Please ensure Javascript is enabled for purposes of website accessibility
Recent News
Home / Budget / Taxes / Issues to watch in 2015

Issues to watch in 2015

Gov. Mark Dayton has four years remaining in office to think about, and little else: The governor has said he will not seek re-election after his second term. (File photo)

Gov. Mark Dayton has four years remaining in office to think about, and little else: The governor has said he will not seek re-election after his second term. (File photo)

In accordance with statute, Minnesota’s 2015 legislative session will start the Tuesday after the first Monday in January — Jan. 6, in this case. When and how it stops, nobody knows.

For the most part, political leaders of all stripes have said it’s too early to even consider a government shutdown owing to a budget stalemate. But raising the specter of legislative gridlock is far from conjecture, and more a function of the state’s recent history. Divided control of government led to two shutdowns in the course of a decade: first in 2005 under Gov. Tim Pawlenty, and again in 2011, when Gov. Mark Dayton and Republican lawmakers refused to budge. Both battles lasted through mid-July, dragging on several weeks into the next fiscal year.

Of course, 2015 has one obvious and significant difference from those years. The state is flush with cash, with the largest projected surplus since 2007. But deciding just how to spend — or, indeed, whether to spend — the bottom-line carryover ought to be complex enough to occupy state politicos’ time for the next five months. If not longer.

The budget is just one of a handful of political narratives worth keeping an eye out for during the coming year. Here are four storylines that are likely to make headlines in 2015.

The surplus: Spend or save?

The state will have an estimated $1 billion surplus in its bank account when the current fiscal year ends in June. The three branches of the Capitol tree have sounded off with some of their desires already, but are keeping other details close to the vest. In the past, Senate Majority Leader Tom Bakk and his budget lieutenants in the DFL caucus have supported building the state’s reserve account to prepare for future economic downturns.

That philosophy was also a hit with Minnesota Management and Budget Commissioner Jim Schowalter. Schowalter’s office consistently lobbied for increasing reserve accounts, at times putting him at odds with the governor. Schowalter’s departure from that post makes way for Myron Frans, who, as former commissioner with the Department of Revenue, was Dayton’s lead negotiator on tax hikes that prove anathema to Republicans.

Those same Republicans, now empowered in the House, will push to “spend” the surplus largely through tax cuts to Minnesota’s individuals and businesses. Federal income tax conformity and cuts to corporate taxes on both income and property are expected to top the GOP’s wish list, though the net effect of those moves remains to be seen.

Also on the table is the possible use of general fund dollars for transportation needs. The Minnesota Chamber of Commerce has said it will push for that idea as an alternative to raising new dedicated revenues; that voice is a crucial one, as chamber opposition was enough to effectively quash prior attempts to raise a gas tax. The suggestion might gain favor with Republicans, who seem equally disinterested in passing a revenue increase, and had instead favored paying for transportation out of bonding projects.

As always, education and health and human services will figure into the spending discussion. Dayton has said he wants to expand pre-kindergarten program availability, and long-term care interests are gearing up for another “5 percent campaign” to boost spending on seniors and the disabled; both items would come with a price tag in the hundreds of millions.

Education reform

Talk of revising the existing “last in, first out,” or LIFO, policy for teachers was a nonstarter under DFL control, but will resurface in a big way this year. About 60 percent of Minnesota’s school districts use seniority as the central determinant in teacher layoff decisions, a policy which Republicans argue has made it harder to remove ineffective educators from the public school system.

Senate Democrats have said they are not interested in the prospect, and are instead looking forward to new recommendations for teacher performance evaluations. But, as Sen. Branden Petersen, R-Andover, observed recently, House Republicans could leverage their position of power on budget votes to force the DFL’s hand on non-fiscal matters, including education policy.

The argument will pit two political powerhouses against one another, with Education Minnesota, the state teachers union, poised yet again to oppose an overhaul of the current system. On the other side, the Minnesota Action Network, a major conservative political action group that favors the dissolution of LIFO, is taking its case to the public. That outfit announced last week that it would air a television ad campaign urging Minnesotans to contact lawmakers and “allow schools to consider performance when hiring teachers.”

Rural versus metro

Conservatives had argued that the state’s DFL leaders were beholden to a liberal urban base, pointing to Dayton’s office and the makeup of House leadership. The same can hardly be said of the upper chamber, where Bakk and several other outstate Democrats hold key positions, including Senate Tax Committee Chair Rod Skoe, DFL-Clearbrook. House Republicans, for their part, can directly attribute their election success to outstate districts, where they won all but one of their targeted districts.

Aside from Dayton, who has often been amenable to Iron Range and rural interests, the scenario leaves urban Democrats on the outside looking in. Topics where House Republicans and Senate DFLers could find common ground include a shift in the local government aid (LGA) formula, less-strict regulations on water or pesticide use for the state’s farmers and an economic development strategy that favors struggling outstate towns over the Twin Cities.

And, of course, mining. The new House committee structure contains a “mining and outdoor recreation” committee which had not previously existed, and could be utilized to address wetlands mitigation policy, among other changes that might tilt the balance toward mining industry needs over the pleas of environmentalists.

Faith in Daudt

Two figures in the state’s elected leadership triangle are known entities. Dayton has been running for office in Minnesota, and winning, for decades, and his populist ideology is firmly ensconced in the public consciousness. Leading the Senate is Bakk, a veteran lawmaker whose strength as a negotiator — before retiring, Bakk was a carpenters union representative — is known to play out both behind closed doors and through the media.

Least known, then, is Kurt Daudt, the 41-year-old conservative who will take the reins of the 134-member body in just his fifth year in office. During his tenure as minority leader under one-party control, Daudt was largely relegated to criticizer-in-chief, lamenting DFL moves on budgeting and taxes as the party’s majorities steamrolled along, unblinking. Election wins have handed Daudt a gavel and a seat at the negotiating table. Can he play Dayton and Bakk off each other and secure political victories for his caucus? Or will the newcomer find himself outmatched by a pair of wily Capitol veterans?

For Daudt, pressure will come both from above, where his partisan opposites hold power, but also below. His newly constituted caucus includes more than a dozen new faces, and wrangling those Capitol rookies into an organized unit would be daunting for even a seasoned legislator. Daudt will need to enforce voting discipline and drafting in moderation; Republican support for a gay marriage ban and voter ID in 2012 were later blamed for election losses. But the Republican would also lose face with his GOP colleagues if Daudt’s budget and bonding deals don’t exhibit Republican priorities.

The “X factor” in the three-way tug-of-war is Dayton. Though his political profile is well-established, Dayton has four years remaining in office to think about, and little else: The governor has said he will not seek re-election after his second term. That’s in contrast to Daudt and Bakk, who will both be angling for fiscal and regulatory policies that will lead to the re-election of their members — and, if possible, losses for their opposite number in the other chamber when voters hit the polls in 2016.

Leave a Reply