Minnesota Legislative Update: 2010 Session Preview

Budget Problems on the Horizon

If early reports of the looming budget deficit are correct, Minnesota is facing another sea of red ink. Current projections suggest the fiscal years 2012–2013 deficit could range from $4.4 billion to $7 billion--or as much as 20 percent of the state's estimated $38.7 billion general fund budget.

Lawmakers wrangled for months during the 2009 Legislative Session over how to solve the $6.4 billion projected budget shortfall for the current fiscal years 2010–2011 biennium, which began on July 1. The federal stimulus legislation provided $2.6 billion to Minnesota was used to help solve the 2010–2011 budget problem. However, the funds are one-time money that will not be available to assist in blunting funding problems in the next biennium.

Minnesota's budget problems will certainly dominate the discussion during the 2010 Legislative Session, which convenes on February 4, 2010.

Crafting a Capital Budget

The 2010 Legislative Session will also focus on approving a capital budget for Minnesota colleges and universities, prisons, parks and recreation areas, and other publicly owned infrastructure. The capital budget--commonly known as the bonding bill--has topped the billion dollar spending mark in recent years.

Gov. Tim Pawlenty has already indicated he is not likely to support a bonding bill that large, leaving legislators to speculate that many projects will be line-item vetoed if they send him a bill with a price tag much in excess of $750 million.

Interim Hearings

The Minnesota House and Senate have begun interim hearings in preparation for 2010. In addition, three new subcommittees have been created by the legislative leadership.

• The Minnesota House Jobs Task Force is chaired by Rep. Alice Hausman (DFL-St. Paul), chair of the House Capital Investment Finance Division; Rep. Ann Lenczewski (DFL-Bloomington), chair of the House Taxes Committee; and Rep. Tom Rukavina (DFL-Virginia), chair of the House Higher Education and Workforce Development Finance and Policy Division. Their charge is to develop a jobs plan that can pass the 2010 Legislature and be signed by the governor.
• The House and Senate Local Government Aid (LGA) Study group is chaired by Rep. Paul Marquart (DFL- Dillworth) and Sen. Rod Skoe (DFL-Clearbrook). The group will consider disparities in the distribution of LGA, an analysis of the formula used to calculate aid for cities, and volatility in the distribution of LGA funds. The study group is required to report to the Legislature in December 2010. However, one can expect several preliminary ideas from the group to be discussed during the 2010 session.
• The Subcommittee on a Balanced Budget, co-chaired by Senate Majority Leader Larry Pogemiller (DFL-Minneapolis) and House Finance Committee Chair Lyndon Carlson (DFL-Crystal), will be a subcommittee of the Legislative Commission on Planning and Fiscal Policy. The subcommittee will be charged with crafting recommendations that reflect findings of current and former legislative leaders and governors, both DFL and Republican, who met at a recent leadership summit to discuss Minnesota's budget problems.

Interim hearings are scheduled for all three subcommittees, which has brought affected constituencies to the Capitol this fall to educate legislators regarding their positions.

Politics, Policy and Pawlenty Vetoes

A combination of budget woes, record levels of state unemployment, and the certainty of numerous tax and spending proposals could make for a powder keg of politics during the 2010 session.

In November of 2010, all 201 legislative seats are up for election. In addition, all the constitutional officers must face the voters. Pawlenty has already announced that he will not seek re-election and is widely viewed as a possible candidate for president in 2012. His recent announcement that he is creating a federal political action committee has fueled that speculation.

Currently, ten sitting legislators have announced their intention to run for governor, including the Senate Tax Committee chair, speaker of the house, and the former House minority leader. Many legislators have already announced their support for various candidates.

Numerous Proposals Expected to Return

The Minnesota Senate and the House are both controlled by the DFL party with sizable majorities. The DFL in the Senate has one more vote than necessary to override a governor's veto (46 DFLers to 21 Republicans); the House DFL is three votes short of a veto-proof majority (87 DFLers to 47 Republicans).

The governor vetoed numerous legislative proposals during the 2009 Legislative Session; many of those are likely to be resurrected—putting mandatory mediation of foreclosures, reverse mortgages, medical marijuana, and other assorted issues up for another vote and perhaps another veto.

Policy Issues Will Have High Profile

Given that legislators are up for re-election but have no money to spend on showcase projects for their districts, they will certainly turn to an array of policy issues to impress their voters. Should Minnesota expand gaming to bring in new revenues? How about expanding the sales tax to clothing or various services? What should be done to bring new jobs to the state or put some of the thousands of unemployed Minnesotans back to work? Should the current moratorium on new nuclear power plants in Minnesota remain in place or be lifted?

These issues and many more will be debated--certainly from a policy perspective, but also through the prism of election-year politics.