Friday, April 24, 2009

Higher education bill goes to conference committee; Taxes debated; Session adjournment nears

Legislative Update
April 24, 2009

Higher education bill heads to conference committee
The House passed the higher education omnibus bill on the floor this week by a vote of 86-46. After almost three hours of debate and multiple amendments, only three amendments were adopted. The amendment adopted that affects the Minnesota State Colleges and Universities system was offered by Rep. Larry Haws, DFL-St. Cloud, and requires that the college and university bookstores, to the extent possible, sell clothing made in America. The institutions must report to the Legislature on their efforts to comply. Earlier in the week, the House Ways and Means Committee took up the bill before sending it to the floor and amended the tuition guarantee provision. Instead of guaranteeing students a stable tuition rate for up to four consecutive academic years, the language now reads that students must be offered the opportunity to participate in a four-year stable tuition rate plan.

Now that both bodies have passed their respective higher education omnibus bills, a conference committee will be formed to work through the differences. We anticipate conferees meeting early next week.

Bonding bill conferees closer to agreement
The Capital Investment Conference Committee met this week and conferees are closer to an agreement. On Wednesday, Sen. Keith Langseth, DFL-Glyndon, presented a new offer totaling $275 million, which was reduced from the Senate’s original position of $329 million. The only change to the Minnesota State Colleges and Universities system in the Senate’s offer was the HEAPR number, which went from $50 million to $45 million. The House, which held the gavel, called another conference committee Thursday to present its proposal. The House came up $10 million in HEAPR for the system and is now at $40 million, so $5 million in HEAPR for the system separates the Senate and House.

All five vetoed projects are still in both the Senate and House proposals. Those projects include the health and science center addition at Lake Superior College; the carpentry and industrial mechanical technology shops at Mesabi Range Community and Technical College; the smart classroom center at Metropolitan State University; the center for business and technology at North Hennepin Community College; and the systemwide classroom renovation initiative at Central Lakes College, Minnesota State Community and Technical College, Minnesota West Community and Technical College, Northland Community and Technical College, Pine Technical College and Rochester Community and Technical College.

Tax plan debated at the Capitol
The Senate and House of Representatives moved the omnibus tax bill through the process this week. In the Senate bill, SF 2074, income tax rates are set at 6 percent, 7.7 percent and 8.5 percent. The bill also creates a fourth tier with a rate of 9.25 percent for single taxpayers making $141,250 or more in taxable net income and for married couples making at least $250,000 in taxable net income. The bill also sets the alternative minimum tax rate at 7 percent for tax years 2009 to 2013 and then returns to the current rate in tax year 2013.

Sen. Tom Bakk, DFL-Cook, tax committee chairman, said the proposal raises income taxes at all levels to bring in $2.19 billion over the next biennium. Bakk said the new income tax rates will blink off in 2014. He said the income tax increase will have an impact on most tax filers, but 15 percent of taxpayers will not be affected by the change. Bakk said the bill is part of the solution to the state's budget crisis. "The (Senate) appropriation bills all contain 7 percent cuts in base spending, but those cuts would be much more severe without the revenue raised in the bill," Bakk said. On Friday afternoon, the Senate was debating the tax bill on the floor.

The House bill was narrowly approved in the Tax Committee this week by a vote of 16-14. Rep. Ann Lenczewski, DFL-Bloomington, the committee chairwoman, said the bill, HF 2323 is an attempt to reform the tax code. The bill cuts $1.6 billion in the current biennium by eliminating many existing business subsidies and other tax expenditures, including Gov. Tim Pawlenty's economic development initiative known as Job Opportunity Building Zones, or JOBZ. The bill raises $1.5 billion in revenue, with a new income tax rate of 9 percent for couples making more than $300,000 a year, a tax on cigarettes of 54 cents a pack, and an additional 1 to 3 cents on the cost of a drink through the alcohol tax. The bill also expands the sales tax to the purchase of goods on the Internet, as well as digital downloads of music, books and video. The House is expected to take up the tax bill on the floor Saturday.

Countdown to adjournment
The House and Senate were busy this week debating omnibus appropriation bills on the floor. Now that lawmakers have approved the majority of these bills, conference committees will be formed to work through the differences between the House and Senate. The fifth and final committee deadline, when conference committee reports are to be to the floor, is May 7. The Legislature is on track, but multiple things could stall the process. Legislative leadership and the governor disagree on taxes, and Gov. Pawlenty has indicated he will not sign a bill that includes any tax increases. Also, the complications the federal stimulus package presents could cause delays in adjourning on time. With only three weeks left until May 18, Capitol watchers are wondering if a global deal between lawmakers and the governor can be reached.

Here's What's Happening at the Capitol:
This schedule shows all meetings that we are aware of at the time of publication that MAY have an impact on the system. This schedule may change. Please watch the House and Senate schedules posted on the Legislature web site.

Saturday, April 25
9:30 AM
House in Session

11:00 AM
Senate in Session

Tuesday, April 28
9:30 AM
Senate E-12 Education Budget and Policy Division
Room: 112 Capitol
Chair: Sen. LeRoy A. Stumpf
Agenda: S.F. 191-Betzold: Omnibus retirement provisions modifications.

Thursday, April 30
8:30 AM
Senate Higher Education Committee
Room: 107 Capitol
Chair: Sen. Sandra L. Pappas
Agenda: Continued Confirmations of MnSCU and HEFA Board of Trustees