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In the end, the DFL-controlled 2013 Legislature finished its budget work on time — with four minutes to spare, to be exact. It was 11:56 p.m. on adjournment day by the time the Minnesota Senate wrapped up its vote on the tax bill.

Tom Bakk: Remembrance of the session past

Senate Majority Leader Tom Bakk argued that the Legislature’s salary level was becoming a serious impediment to the recruitment and retention. (Staff photo: Peter Bartz-Gallagher)

Senate majority leader talks about highs, lows, unfinished business

In the end, the DFL-controlled 2013 Legislature finished its budget work on time — with four minutes to spare, to be exact. It was 11:56 p.m. on adjournment day by the time the Minnesota Senate wrapped up its vote on the tax bill.

The down-to-the-wire conclusion followed a tense month in which Senate and House Democrats shadow-boxed over a number of issues inside and outside the budget arena. They included, most notably, the shape of the tax bill, the scope of a bonding bill, and the question of a pay raise for legislators. The last point in particular was a key objective of Senate Majority Leader Tom Bakk, who argued that the Legislature’s salary level was becoming a serious impediment to the recruitment and retention of strong legislators.

That issue helped to put Bakk and his Senate DFL caucus on a collision course with the House, which wanted no part of the pay issue, particularly in a budget year marked by the passage of $2 billion in new taxes. In a far-ranging talk with Capitol Report late last week, Bakk talked about the salary question as well as the key achievements and unfinished business of Session ’13. This is an edited transcript of that interview.
Capitol Report: What did you see as the major achievements of this session —the high points concerning the budget and other measures you were able to pass?

Tom Bakk: I think one of the most important things relative to the budget was that in more than a decade, the state hasn’t had an honest budget — one without accounting gimmicks, without borrowing, without shifts — and we accomplished that. Not only is it balanced in the current biennium without those kind of gimmicks, it’s balanced in the next biennium also. So the next governor and the next Legislature that get elected in 2014 aren’t immediately going to have to deal with a deficit.

CR: Within that budget, or regarding policy measures, are there other major achievements you’d cite this time around?

Bakk: To me personally, there are two things, and they’re both in education. One is the state now paying for all-day kindergarten. There’s been plenty of research done at the University of Minnesota about early childhood learning, and we haven’t had any money to spend on it. So I think we made some headway there. We’re paying for half-day now, and some districts are offering half-day now because that’s what we pay for. Others are offering half-day and letting parents buy the other half with tuition. And some districts are charging over $4,000 for that half a day. So those parents are going to save a lot of money. And some districts that pay for the half-day out of existing resources are taking it out of programs they would otherwise be doing. It’s a significant policy change.

The other thing is, we’re getting this growing disparity around the state because of the growing reliance on voter-approved levies. So the idea of allowing every district in the state to levy $300 [per pupil] without a referendum – and increasing the equalizing factor on that so not all the burden will fall on property taxpayers, but the state will pick up a bigger share of that $300 — is really, really good education policy.

CR: What were the main disappointments this session vis a vis the goals you entered session with?

Bakk: Of course I would have liked to get something on the minimum wage. That was a priority for me, but I just felt the House came in too high. They passed $9.50. I think in the Twin Cities, businesses could probably absorb $9.50 and figure out how to manage that. But when you get outside the Twin Cities, into rural towns and border communities, that is just not sustainable. Unfortunately we were unable to find some middle ground between $9.50 and what the Senate passed at $7.75. I just don’t have the votes in my caucus to even meet them halfway. We spent a considerable amount of time talking about the minimum wage, and there’s a strong appetite to raise it, but I just didn’t half the votes to meet them halfway.

The other disappointment — and I really only have two — is that the Senate passed a gas tax increase of 2.5 cents and 2.5 cents, a total of 5 cents over two years. We were trying to lead. Clearly our transportation infrastructure is falling apart around the state. I’ve talked to school superintendents who have told me their biggest fear is that some bus is going to fall through a bridge someday. We shouldn’t have to think like that in Minnesota. There is a critical, critical need to address our transportation infrastructure.
We tried and tried in the Senate. We passed that gas tax, but we just couldn’t get the governor and the House to see it our way. Now the governor has committed to me to conduct a major educational effort over the next year, and committed that if we can build some public support for transportation, he’s absolutely willing to consider a transportation package next session.

CR: Beyond what you just mentioned about the minimum wage and transportation funding, what other pieces of unfinished business do you see out there for next year?

