Budget Battle
Conference committees on the budget bills for the next biennium have begun their initial walkthroughs of fiscal tracking sheets and side-by-side comparisons, but the real negotiating is awaiting new budget targets from legislative leaders.
Minnesota has a projected $1.9 billion surplus and disparate philosophies expressed by the three players on how to use the money. Conferees on the budget bills are hoping for targets by very early next week in order to reach final conclusions on the bills.
House Speaker Kurt Daudt (R-Crown) is making his pitch that state government should shrink when there’s a budget surplus, and that the extra money should be used to cut taxes. House Taxes Chair Greg Davids (R-Preston) has acknowledged his $2 billion tax cut plan isn’t going to become law as proposed, and crafted his tax bill to include Gov. Dayton’s top tax measures — including expanding the state’s child care tax credit.
Gov. Dayton has drawn a line on universal pre-kindergarten for four year olds and on improving water quality by requiring farmers to leave buffer strips near lakes, streams and rivers. He is signaling a willingness to compromise with House Republicans on a tax bill. He said Monday that he’s interested in adjusting the tax on Social Security benefits to lessen its impact middle-income seniors. Gov. Dayton also expressed an openness to an individual income tax exemption. He said he could be agreeable to that tax cut, because it benefits all income levels and would last only two years.
Senate Majority Leader Tom Bakk (DFL-Cook) signaled he’s willing to wait Daudt out on taxes. He said he would like to have a tax bill, really wants to get a transportation bill, and is willing to consider matching dollar for dollar gas tax money for tax cuts. However, Bakk has also said that tax and transportation bills could wait until the 2016 session if agreement can’t be reached.
The Senate passed a tax bill Monday that cuts taxes for businesses that hire veterans, reduces business property taxes, and directs more state aid to cities and counties. Senate Taxes Chair Skoe (DFL-Clearbrook) said the key provision in the bill is a $2,500 tax credit for employers who hire veterans. The bill would also speed up an aid payment to local governments and provide property tax relief for homeowners and businesses. It would also increase state aid to cities and counties.
Republicans said the bill doesn’t cut taxes enough. Sen. Julianne Ortman (R-Chanhassen) complained that Senate Democrats are using just a tenth of the state’s nearly $2 billion budget surplus for direct taxpayer relief.
House Speaker Daudt revealed Wednesday that a compromise on taxes with Gov. Dayton and Senate Democrats would require a cut of at least $1.1 billion to the House tax bill. Daudt said that to achieve a budget agreement everyone has to meet in the middle.
Rep. Daudt and DFL Senate Majority Leader Bakk are scheduled to join Gov. Dayton at Saturday’s fishing opener on Lake Vermillion. Time will tell if the fish are biting. To avoid a special session they have to pass a budget before the constitutional deadline to adjourn of midnight on May 18.
Health and Human Services Budget
Leaving a breakfast meeting at the Governor’s residence with other House Republicans, Speaker Daudt said that health policy is where Democrats and Republicans are furthest apart.
House Republicans are proposing an elimination of MinnesotaCare, the state-subsidized health care program for the working poor that is funded by a tax on hospitals and health care providers. They want to move those people to coverage through the MNsure health insurance exchange. Rep. Daudt said Republicans don’t think it’s responsible to fund MinnesotaCare, knowing that the funding source for the program is sunsetting in 2019, and there’s no plan to continue it.
The Senate is proposing a $341 million increase in health and human services spending. The Governor is at roughly the same level. Sen. Bakk noted that they are about $1.4 billion apart from the House. The Senate has held that they are not going to dismantle MinnesotaCare. Despite that fundamental disagreement, House and Senate negotiators have started holding conference committee discussions about their respective health and human service bills.
House HHS Finance Chair Rep. Matt Dean (R-Dellwood) said the House wants to end wasteful spending. He has said that Minnesota spends a great deal relative to other states on public health programs and that Minnesota has ranked last in terms of accountability over waste. Sen. Tony Lourey (DFL-Kerrick) Chair of the Senate HHS Committee, has pushed back on the numbers and said the claim of House Republicans that they can save $300 million by cracking down on waste is “questionable at best.”
Medicaid Fraud
After years of criticism that it is soft on fraud, the Minnesota Department of Human Services has dramatically intensified efforts to combat illegal overbilling in the state’s publicly funded health insurance program.
