CEEM predictions for the 2018 Minnesota Legislative Session

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We are heading into what is sure to be an exciting year in Minnesota politics.

Al Franken’s resignation from the U.S. Senate and, subsequently, former Lieutenant Governor Tina Smith’s appointment to replace him has caused a constitutional argument. The question posed is whether state Senator Michelle Fischbach (R-St. Joseph), who, as President of the Minnesota Senate, automatically became Lieutenant Governor upon Smith’s appointment, can hold two elected offices at once (she intends to ascend to the Lieutenant Governor’s office while simultaneously holding her seat as a State Senator). This question will likely be answered by the courts, but the appointment of Smith means that in the 2018 midterm elections, Minnesota will have both of its U.S. Senate seats up for grabs.

Senators Smith and Klobuchar will not be the only ones up for re-election this fall. The entire Minnesota House of Representatives will be on the ballot in November and, with Governor Mark Dayton not seeking reelection, Minnesotans will be choosing a new Governor.

The looming November election sets the backdrop for the 2018 legislative session which begins on February 20 in Saint Paul. In Minnesota, our government operates on a two-year cycle, or a “biennium.” As the second year in the biennium, unlike the first year, the legislature is not required to pass a new, full budget. Traditionally, the second year in a biennium is reserved for just one major policy initiative: capital investment.

Bonding

Capital Investment, or “bonding,” is the state’s way to pay for public works construction projects on publicly owned buildings and property. The state borrows the money required to finance construction projects by selling state bonds that are paid back over 25 years. Bonding projects could include anything from updating a city’s wastewater infrastructure, to constructing a new museum or concert venue.

Last year, the legislature passed a $988 million bonding bill, so many legislators say there is no need for a bonding bill this year. However, Senator David Senjem (R-Rochester) has the Senate Capital Investment Committee busy touring the state, vetting the nearly $4 billion in project requests. Governor Dayton has already released his 2018 bonding proposal. Coming in at $1.5 billion, the proposal, if passed, would be the state’s largest capital investment bill in state history.

The legislature, however, does not usually adhere to the bonding-only guideline in the second year of a biennium. Often, they pass supplemental tax and/or budget bills.

Taxes

The legislature is never required to pass a tax bill. Tax policy simply rolls over indefinitely if no new legislation is enacted to change the existing law. Last session, the legislature passed a full tax bill, so many legislators had no intention to redo the new law in 2018. With the passage of the federal government’s tax bill in December, the state legislature may need to pass a federal conformity bill that aligns state-policy with the new federal law.

The possibility of a tax bill this year opens up other possibilities for organizations across the state who might be seeking a new tax credit proposal.

Budget

In December, the Minnesota Management and Budget Office released the first of two budget forecasts (the other forecast will be released in February). At the time, Minnesota was facing a $188 million budget deficit. This projection did not consider any change or adjustment in federal policy, including the reauthorization of the Children’s Health Insurance Program (CHIP) which provides nearly $176 million in federal funding to Minnesota. With the passage of the federal government’s tax bill, CHIP was fully reinstated, but whether CHIP funding alone will eliminate Minnesota’s projected deficit is uncertain.

With this uncertainty in budget forecasts, legislators have been hesitant to commit to any new spending. The upcoming February budget forecast will give lawmakers better insight into whether any supplemental spending might be possible.

Energy

CEEM is committed to supporting the growth of energy efficiency and clean energy jobs and investment in Minnesota. CEEM will focus its educational efforts on supporting proactive energy policies that can garner bipartisan support for clean energy jobs and innovation here in Minnesota.

This session, our team is focused on proactively improving Minnesota’s clean energy business ecosystem and, when necessary, defending Minnesota’s nation-leading clean energy initiatives in order to ensure that Minnesota remains a Top State for Business.

Specifically, CEEM will work to establish a clean energy innovation and jobs commission tasked with developing strategies and recommendations to grow and support Minnesota’s clean energy workforce.

We will also be working to advance microgrids and energy storage innovation this session as a way to move the entire clean energy industry forward.

Throughout the last year CEEM has attended and participated in the Residential PACE (R-PACE) Consumer Protection Task Force. We will continue to support efforts to increase access to efficient and clean energy by re-implementing R-PACE in Minnesota with added consumer protections.

We will continue our efforts to accelerate the growth of the state’s solar market. We plan to pursue opportunities to enhance existing programs with additional funding as well as bring forward ideas to expand solar throughout Greater Minnesota.

This session we also plan on re-introducing the residential biomass heating system tax credit. This bill received a hearing in the Senate last year, and we are committed to moving it further along this session.

Lastly, CEEM will also be educating lawmakers on the importance of Minnesota’s Angel Investment Tax Credit that supports the growth of startup companies developing high-technology products and services.

Given our broad array of priorities, it should be noted that with a short, 10-week session, advancing any significant policy changes may be difficult. To that end, we hope to have your participation at the legislature, or wherever you are willing to share your voice. Let us know if you want to meet with your legislator, write a letter, or attend a public hearing.

We always like to remind our members, and every Minnesotan, that your voice matters.