Bakk: You know, I’m not sure there is anything. I know Sen. [Scott] Dibble still wants to move his bullying bill along, and the governor supports that, so I suspect that’s something we’re likely to take up. I think we’re going to have to decide what’s going to be on the ballot in 2014 relative to constitutional amendments. That’s normally done in even-numbered years, so I suspect we’re going to have some conversation with the House about that.

CR: Which amendments do you have in mind?

Bakk: Well, Senate File 4 is a bill that I’m the author of, and it requires a super-majority of the Legislature to put something on the ballot. I don’t know for sure how the speaker feels about that. But you know, this 2012 election was an incredibly divisive election in Minnesota, and part of the reason was that amendments were put on the ballot that had no, or little, bipartisan support. In the case of Voter ID, I don’t think there was a Democratic vote. In the case of gay marriage, I think there was one. [Editor’s note: Two House DFLers, Reps. Denise Dittrich and Lyle Koenen, voted for the gay marriage ban amendment in 2011.] So neither one met the kind of threshold for bipartisan support that I think you should have before you propose amending the state’s constitution. I personally feel pretty strongly about that, but we haven’t talked about constitutional amendments in the caucus yet, and I don’t know where the House is at.

There’s another [amendment] I’ve got some interest in — the idea of retention elections for judges. That issue’s been around for a while, and I think we’re going to have a pretty good vetting of that. I guess I’m not aware of whether any others have been introduced.

And of course next year’s session will include a bonding bill. Conversations that I had with [House Minority Leader] Rep. [Kurt] Daudt and [Senate Minority Leader] Sen. [David] Hann in the closing days of session when we passed the small bonding bill for the Capitol — they clearly are willing to do some additional bonding next session. I think they’ll be willing to do something significant.

Other than that, we go home. We do bonding, we take a look at constitutional amendments and we do something [there] or we don’t, we take a look at the supplemental budget and see if there are any budget corrections to be made. But I expect a session of probably not more than 10 weeks.

CR: The Senate sought to reopen the tax bill in the late going to deal with issues related to taxing farm equipment repair and possibly other matters. What needs fixing there?

Bakk: Well, the Senate had proposed a broader sales tax reform, and when we pared that back, we had had in there a sales tax on the sale of farm equipment and another provision on the sales tax on the repair of farm machinery. But remember, we had proposed lowering the sales tax rate down to 6 percent as a part of that whole package. So when we had to dismantle that, somehow the repair on farm equipment accidentally got left in. It was nobody’s fault. There’s a lot going on in the final days of session, and it was a mistake. So I expect we’ll probably have a conversation about revisiting that issue. We had hoped to just be able to have the 10 conferees sign a change for the revisor’s bill to say it was a mistake. But for whatever reason, in those final hours of session we just couldn’t get all 10 signatures on that, so it didn’t get done.

The challenge in the non-budget year is, there’s really not a need for a tax bill. The challenge will be, what other things should possibly be done from a tax policy standpoint? I expect if any kind of a tax bill does pass [in 2014], that farm equipment thing will be considered. There will probably be some TIF [tax-increment financing] provisions. The department [of revenue] usually has some technical changes that they need to make. But it’ll be a pretty slim tax bill next year, I would think.

CR: Were you satisfied with the amount of tax reform enacted along with the revenue-raising measures in the end?

Bakk: Well, I’d rather have had more. And we brought more to conference, but we had to abandon much of that. The House came a long way in the Senate’s direction on the fourth tier of the income tax. We had to go further on the cigarette tax than I wanted to. But the two major sales tax reforms we got were brought by the Senate — the upfront exemption on capital equipment purchases for business and the elimination of the sales tax for local governments. That’s going to save cities and counties $100 million a year. They’ve been raising property taxes in part to pay that sales tax to the state, so it’s very good tax policy. I would like to have gotten a little more, but no one should underestimate what we got.

CR: With respect to the bonding bill that did pass, you’ve certainly heard all the rumblings out there about your allegedly cutting a deal with Republicans to pass that bonding bill with the understanding that minimum wage and/or bullying would not come up this year. You’ve said that’s not so. Can you explain what did transpire?

Bakk: That’s absolutely not true. You know, the minimum wage bill was a House file. It passed the House first. And for whatever reason, the author, [Rep.] Ryan Winkler, never called a meeting of that conference committee until the last night of session. I don’t have a clue why he didn’t try to pull that conference committee together sooner. He waited until late in the day on the last day of session to have the very first hearing on the minimum wage. And we were just way too far apart. There was no time for us to find the middle ground. You know, conference committees are an opportunity to take public testimony on why both sides have the position they have. And there was no time to get that done.

I really wish he had called the conference committee sooner. I think we might have had the chance to get something done if he had done that. That just kind of failed because the House never called a hearing of the conference committee.