The agency more than doubled its recoveries last year from health care providers who billed for services not rendered and other improper billing practices.
The surge in recoveries reflects a broader shift at DHS, toward heightened oversight of doctors, pharmacies, home caregivers and others that bill the state-federal Medicaid program for services delivered to more than 1 million poor and disabled Minnesotans. For years, the agency has been criticized for lax supervision, particularly in cases where elderly and disabled people receive care at home.
The DHS Office of Inspector General has doubled the size of its fraud investigative unit, from seven to 14 staff; launched an intensive effort to conduct hundreds of unannounced, on-site screenings of Medicaid providers; and has initiated fingerprint background checks on tens of thousands of health care and social service workers statewide. The office is on pace this year to refer a record number of Medicaid fraud cases, more than 110, to the state Attorney General’s office for possible prosecution.
Several lawmakers, including Rep. Dean, said the findings show that Minnesota still needs to spend more at the front end to screen out unscrupulous providers.
Responding to calls for tougher enforcement, the Department is pushing legislation this spring that would require Medicaid home care operators to place at least one random, unscheduled phone call every three months to verify that their employees are actually providing the services in the home as scheduled. With state approval, providers could also use electronic monitoring tools to verify the presence of caregivers in the home.
Transportation
In the midst of negotiations on a transportation funding plan, some regional chambers of commerce are weighing in with a letter asking for a revenue increase to fund road and bridge construction. The letter’s signatories include regional chambers from the Twin Cities and Greater Minnesota.
While the Dayton Administration argues that the current gas tax isn’t keeping up with road construction costs because people are buying less gas, the Minnesota Chamber of Commerce has said that the projected $6 billion in new revenue needed by the state is overstated.
The House and Senate versions of the transportation bill are far apart, with the Republican-controlled House relying on existing revenue sources to pay for roads and bridges as part of a $7 billion funding proposal and the Senate version including a minimum 16 cent increase in the gas tax as part of a more than $10 billion proposal that includes funding for transit.
Light Rail
The troubled Southwest Corridor light rail project won a crucial show of support from elected officials in the Twin Cities metro area on Wednesday.
City and county leaders overseeing the project say they want to find a way to drive down its rising cost instead of scrapping the project altogether. The estimated price tag of the project rose to nearly $2 billion last week after the Metropolitan Council announced that delays and poor soil conditions were driving up costs. Gov. Mark Dayton called the increase “appalling” and questioned the project’s viability.
Members of the Counties Transit Improvement Board (CTIB), which would provide 30 percent of the funding for the project, say they want to keep the budget at $1.65 billion. Several local elected leaders say they’d be willing to shorten the proposed rail line to control its skyrocketing budget.
Planners will present options for reducing the project’s budget in two weeks. The Met Council also is trying to determine whether enhanced bus service would be more cost effective.
Lottery
The Senate passed a bill Thursday that would ban lottery ticket sales at gas pumps, ATMs and online. The vote was an overwhelming 56-8.
The bill directs the Minnesota Lottery to stop marketing and selling the new games. Sen. Roger Chamberlain (R-Lino Lakes) said the lottery director should have obtained permission from the Legislature before starting the games.
Some senators acknowledged that lottery officials overstepped their authority but encouraged the Senate to let the games continue until contracts with vendors expire in 2018. Sen. Pappas (DFL-St. Paul) offered and amendment to do just that but it was defeated.
The House is poised to pass similar legislation. Gov. Dayton vetoed a similar bill last year.
Drinking Water
A new report released Wednesday from the Minnesota Department of Health on drinking water underscores the need for legislative action this session. The annual report on drinking water quality warns that nitrate contamination in public waters could affect public health.
Eight communities are treating their water supplies to reduce nitrate levels. Dr. Ehlinger, Commissioner of the Minnesota Department of Health, said nitrate contamination is a growing threat. He said farm-management practices, including the use of buffer strips near bodies of water, would help keep nitrate levels low.
One of Dayton’s priorities for the 2015 session is a 50-foot buffer requirement to help filter farm runoff. Gov. Dayton made it clear he is not singling out farms and has been talking more broadly about improving water quality. Gov. Dayton said water quality will be a priority for the remainder of his term. He’s asking legislators to fund a new director position in his office to focus on water issues.
