute a portion of operating levies in local school districts through the general education formula. The recommendations, which would increase state funding for education by $663 million, also include a call for all-day kindergarten for children in poverty.

Lawmakers will also scrutinize the teacher evaluation system that’s in the design stages. In 2011 Gov. Mark Dayton and GOP legislative leaders agreed on a general framework for assessing teachers based on a variety of measures, including student performance. Incoming House Education Policy Chair Carlos Mariani, DFL-St. Paul, said the Legislature will play an oversight role in the development of the teacher evaluation system that’s supposed to go live in 2014.

“My understanding is, it’s gotten pretty complex,” Mariani said. “We’re going to be keeping a close eye on it. If it gets overly complex, it’s not a good sign. Because sometimes over-complexity … says we’re trying to figure out how to not make this thing work.”

The issue of school bullying is also likely to get attention in 2013. In August, Dayton spoke out against bullying and gave the state’s current anti-bullying law “a

D-minus, at best.” Mariani said his committee will aggressively pursue anti-bullying legislation.

“I think there is a real strong will and desire to get something in statute this year to make sure we come out with a modern version of anti-bullying legislation so that we can avoid some of the tragedies that have been happening in our state,” Mariani said.

Mariani also said it’s with no small amount of humility that his committee will set about overhauling the high-stakes test law that originally passed when he last chaired the House Education Policy Committee. The so-called GRAD test in math, reading and writing is required of seniors. The math test in particular has placed many students at risk of not getting their diplomas. By 2015, according to current statute, students won’t be able to graduate if they don’t pass the test.

Mariani said people are leaning on him for a total repeal. Short of repeal, he said, he’s inclined to make a massive overhaul given that both the business community and advocates for communities of color would like to see some sort of guarantee that high expectations are being set for students.

“I think the better tack to approach this from is modifying the existing testing statute, perhaps getting rid of the high-stakes nature of it,” he said. “Or keeping the high stakes nature but making it more fair in being the kind of engagement that actually informs instruction and doesn’t just get a student at the end of the year and then you’re rushing for the last few weeks to figure out how to pass this damn test.”

The state’s integration revenue program will also get significant attention. A report from the Office of the Legislative Auditor a couple of years ago pointed out problems with the program, which is supposed to help make schools better racially integrated. In 2011, lawmakers passed a budget that sought to overhaul the integration funding program.

— Charley Shaw

Health care

The establishment of a health care exchange ahead of the full implementation of the federal health care overhaul is the foremost item on the agenda (see related story in this section). But retooling MinnesotaCare — the state’s primary vehicle for providing subsidized insurance to the working poor — will also be a significant focus for the session. That’s because there will need to be substantial changes in order for the program to coexist with the Affordable Care Act (ACA).

MinnesotaCare was enacted two decades ago. It provides subsidized, sliding-fee coverage to individuals and families who make up to 275 percent of the federal poverty standard. (That’s roughly $58,000 for a family of four, or $28,000 for a single adult.) An average of 148,000 individuals are covered through the program at any given time, with roughly 35 percent of those being children.

Under the federal health care law, Medicaid will be expanded to cover everyone making up to 138 percent of the federal poverty level, and the state government won’t be on the hook for its customary portion of the bill initially. But that still leaves a significant chunk of the working poor who won’t qualify for Medicaid and would also struggle to afford coverage offered through the exchange.

Under the ACA, states have the option of creating what’s known as a Basic Health Plan to help plug this gap. Health care advocates are hoping that MinnesotaCare can be tweaked to fill this role, and perhaps even be expanded with the help of federal dollars.

“It is a program that works for working families,” said Liz Doyle, associate director of TakeAction Minnesota, which expects to be active in lobbying on the issue. “We have the opportunity to not only keep the program but improve it and modernize it.”

DFL Rep. Tina Liebling, who will chair the Health and Human Services Policy Committee, confirms that overhauling MinnesotaCare will be on the agenda. “We’re hoping to put something in place that will be the next iteration of MinnesotaCare,” Liebling said.

— Paul Demko

Transportation

Transportation has been a sleepy subject since the 2008 session in which House DFLers persuaded six Republicans to override Gov. Tim Pawlenty’s veto of a transportation funding bill that increased the gas tax. Transportation needs, meanwhile, have continued to grow: The state Department of Transportation projects that the state’s highway construction program is en route to being underfunded in the next 20 years by $12 billion.

In January 2012 Gov. Mark Dayton created a Transportation Finance Advisory Committee consisting of state legislators, local government officials and businessmen, and that body issued draft recommendations on Nov. 30. The recommendations call for a gradual increase in the gas tax to raise $15.2 billion over the next 20 years for the Highway Users Tax Distribution Fund. They also call for increasing the motor vehicle registration fee to raise $1.1 billion in the next 20 years. On transit, the panel advised an increase in dedicated sales taxes devoted to transit in the metro area and greater Minnesota.

