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Sen. Torrey Westrom Capitol Report: Feb. 1, 2012

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Welcome to my periodic Senate legislative update. Here you will learn about what is taking place at the Minnesota State Capitol.  

This week proved to be busy with some important and interesting activity occurring.

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The Governor’s Budget: We continued to learn more about Governor Dayton’s proposed budget. Overall, his plan calls for $3.6 billion in new taxes, including $2.1 billion in new sales taxes through a broad expansion of the tax on new goods and services. New sales taxes would be imposed on a wide range of transactions including clothing articles over $100, over the counter medications, haircuts, and auto repair services.

Taxes: The Tax Reform Division held preliminary hearings on a range of issues. Two proposals were considered to establish an up-front sales tax exemption for business purchases of capital equipment. Currently, Minnesota employers are required to pay the sales tax at the time of purchase and apply for a refund later creating a blizzard of paperwork and cash flow problems. This bipartisan idea has enjoyed broad support, and in fact was passed by the 2012 Legislature, though ultimately vetoed in a broader tax bill by Governor Dayton. 

Lastly, the Division began a discussion over the complex topic of business taxation and the tax treatment on Minnesota's many research based employers. Former House Speaker Margaret Anderson Kelliher, now President of the Minnesota High Tech Association, was among the testifiers reiterating that current tax policy, including the so called "foreign royalty deduction" is important to many of the state's biggest employers. Minnesota employers with a long tradition of innovation through research and development support over 1.2 million Minnesota jobs, nearly 50 percent of Minnesota's private sector jobs according to the state's high tech and life science associations. 

Health and Human Services: The Health Insurance Marketplace (exchange) bill continued to be heard in a variety of Senate Committees. This week it was passed out of the Commerce Committee after two hearings on the bill. Many amendments were offered by Republicans that helped increase choices and flexibility for consumers but were rejected. There are still significant concerns about the bill. One of them being the fact that this Exchange would not allow all businesses with a health care insurance product to even be included in the Exchange.

The HHS Finance Committee continued reviewing the Governor's health and human services budget. The Governor's FY 2014-15 proposed budget spends $11.57 million, which is $880 million more than FY 2012-13 and a 9 percent increase over current biennium spending. The FY 2014-15 proposed budget also spends $128 million more than the November Forecast. Public testimony was taken on the Governor's budget.

The HHS Policy Committee passed Senate File 5 (Medical Assistance Expansion) which is an expansion of Medical Assistance coverage for persons up to 138 percent of the federal poverty guideline.  Senators expressed concerns about the bill because the expansion is offered by the federal government under the Affordable Care Act. While the federal government says they will pay for the cost of newly eligible enrollees for the first few years of the program, the expansion will cost a huge unknown amount down the road that the state will be expected to cover.

Transportation: On Monday, the Transportation Committee recommended the confirmation of MnDOT Commissioner Charlie Zelle on a voice vote. Commissioner Zelle is the majority owner of Jefferson Lines, an interstate bus company, and member of Governor Dayton's Transportation Finance Advisory Committee (TFAC). On Wednesday, the committee heard budget presentations from the Department of Transportation and the Metropolitan Council. For his FY 2014-15 budget, the Governor is proposing a .25 percent sales tax increase in the seven-county metropolitan area to help fund Metro Transit bus and rail operations.

State Departments and Veterans: On Thursday, the State Departments and Veterans Division acted on the state employee collective bargaining agreements reached between Minnesota Management and Budget and the state's employee labor unions. These proposed contracts include: A two percent across-the-board salary increase; step increases for eligible employees (approximately half); and no changes in healthcare insurance premium percentages (0% single/15% family).

Judiciary Committee: In addition to budget overviews, the Judiciary Committee began to hear bills this week. First, the committee passed a bill by Sen. Dibble (Senate File 41) that would prohibit discrimination for marital status or sexual orientation in the jury selection process in the courts. This bill now awaits a full vote by the Senate. Second, members began an intense discussion about data privacy as Senate File 60 came up in committee on Tuesday. Members of the committee are attempting to protect citizens' personal email addresses and phone numbers when they sign up to receive snow emergency alerts or school closing notifications. The bill was laid over to hear another day in order to give members and stakeholders the opportunity to tighten the language to best protect people's personal information while still allowing government entities to fulfill their duties. 

Environment and Energy: The full senate confirmed John Linc Stine as Commissioner of the Minnesota Pollution Control Agency and Brian Napstad of Aitkin County as chair of the Board of Water and Soil Resources. The Senate Environment and Energy Committee held confirmation hearings for Governor appointments to the Minnesota Pollution Control Citizens Advisory Committee, the Environmental Quality Board, the Clean Water Board and the Lessard Sams Outdoor Heritage Committee. 

Education: In the Education Finance Division, attention was given to legislation that would expand Minnesota’s funding of kindergarten from half-day to all-day so that it would be a free option for families. The Governor’s budget proposal moved in this direction as well, but did not provide all of the funding that would be necessary to pay for it. According to fiscal analysis, to fully fund the all-day proposal would cost over $165 million per year once it was phased in, which is over three times the Governor’s recommendation. Authors of the legislation did not include a revenue proposal to provide the funding. At this time, between 50-60 percent of kindergartners are enrolled in all-day programs with the money being drawn from family fees, federal funds, and miscellaneous areas of school district budgets.

I encourage and appreciate citizen input. I can be reached by telephone at (651) 296-3826 or(855) 407-7386, by mail at 107 State Office Building, 100 Rev. Dr. Martin Luther King Jr. Blvd., St. Paul, MN 55155, or via e-mail at sen.torrey.westrom@senate.mn.

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