On the bullying issue, our voting board went down and we couldn’t vote any longer. So we were on the bullying bill when the board failed — under a call of the Senate, I believe — so we tabled the bill and recessed until we could get the board fixed. And during the recess, Sen. Dibble and Sen. Hann and I met – and we’re in the last night, right? So I asked the question, how much more time are we going to spend on this bullying bill? And with Sen. Dibble there, Sen. Hann answered, “Our members really don’t like it, and we’re probably going to have considerable debate left on this bill.”

The understanding I always had with Sen. Dibble was, we will take it up, Scott, we will try to pass it. And I support it. But I am not going to spend hours and hours and hours on the floor with this bill in the final days of session. We just didn’t have the time. We saw what happened with that child care [union] bill. We didn’t have the time to spend on another measure like that.

It had already passed the House, and it’s a live bill. I expect it’s one of the things that will be taken up next year. But Sen. Dibble and Sen. Hann and I had a conversation that last night. It became clear that bill was going to drag on, and we just didn’t have the time.

CR: One other issue that seemed to loom over final negotiations was legislator pay, an issue that the House did not want to take up this year. There was a compromise of sorts around passing that compensation council amendment to the 2016 ballot. Can you talk about why pay was a key issue to you this session, and whether that amendment is a satisfactory resolution?

Bakk: What we tried to pick up in the Senate, and actually passed, were all the recommendations of the [Dayton administration] compensation council. Turns out we got them, except for the Legislature. So it’s not as if we didn’t get something done on the pay issue. We certainly got it done for the governor and all of his commissioners, which is important.

And I would like to have gotten it done for the Legislature. As somebody who had to recruit the candidates in 2012, the first question new candidates asked me was, how much time is it going to take? I have to know if I can manage it with my current employer or with the small business that I run. That’s the very first question that really good candidates ask. And the second question they always ask is, what does it pay?

There were some very, very good candidates I interviewed who, when we told them that it paid $31,000, they said well, to take five months off is going to cost me more in my regular employment than I’m going to earn serving in the Legislature. Why would I do that and lose money for my family? That’s not true for everybody, of course, but there are some good candidates we could have gotten to run if we had had a little bit better salary structure. I think the salary we have is inadequate for the responsibility that members of the Legislature have. I realize it’s a very tough vote for people.

But I think the pay issue has to be addressed. We’ve gone 15 years now without a pay increase. I think that’s just not in the public’s interest and not in the institution’s interest. But unfortunately I couldn’t get the House to agree. They just were afraid that it was very bad politics in ’14.

The governor supported me, and I probably could have dug in. I was holding that state government finance bill up for some other reasons. But I probably could have forced it. But the House felt so strongly, and I didn’t want to put the House in a position where I get blamed if they lose the majority in ’14. I felt like that was how it lining up. They thought it was such a difficult political move that it could have impact on their election in ’14. And it’s an Obama mid-term, it’s going to be a tough election for Democrats. There’s no question about that – it’s the same as Republican mid-terms during the George Bush days or the Reagan days. Mid-terms just are what they are, and knowing it was difficult for them, I didn’t want to make it more difficult. When we agreed that we’d do a constitutional amendment, they asked me to do it in ’16 and not ’14 for the same reason.

CR: Any other thoughts about the session?

Bakk: There is kind of a broader theme here, I think. I’ve been contrasting where we are now to where we were two years ago. Two years ago, the courts were deciding what was an essential service and what was going to be funded in the absence of a budget by June 30. We ended up with a [government] shutdown and ended up resolving [the budget] in July after the longest shutdown in the country’s history. We ended up cutting aid to our higher education institutions by 14 percent, borrowed $2.7 billion from our schools, [and] eliminated the homestead credit that homeowners received.

And you can go down the list. So I look at that and I think, wow, what a difference an election makes. This year we’re paying for all-day kindergarten. We’ve put an additional 1.5 percent and 1.5 percent into the [K-12 aid] formula. We’ve put $40M into early childhood funding. We’ve put enough into higher ed that the U of M and MnSCU are going to freeze tuition for the next two years. And all the property tax relief — $100 million more into the property tax relief program. New LGA and county program aid. Township aid for the first time since 2001.

And all the big projects that we accomplished that I don’t think the Republicans could have passed. Mayo Clinic funding. I think if the Republicans had controlled the Legislature, that couldn’t have happened. I don’t believe they would have done the taxes that were necessary for Rochester to be able to partner with the state. So you’ve got the Mayo Clinic. You’ve got 3M. You’ve got Baxter International. You’ve got the expansion at the Mall of America – all major economic development initiatives that came out of this Legislature.

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