Rep. Paul Torkelson (R-Hanska) was critical of the Governor’s initial buffer proposal for being a one-size-fits-all approach. But Rep. Torkelson, a farmer, is now complimenting Dayton for his flexibility on the issue. He said he’s hopeful an agreement on buffers and water quality can be reached before the end of the session.
Right to Try
The House unanimously passed a bill Friday allowing terminally ill patients to explore last-ditch treatment options. Under the legislation known as the “Right to Try Act,” eligible patients could more easily access experimental drugs and procedures. They could use a drug, product or device that has not been approved for general use by the federal Food and Drug Administration if it is currently under investigation in a FDA clinical trial.
Rep. Zerwas (R-Elk River) said his bill doesn’t mandate doctors to offer the treatments nor does it mandate insurance companies to pay for the treatments. The Senate passed the bill last week by an overwhelming margin. Gov. Dayton said he plans to sign the bill.
Sunday Growlers
Gov. Dayton signed a liquor policy bill into law Friday that will allow the sale of beer growlers on Sundays.
Taprooms and brewpubs with the proper local approval will soon be able to sell beer in the 64-ounce containers commonly known as growlers. The law also allows the sale of take-home 750-milliliter bottles. The law took effect on Saturday, but businesses must first obtain municipal licensing for take-home bottles of beer brewed on the premises.
Under the “Bloody Mary” provision in the new law, bars and restaurants are now allowed to start serving drinks two hours earlier on Sundays. The new start time is 8 a.m. Lawmakers overwhelmingly supported the two changes, but they again rejected a repeal of the state’s longtime ban on Sunday liquor store sales.
MNsure Board CEO Departure
MNsure’s chief executive is resigning from the health insurance exchange. Scott Leitz announced his resignation Monday to MNsure’s board of directors. Leitz took over in 2013 after MNsure’s first executive director resigned amid a troubled rollout of the program.
His exit comes as the Legislature debates MNsure’s future. Lawmakers are reviewing proposals ranging from abolishing its governing board to dismantling MNsure entirely in favor of joining the federally-run exchange.
Campaign Funding
Gov. Dayton is threatening to veto a state government budget bill if it includes a repeal of the state’s political contribution refund and public subsidy programs. The provisions would effectively end campaign spending limits for statewide candidates including in governor’s races, as well as for other statewide offices and in state legislative races. It would remove limits on the amount of total donations that could be received by lobbyists and political action committees, and end public subsidies for campaigns.
The state elections campaign fund provides public financing to candidates who agree to spending limits. The money comes from a legislative appropriation as well as individual tax-return check offs. Voters who contribute to those campaigns are eligible for a refund of $50 for individuals and $100 for couples.
Rep. Sarah Anderson (R-Plymouth), Chair of the House State Government Finance Committee, defended the repeal saying that she doesn’t think the taxpayers of Minnesota are expecting that their taxpayer dollars are going toward political campaigns. She said the repeal would save $2.7 million that could be better spent on other initiatives like nutrition and literacy programs.
Talking Turkey
While legislators Tuesday enjoyed a turkey burger lunch on the Capitol lawn to demonstrate that turkey products are safe despite an avian influenza outbreak, one DFL lawmaker tried to joke about it. His colleagues on either side of the aisle did not find it funny.
Dressed in a white lab coat and stethoscope, Rep. Ron Erhardt (DFL-Edina) told the House he was concerned avian influenza may threaten humans. He also held a bottle and spray can that were labeled “bird flu vaccine.” He quipped that after he found out the free turkey burgers were a bipartisan offer he felt better about it.
In a subsequent statement sent out by the DFL Caucus, Rep. Erhardt apologized and said he supported “immediate passage of legislation that will adequately fund a response to the avian flu crisis.”
Minnesota is the largest turkey producer in the nation. Officials have emphasized that the food system is safe and no human cases have been reported.
DFLers were quick to rebuke Erhardt’s antics. Rep. Poppe (DFL-Austin) said avian influenza is not a partisan issue. “It appears as though this is going to be a joke at some point” she said of Erhardt’s comments. “But the turkey farmers in our state are suffering a very serious crisis. It’s not something that we need to be making light of.”