The prospects for a gas tax increase are uncertain because Gov. Mark Dayton is a critic of the tax. “I’m not a proponent of the gas tax, because it doesn’t solve the problem,” Dayton said this month. It’s uncertain how extensively Dayton will embrace the panel’s findings.

But long-time transportation lobbyist Bob Vanasek said that the session has the makings for progress on transportation funding. “I think, for the first time since 2008, there’s going to be a serious look at new funding for transportation,” Vanasek said.

— Charley Shaw

Bonding

While the Republican Party lost its legislative majorities in November, the GOP still retains clout in one area: bonding, where the DFL’s freshly won majorities still fall short of the required three-fifths majority required to pass capital investment bills. With 81 votes needed to pass bonding in the House, and 41 in the Senate, the DFL would need to gain at least eight Republican representatives and two senators to approve a bonding package.

Over the past two years, Republican majorities and Gov. Mark Dayton have agreed on relatively moderate bonding bills, passing a $531 million package as part of the deal to end the 2011 government shutdown, and a $496 million bill last session.

Already, some DFLers have said the party should not only consider bonding, but pursue it aggressively. Democrats who have expressed interest in the bill come from a range of regions and professional backgrounds. Rep. Paul Rosenthal, DFL-Edina, who works as a trader of international currency, said he wants to see a “big” bonding bill, explaining that historically low interest rates make the idea “a no-brainer.” Meanwhile, Iron Range newcomer Jason Metsa, DFL-Virginia, a union organizer who will fill the vacant seat of his political mentor, retired Rep. Tom Rukavina, said he is looking forward to a “good, strong bonding bill.”

Rep. Alice Hausman, DFL-St. Paul, who will chair the House Capital Investment Committee, wants the DFL to pursue a “robust” bonding bill during the start-of-session lull that occurs before the February economic forecast kicks off budget season in earnest.

But Hausman, now entering her 12th term in office, has another reason to push the issue early: She fears Republicans would try to withhold late-session bonding votes as a bargaining chip in exchange for greater influence on the budget debate. Calling bonding a “stand-alone deal,” Hausman is confident the requisite number of GOP votes can be found.

“I know there are Republican districts and the business community who want this bill,” Hausman said, “and all the major metropolitan chambers [of commerce] want it.”

— Mike Mullen

Environment

The four environment policy and finance committees in the Legislature are evenly split between metro-area environmentalists and pro-business Iron Rangers. If the controversial subject of nonferrous mining arises — and especially if it’s related to the proposed PolyMet copper and nickel mine near Babbitt — then sparks are certain to fly.

When DFLers last held the majority, metro-area legislators in the House and Senate proposed legislation that would have ratcheted up the financial assurances that nonferrous mining companies would need to make in order to start mining. (Those assurances involve the environmental clean-up costs that would come into play as a result of the mining.) Iron Rangers responded that the bill would kill the project. Incoming Senate Environment and Energy Chair John Marty, DFL-Roseville, said mining will be a topic for discussion in his committee, although he’s not sure whether legislation will arise.

“I’ve seen a lot of mining companies promise jobs and good practices,” he said, “and then they strip the treasures out of the earth and leave the land scarred. I think it’s a huge risk and I suspect the committee will take a look at it.”

House Environment and Natural Resources Policy Chair David Dill, DFL-Crane Lake, said the PolyMet project is under regulatory review and matters like issuing a water permit and assigning financial assurances will be determined by the state Department of Natural Resources.

Dill said he’s concerned that some legislators might want to enact financial assurances so stringent that it would derail the project.

“My position, and the Iron Range delegation position, is if it can be demonstrated that it can done properly with the proper technologies, and with the proper financial assurances, then by all means we should move forward,” Dill said. “If it cannot be, or the risk is such that it can’t be quantified or assured, then we probably shouldn’t do it. We’re hoping that it can be done. We’re not willing to put obstacles in front of it so it just can’t be done.”

Another hot environmental issue that’s arisen more recently pertains to the massive expansion in mining of the silica sand that exists in abundance around the banks of the Mississippi River. The finely ground sand is in high demand for the hydraulic fracturing process used to explore for oil and natural gas deposits in North Dakota. Environmentalists and local government officials in eastern Minnesota have expressed concerns about the effects of frac sand mining on the land and the air. John Tuma, a former GOP legislator and a lobbyist for Conservation Minnesota, said it’s unclear what sort of legislation might get offered regarding nonferrous mining this session.

“It will be interesting to see what direction that goes,” he said — “if it goes down the line of a moratorium or if takes more of a health-issue type setting where we’re talking about the [health effects of] silica dust and that type of stuff.”

