Today is the day that the legislature waits for to make its economic plans and the news is good for the State of Minnesota. A surplus of $329 million has been projected by the State Economist and the outside forecasters for the FY 2018-19 biennium. The revenue forecast for the biennium is up $353 million compared to the November forecast. Higher forecasts for all the major tax types contributed to the change.
This positive reversal is in part because the November 2017 forecast was especially dire. At that point, Congress had not passed a huge federal subsidy to the Children's healthcare program (CHIPS). It was caught up in the Tax Cut and Jobs Act negotiations, in the continuing funding resolution, DACA, and some other contentious votes. It passed, and so there no longer had to be an assumption of that potential hole in Minnesota's budget
But it's also undeniable that tax cuts are having an effect, especially the Federal Tax Cuts and Jobs Act but also the modest relief passed in last year's tax bill. You remember that bill? The one Governor Dayton said he was blackmailed into signing and wanted a do-over. That one.
It's more important than ever that the legislature and the Governor work together this session to craft a conformity bill that gives Minnesotans tax relief so that the turnaround we see here continues.
This morning 2/27/2018, the the HHS Policy Committee in the Minnesota House, the Chair of the HHS Finance Committee, Rep. Matt Dean introduced a bill, HF 2725 that would start to peel away at the layers of of bureaucracy and even outside vendors that are part of the MNSure monstrosity. The bill would create a new system, based in the counties of determining eligibility for need based health insurance and get people who don't need and aren't eligible for subsidies back to private sector brokers to help them find insurance. The committee heard testimony from the counties association, from an insurance broker and (in opposition) from a testifier who works for a company that is an outside vendor to MNSure, providing "navigators"that help people get through the cumbersome MNSure processes. The company, a for profit, Briva Health gets grant money ($340,000 last year) from MNSure to help people get insurance through MNSure. She said 40% of their operations are due to this grant.
It's a good example of how government programs spawn "stakeholders" who then clamor to make sure their interests continue to be served.
The table was set for a bitter end of session resolution.
You had the House Republicans, with a 77-strong majority hoping to get some wins for their base in the form of
- Tax cuts and Tax Reform. Especially property cuts taxes for farmers and the phase-out of taxes on social security taxes on Seniors.
- Education reform, including an end to seniority as the critical factor in teacher retention (LIFO) and school choice in the form of tax credits for private school tuition.
- A bill on Female Genital Mutilation,
- A stand your ground bill for the gun activists.
- Some state downsizing and budget cutting.
- Pumped up transportation spending. The trick here was to do it without raising the gas tax, or any other vehicle-related tax or fee like license tab fees which both of which Dayton had wanted.
- Preemption. Business was very keen on a law preventing cities from creating their own minimum wage and labor laws.
On Tuesday, the Minnesota House tax committee heard two bills which tackled the issue many of us have been following for some time, the tax on social security benefits in Minnesota.
HF 9 authored by Rep. Dale Lueck proposes to phase out the tax on Social Security in 5 years, (with a reduction of 20% a year until fully phased out). Rep. Kathy Lohmer’s bill HF 213 does the same thing, less speedily, over 10 years.
The Committee heard testimony from one member of the public and a few people representing groups. Here are some highlights.
We've dropped a notch on the Kiplinger Magazineworst places to retire due to our high taxes.
On Tuesday, the Senate passed a Met Council "Reform" Which created staggered terms for the council members. On Wednesday, the House brought an offer to the Transportation Omnibus Bill Conference Committee, which included "Met Council Reform" as part of a compromise. This version of reform included the staggered terms as well as having members be elected local government officials. We are the record for not being fans of this proposal. Here's why.Read more
The "Claims Bill" is up on the House Floor today.
It is the product of the Joint House/Senate Subcommittee on Claims. In theory, this Subcommittee hears and recommends to the legislature whether or not to pay claims that have been brought against the state. In reality, they meet a few times to largely rubber stamp decisions that have already been made by the Attorney General's office, the State Supreme Court, and other parties.Read more