The 2016 Legislative Session will be the second act of the 89th Minnesota Legislature. In order to anticipate what policies, issues, and local projects are likely to be addressed during the 2016 Session, we need to understand what did and did not happen during the chaotic 2015 Session.
After the dust settled and the 2014 election results were final, few political observers would have predicted a smooth and harmonious 2015 Session. After two years of DFL control, with majorities in both the Senate and House as well as DFL Governor Dayton residing in the Governor’s mansion, Republicans took control of the House. This resulted in a significant power shift in the state, one that promised to have major implications in the final budget making process. While there was certainly drama in the negotiating process, the tension between the negotiating parties was not necessarily where many political observers may have expected it to be.
Instead of a united coalition between DFL Governor Dayton and the DFL-controlled Senate against the GOP controlled House, there appeared to be at least as much public tension between the Governor and Senate as there was between either DFL controlled body and the House. In fact, the Legislative Session began and ended with Governor Dayton bluntly expressing his frustrations with the DFL-led Senate. This public rift between the Senate and the Governor, in addition to vastly different budget negotiating positons from the House, Senate, and Governor, resulted in a contentious, closed-door budget making process.
Session ended on May 18th after a frantic scramble by both the House and Senate to pass large omnibus bills in the final moments before the constitutionally required midnight deadline. Governor Dayton took issue with three of these omnibus bills, vetoing the omnibus agriculture, environment and natural resources bill; the omnibus jobs and energy bill; as well as the omnibus education funding bill. This lead to a Special Session in June, during which these vetoed bills were eventually worked out in a form the Governor would and did sign, but not before some additional drama.
The omnibus environment and natural resources bill lost the support of several environmentally conscious DFL Senators and needed broad Republican support to pass during Special Session. This resulted in increased tension between the DFL members of the Senate, with a rift developing between the DFL metro lawmakers and DFL members from Greater Minnesota. Senate Minority Leader David Hann has since stated that his caucus’s support for the environment and natural resources bill was based on a promise from Senator Bakk to include tax cuts in the 2016 omnibus Tax Bill.
With those developments from the 2015 Session in mind, we can look at what to expect in 2016. The major pieces of legislation to watch, come March, will be the omnibus tax bill, the omnibus bonding bill, and any potential legislation on transportation funding. The interactions between the Governor, Senate, and House will also be worth noting, as will the dynamic between rural and metro DFL members in the Senate. We will start by examining what we might expect to see in the omnibus tax bill.
The 2015 Session included a great deal of work on an omnibus tax bill that never came to fruition. Senate Tax Chair Rod Skoe and House Tax Chair Greg Davids, along with their Conferees, met extensively at the end of the 2015 Session in an attempt to hash out an omnibus tax bill. The bill was never fully agreed to, but many provisions were discussed and should provide a good starting point for the Committee’s when they begin assembling the 2016 omnibus bill.
As previously mentioned, Senator Hann has alluded to an agreement between himself and Senator Bakk which will call for tax cuts in the omnibus bill. The size, scope, and nature of these cuts will need to be determined during the committee process, which will be influenced by budget forecast information the State will receive in November and again in February. The tax bill process should be an interesting one to keep an eye on in 2016.
The second year of the biennium is traditionally the year in which a bonding bill is assembled. In order to be eligible for this form of state funding, a project must be publically owned, be of state or regional significance, and be a capital project. To fund these projects, the state sells general obligation bonds on the bond market and pays the debt service on these bonds over time.
2016 will have no shortage of eligible projects looking for funding. Both the Senate and House Capital Investment Committees have been busy crisscrossing the State to observe projects requesting State funding. These bonding tours give Capital Investment Committee members a chance to see projects up close and ask questions of stakeholders. This process provides valuable context when it comes time to assemble the omnibus bill, as members know the projects and have seen what the funding will be used for.
Since the State is currently in healthy economic shape, legislative observers will want to keep an eye on the amount of cash from any potential surplus that may be applied to the bonding bill. If the bonding bill is a mix of bonds and cash, the total number of projects that receive funding may be increased as opposed to a bond-only bill.
Coming into the 2015 Session, transportation funding was identified by both parties as an urgent need across the state. As no omnibus transportation bill could be agreed to last year, this need has only grown. Governor Dayton has stated his desire to address transportation funding again in 2016, as he does not think it is an issue that can wait. However, the Governor’s desire for a transportation bill may be thwarted by the political reality that 2016 is an election year for both the House and Senate. As such, lawmakers’ appetite for a large spending package with tax or fee increases may very well be limited.
Transportation funding is a priority for the Governor, the House, and the Senate, but their differing opinions on how best to fund it may ensure another session passes without any major progress being made.
The fun begins March 8, 2016.
Fryberger, Buchanan, Smith & Frederick, P.A.