— Charley Shaw

Campaign finance

On the heels of a major election year, Capitol watchers can expect a loaded agenda for the House and Senate Elections Committees when the new DFL-controlled Legislature convenes in January.

DFLers are likely to take up everything from a June primary date and electronic poll books to revamped campaign finance reporting requirements.  DFL Rep. Steve Simon, the incoming chairman of the House Elections Committee, says he’s seeing a strong desire to put more teeth in campaign finance reporting requirements after outside groups proved to be the major money players in a handful of key legislative elections this fall.

The desire to change reporting requirements is bipartisan. Incoming freshman Republican Rep. Jeff Howe, the brother of ousted GOP Sen. John Howe of Red Wing, wants to crack down on the kind of outside spending excesses that he says contributed to his brother’s defeat. DFL Sen. Jim Carlson, who prevailed in a costly Senate contest in Eagan, says much of the money spent against him did not show up on any campaign finance reports. He’d like the committee to tighten requirements to include spending from nonprofit issue advocacy groups, which currently are not required to file reports with the Minnesota Campaign Finance and Public Disclosure Board.

Members of both parties are also taking issue with a state law that complicated several races this cycle. A decades-old election provision in the law books currently does not allow most candidates for elected office to withdraw from the ballot after a two-day window in June. The law was highlighted this summer when DFL Rep. Kerry Gauthier, a first-term lawmaker from Duluth, made headlines for having oral sex with a 17-year-old male in a public rest stop. Gauthier ultimately withdrew from the race, but Democrats had to go all the way to the state Supreme Court to get his name pulled from the ballot.

“We’ve been grappling with this law since at least Sen. [Paul] Wellstone’s death,” Simon said. “We need a better way to deal with these unforeseen events.”

Secretary of State Mark Ritchie has also recently said that he would like to see the window for early voting expanded in the state after a record number of ballots — about 30,000 more than in 2008 — were cast this year.

— Briana Bierschbach

Minnesota Sex Offender Program

The politically toxic issue of what to do with the state’s troubled civil commitment program for sex offenders will be on the front burner when the Legislature convenes. That’s because the court-appointed Sex Offender Civil Commitment Advisory Task Force has directed legislators to take action on creating “less restrictive alternatives” to indefinite detention at prison-like facilities in Moose Lake and St. Peter. That panel’s creation stemmed from a class-action lawsuit challenging the constitutionality of the terms of confinement for the 650-plus individuals involuntarily enrolled in the Minnesota Sex Offender Program.

That process will likely prove costly and contentious. The flaws of the program have been known for years. Minnesota has the highest per-capita rate of civil commitments in the country, but has provisionally discharged just two individuals over two decades. Last year the Office of the Legislative Auditor released a report that was sharply critical of the civil commitment program, detailing flaws that included disparate treatment of individuals depending on where they live and inadequate treatment options available to enrollees.

Last year Sen. Warren Limmer, R-Maple Grove, and Rep. Tony Cornish, R-Vernon Center, spent months working on a plan to overhaul the state’s sex offender policies. But that effort was scuttled by GOP House leadership even before a bill was introduced. Now the Legislature will be forced to act or risk a federal takeover of the civil commitment program.

Legislators from both sides of the aisle insist that they understand the gravity of the situation and will act promptly to fix the problems. “We’ve known for a long time that this program needed a good deal of attention,” said Sen. Tony Lourey, DFL-Kerrick, the incoming chair of the Senate Health and Human Services Finance Committee. “I think it’s time to really put our nose to the grindstone. One of the key things that we have to do is work in a bipartisan manner.”

— Paul Demko

Labor

One of the most controversial acts of Gov. Mark Dayton’s first two years in office was issuing an executive order calling for an election to determine whether the state’s roughly 11,000 child care providers want to have union representation. Child care providers who were opposed to the election sued Dayton in Ramsey County District Court, arguing that he had overstepped his constitutional authority in authorizing the vote. A judge agreed and halted the proceedings last December, just two days before ballots were set to be sent out by the Bureau of Mediation Services.

But with DFL legislative majorities back in power, there likely will be a push to authorize such an election legislatively. AFSCME Council 5 and the Service Employees International Union (SEIU), the two unions that would split representation of the day care providers, have spent years trying to organize workers across the state and aren’t going to give up on the matter.

“I absolutely expect it to come back legislatively. The question is what form that takes,” said Jonathan Blake, vice president of the Freedom Foundation of Minnesota, which has been a vocal critic of the unionization effort. “AFSCME and SEIU invested a great deal of money in supporting and electing these new legislative majorities, and I don’t think they did that out of the goodness of their hearts.”

