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Session Insight: Will Legislators Reach a Deal?

By May 1, 2016 No Comments

The 2016 legislative session must end three weeks from Monday and as expected we’re nowhere close to a grand bargain that would bring resolution to transportation, taxes, bonding and supplemental spending. This shouldn’t be a surprise as every legislative session sees the major issues pile up in partisan wrangling as we head down the stretch. View MREA’s complete side-by-side comparison of the legislative proposals.

In most sessions, leadership is able to negotiate their way to a deal that brings closure to major legislation. The difference this session is a persistent sense of skepticism about whether or not the major parties and players actually want to negotiate a deal. Read the Star Tribune article.

What’s working against a deal?

Election year politics for starters. The entire legislature is up for election and the pressure is on to satisfy base interests instead of compromising. A decline in the state’s revenue forecast and concerns about a slowing economy are making appropriators nervous.

To provide a sense of how far apart the House GOP majority and the Senate DFL and Governor Dayton are on these major topics, here’s a table showing the big picture numbers:

House GOP

Senate DFL

Governor

Bonding
bill
$600 million $1.4 billion $1.4 billion
Transportation
bill
No gas tax or metro sales tax for transit

Use about $300 million or more in
ongoing general
fund revenue

 

5 cent gas tax and metro sales tax for transit

Use about
$31.5 million
in general fund

5 cent gas tax and metro sales tax for transit

Use about
$20 million
in general fund

Tax cuts

 

$2.3 billion in proposed tax cuts
last sessionCurrent plan is to use a large portion of the $900 million surplus for tax cuts this session
$300 million in
proposed tax cuts
$117 million in proposed tax cuts
Supplemental Spending
(on non-Tax and
non-Transportation accounts)
A net $0 impact on the general fund; leave the $900 million surplus
for tax cuts and transportation
$489 million of
$900 million
surplus spent on
E-12, health and human services,
jobs, etc.
$581 million
of $900 million
surplus spent on
E-12, health and human services,
jobs, etc.

There are philosophical differences over transportation funding; whether to raise the gas tax or use general fund dollars for roads and bridges. Whether or not light rail, such as the southwest metro light rail line, should move forward. The size and scope of tax cuts, state borrowing for capital projects and various funding priorities like pre-K and broadband.

On tax and budget issues, they simply can’t afford to make any major moves right now without jeopardizing the state’s long term budget status. Responsible policy makers know they can’t bite off more than they can chew and perhaps they would rather take their messages of priorities to the voters this November.

Perhaps leaving the surplus on the table for the next legislature is the best thing to do. Given the fact that they don’t have to pass anything to keep the wheels of government turning a “do nothing session” could be the result.

What could move forward?

Still, there are many ‘small ball’ items that could be addressed this session while there’s still time on the clock.

A comprehensive transportation package may be out of the question, but they can still use one-time surplus cash and bonding to take care of some immediate transportation projects.

Broadband expansion could be funded with one-time funds.

There are many education funding initiatives that would advance the ball in areas of teacher shortage and licensure capacity that aren’t budget busters.

This is a non-budget session and they don’t need to swing for doubles and home runs this May, but they could string together a few base hits to score a few runs and say to the people of Minnesota they took care of some limited consensus priorities. This will require cooler heads to prevail and a public desire to accomplish some of the legislative agenda that’s advanced this far.

What’s next?

Next week the supplemental budget conference committee will get appointed and will start work sorting through hundreds of pages of proposed fiscal policy and budget initiatives. We’ll see the Senate roll out an ambitious bonding bill that will match or exceed Governor Dayton’s $1.4 billion package of requests.

The transportation conference committee will meet and presumably leadership will be meeting to see what’s possible to get across the finish line. It will feel like a lull in the action this week and the next.

The question is will we have the usual flurry of activity in the final week or will the 2016 session fizzle out and become a historical footnote as a “do nothing session.”

What’s Changing?

Read about the recent amendments of interest.

View MREA’s complete side-by-side comparison of the legislative proposals.