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Traveling in the House and Senate budget bills are dozens of little-discussed provisions that could become sticking points in final negotiations.

The fine print: Minnesota budget bills contain little-noted provisions

Instead of putting more money into special education, House Education Finance chairman Paul Marquart said the caucus made a decision to invest in all-day kindergarten and funnel more money into the basic education formula, which is spread evenly across the state. (Staff photo: Peter Bartz-Gallagher)

One-party government moves quickly. Minnesota Capitol regulars have been struck by how fast major budgeting bills have moved through committees and to the floor in the DFL-controlled Legislature.

And with each of those bills come hundreds of lines of fine print.

Traveling in the House and Senate budget bills are dozens of little-discussed provisions that could become sticking points in final negotiations. They include fees and surcharges peppered throughout the proposals, scant funding for special education, a provision that would prevent another government shutdown, and the makeup of a board that will oversee the multibillion-dollar Mayo expansion in Rochester.

The next step for lawmakers is conference committees, where the House, Senate and Gov. Mark Dayton will work out their different funding proposals.  Here’s a rundown of some of the less-heralded provisions now moving in various budget bills.

Special education funding: All DFL leaders agree there’s a shortfall in special education funding in the state, but only Dayton proposed a significant increase in funding for the programs over the next two years. The governor has proposed a $125 million increase for the biennium in his budget, while the Senate increased funding by only $10 million. House Democrats did even less, opting to leave special education funding untouched over the next two years.

DFL House Education Finance chairman Paul Marquart points out that special education is the only area of the education budget that gets an automatic increase in funding.  (Those programs will see a $100 million bump in state spending over the next two years, which amounts to a 4.6 percent increase.) Instead of putting more money into that sector, Marquart said the caucus made a decision to invest in all-day kindergarten and funnel more money into the basic education formula, which is spread evenly across the state.

“We thought the fairest way to get money to all the schools was to put it onto the formula,” he said. But Marquart noted that special education is a “$600 million problem,” and an increase is a priority for Education Commissioner Brenda Cassellius. “Even if you put in $100 million, you are just getting at a sixth of the problem,” he said. “Our whole idea is, we are very serious about creating the best workforce for the state, and we’ve sent some high goals. We need to start early on.”

Fees, surcharges and more fees: There’s a fee on prepaid wireless cell phones in the House tax bill, a fee on water usage in the environment and agriculture bill, and an additional fee on drivers licenses tucked into the omnibus House transportation proposal. And in the omnibus health and human services budget bill, House Democrats impose a surcharge on hospitals to raise more than $100 million over the next two years.

All told, the omnibus House budget bills raise about $300 million through various fees strewn throughout the proposals, a method used far less frequently in the Senate budget bills.  In some cases, that will be a point of friction between the two chambers as they head into conference committees.

For instance, House Judiciary Committee chairwoman Deb Hilstrom would like to see a number of fees imposed on various parts of the legal process in order to pay for improvements to the court system. In her omnibus judiciary bill, Hilstrom raises $13 million from a $15 surcharge on criminal traffic charges, $4 million from fees related to conciliation court and $5.6 million from a $2 fee on court filings.

Rep. Mary Liz Holberg, the ranking minority member of the Ways and Means Committee, said that when it comes to the House’s attachment to fees, “there is a lot more to the story.” (Staff photo: Peter Bartz-Gallagher)

But Senate Judiciary chairman Ron Latz has made it clear that he doesn’t want to add fees to a system already burdened by such things. The House and Senate omnibus health bills also use different surcharges — the surcharge on hospitals in the House, a surcharge on HMOs in the Senate — as a way to make up for a $150 million cut in their budget targets. One option will have to win out in the conference committee.

“There is a lot more to the story,” said GOP Rep. Mary Liz Holberg, the ranking minority member of the Ways and Means Committee, of the House’s attachment to fees. “Within these net targets, there can be all kinds of fee increases and additional spending. Two years ago when we did these targets, there was basically a prohibition on fee increases in our spending bills, so our numbers were pretty tight to what the end result would be.”