— Paul Demko

Legacy Amendment

Controversy erupted two years ago over the distribution of Legacy money between the Twin Cities and greater Minnesota. In 2011, greater Minnesota parks backers made a push to increase their share of the voter-approved dedicated sales tax funding. Before then, the Legacy money for parks had been a three-way split of 43 percent for metro parks, 43 percent for Department of Natural Resources parks and 14 percent for greater Minnesota parks. After much sturm and drang, lawmakers increased the greater Minnesota share to 20 percent. The metro was knocked down a point to 42 percent, and the DNR parks received 38 percent.

Since then, a group has met to reach a consensus on the proper amount of funding. The outcome is a recommended 40-40-20 split. Brian Rice, a lobbyist for the Minneapolis Parks and Recreation, has said that the percentages are not fair and that the issue will be contentious as lawmakers write the next Legacy funding bills. Rice noted that the volume of visits in metro parks is far greater than in the rural parks: He said the metro parks system have 44 million user visits a year, the DNR parks have 9 million visits and the greater Minnesota parks have about 1.2 million visits.

“To spend resources in that way is simply not good public policy,” Rice said.

The parks portion of the Legacy fund is slated to receive roughly $38 million in the 2013 fiscal year.

— Charley Shaw

Consumer protection

The fallout from the housing crisis has led to an unanticipated development: The number of contract-for-deed transactions has skyrocketed in recent years. These alternative transactions can be risky because the seller typically maintains control of the deed until all payments have been made. If the buyers miss a payment, the deals can be canceled and the purchasers potentially lose their entire investment. Such deals were rare — and typically between family members or close friends — prior to the housing crisis. But with the dramatic tightening in credit, particularly for low-income individuals, contract-for-deed transactions have become much more common.

In Hennepin County, for instance, the number of such transactions has increased from 401 in 2007 to 623 in 2011 — a more than 50 percent increase. In addition, the number of individuals conducting multiple contract-for-deed sales has similarly jumped, accounting for as much as a third of such transactions in recent years. In some cases, landlords who primarily rent to low-income tenants are utilizing such deals to avoid rental licensing and inspection requirements.

The Legal Services Advocacy Project and other consumer protection advocates are pushing for legislation that would require greater disclosure for individuals engaging in contract-for-deed purchases so that they have a chance to fully understand the risks. They’d also like to see a waiting period implemented whereby purchasers would have time to assess the merits of such a deal. Such requirements would likely only apply to transactions in which the seller has engaged in more than one contract-for-deed transaction in a year.

“Frankly it’s been necessary for a long time,” said Ron Elwood, supervising attorney for the Legal Services Advocacy Project. “The problem has reached the magnitude where it’s clear something needs to be done.”

— Paul Demko

Liquor

The liquor lobby — led by the Minnesota Licensed Beverage Association (MLBA) — has generally been successful in beating back any effort to make substantial regulatory changes. But two years ago, the state’s liquor laws came under an unusual amount of scrutiny.

That’s largely because Surly Brewing hired the influential lobbying shop of Cook Girard Associates to push its proposal to allow breweries to operate bars on their premises. Under a barrage of pressure and negative public relations, the MLBA eventually acquiesced to the change. But other changes to the state’s liquor laws, with arguably greater ramifications, were dropped.

Most notably, a proposal backed by the state’s brewpub owners that would have allowed them to bottle and can their products for sale in stores got mothballed. DFL Sen. Sandy Pappas, of St. Paul, was the lead author of the bill. The issue largely lay dormant in 2012, but could be back on the agenda in the coming legislative session.

Brewpubs would also like to lift the 3,500-barrel limit on how much beer they can brew at a single facility each year. Some of the state’s more successful operations are already butting up against that limit. At Fitger’s Brewhouse in Duluth, for instance, the owners believe that they could hit the 3,500-barrel capacity as soon as next year, according to company spokesman Brad Nelson. Fitger’s currently has four venues in the Duluth area and is in the process of developing two additional locations.

But Nelson is uncertain how much energy or money the company is willing to devote to lobbying for changes in the law, given the difficulty of taking on liquor interests. “We’ll poke and prod on the issue, but we don’t have plans to hire a lobbyist,” Nelson said.

—Paul Demko

Renewable fuels

The issue of the future of biofuels could find traction in agriculture policy committees.

The 2012 omnibus agriculture policy bill created an advisory committee to assist the NextGen Energy Board in formulating policy recommendations for the next generation of biofuels beyond corn-based ethanol. Interest groups ranging from farmers to ethanol producers and refiners have been discussing the topic in the run-up to the session. That group’s report is due to the Legislature in February. Current state law has a percentage requirement for ethanol use. State lawmakers will likely look at whether biobutanol should be added to the fuel mix, and if so, what sort of formula should be adopted.

Chris Radatz, public policy director for the Minnesota Farm Bureau, said there’s also been a larger discussion of whether state law should be made more flexible to allow for new technologies and products as they emerge. “That’s an issue that’s out there that needs to be addressed,” Radatz said.

— Charley Shaw