Destination medical center board: All eyes have been on the Mayo clinic’s $5 billion-plus plan to build a “destination medical center” this session, but most of the scrutiny has been devoted to the size and terms of the state’s contribution. Less noted is the fact that House and Senate also differ on the makeup of a public board that will be charged with spending state dollars on local infrastructure projects.

In the Senate bill, an eight-person board would lead a new Destination Medical Center Authority, including four people appointed by the governor, two named by the city of Rochester, one from Olmsted County and one from the Mayo Clinic. That’s a big change from the Senate’s previous proposal, which would have prohibited any Rochester residents from serving on the authority. In the House version, final say on infrastructure projects would rest with the Rochester City Council.

Estate taxes: It doesn’t raise as much money as the income, sales or so-called “sin taxes,” but rarely mentioned changes to the state’s estate tax could bring in tens of millions of dollars in revenue if adopted.  Minnesota collects an estate tax on all of the assets of a decedent before they are distributed to their heirs. In the House tax bill, various tweaks to the law would help raise $78 million in revenue. Specifically, the House proposes to raise the money by taxing nonresident property held by pass-through entities, adding a gift tax to certain provisions under the estate tax, and eliminating some exclusions for small business and farm property. But the Senate raises only $23.8 million in their budget via the estate tax, and Dayton proposes no changes to the tax in his budget.

Shutdown provisions: No one wants to raise the specter of government shutdowns in the current Legislature, so DFL lawmakers took a quieter route to assure government continues to work even if lawmakers don’t approve a budget in time. Tucked into the House omnibus state government and veterans bill, which passed off the floor on the first Saturday session of the year, DFL lawmakers included a proposal that would continue all budget appropriations for one year even if lawmakers fail to approve a budget by July 1. Just two years ago, parts of state government were shut down for more than three weeks when the governor and the Legislature couldn’t agree on a way to balance a more than $5 billion budget deficit.

The “Dan Patch” moratorium: The transportation conference committee will have to decide whether to toss out a moratorium on discussing a commuter rail line, a ban that was created by a Republican-turned-DFL House member who now runs the transportation policy committee.

The origins of the current debate are complicated. The Dan Patch freight rail line runs between the Twin Cities and Northfield, but it also used to carry passengers. A decade ago some lawmakers pushed to re-establish that service, but the idea caused so much controversy that some lawmakers, led in by then-Republican Rep. Ron Erhardt, put a ban on transportation officials discussing, studying or even mentioning the project in regional planning documents.

Erhardt is back at the Legislature this year as a Democrat and chairman of the House Transportation Policy Committee, but his new label as a DFLer has not made him more amenable to the idea of lifting the ban. He refused to hear the proposal in his committee.

Northfield DFL Sen. Kevin Dahle managed to push a proposal through the Senate that would allow the Metropolitan Council to study the corridor again. “This used to be a huge priority for some people, and now you can’t even talk about it,” he said. “I’m not saying, ‘Let’s get going and fund this project right now,’ but I think we should at least be able to talk about it.”

One comment

  1. The Omnibus Tax Bill also contains a highly controversial $5 annual surcharge on all home and car insurance policies that would attempt to bailout underfunded police and fire pension funds. It’s controversial because policyholders realize the unfairness of only penalizing insurance buyers and not all Minnesotans with the plan. Plus the surcharge only raises $23-million a year and the funds are underfunded by $1.8-billion, so it seems pretty clear that the $5 surcharge is an initial trial balloon and once it is in place it would likely be raised dramatically. Plus there’s the fact that much of the problem with the underfunding was caused by the pension plans in Minneapolis and St. Paul but the surcharge is going to be paid by policyholders statewide, leaving Greater Minnesota policyholders feeling like they are being asked to bail out bad pensions that are the fault of the cities of Minneapolis and St. Paul. There’s a large amount of unfairness with this proposal but yet the proponents continue to press for it. Luckily, the Senate version of the bill fixes the funding issue but doesn’t impose such an unfair way to pay for it, the $5 surcharge

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