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Minnesota Government Update

May 11, 2009

Minnesota Legislature: Entering the Final Week of Regular Session
Minnesota lawmakers are starting their last full week of the regular legislative session.
Long days are expected as the clock ticks down toward the Legislature's constitutionally mandated adjournment deadline of May 18th, one week from Monday.
Democrats who control the Legislature and Republican Governor Tim Pawlenty still have not decided upon most of the budget for the next biennium. If the legislature fails to meet the deadline, the legislature will undoubtedly move into a Special Session to finish its work to alleviate a $4.6 billion deficit.

Governor Vetoes DFL’s Latest Tax Bill
Governor Tim Pawlenty vetoed the DFL’s latest tax plan on Saturday at 3 a.m., sending legislators back into negotiations at the State Capitol to find yet another alternative source of revenue to make up for a $4.6 billion deficit.. 
The DFL tax plan, which was passed by both the Senate and House late Friday after hurriedly being unveiled the previous day, would raise $1 billion over two years and dedicate the money to hospitals, schools, and nursing homes. The plan would have included tax increases on alcohol, credit card companies that charge high interest rates and couples earning more than $250,000 annually. Pawlenty’s plan would also raise roughly $1 billion, but would largely do so by borrowing through tobacco appropriation bonds.
Senator Tom Bakk (DFL-Cook) stated that he was not surprised by the Governor’s veto of the bill. Regarding the Governor’s veto, House Majority Leader Tony Sertich stated, “We need the governor to stop being inflexible to the balanced approach of cuts and revenue that will keep our commitment to our students, hospitals, nursing homes, and disabled Minnesotans – while protecting jobs.” Bakk stated that there were other options on the table that could be used to generate revenue.

Last Week of Session Overview:
So far, there has yet to be an agreement on the deficit figure to use. Pawlenty refers to a $4.6 billion projected shortfall, while DFL leaders prefer the $6.4 billion figure that would have been the state's deficit but for federal stimulus money. The House and Senate have been in debate with the Governor’s office over who is making more cuts. DFLers say they are making deeper cuts than Pawlenty in all areas, including to K-12 Education. Pawlenty has accused DFLers of attempting to protect what he calls “runaway health-care costs” at the expense of every other part of the budget. Pawlenty and DFLers must agree to a basic budget framework of how much to spend and cut in major areas. House and Senate DFLers warn that because there is little support for the borrowing proposal from Pawlenty, cuts to nearly every part of state government will have to go deeper unless legislators are able to raise additional revenue.
Health Care:
Minnesota's hospitals, nursing homes and community clinics – already suffering from the a poor economic climate are bracing themselves for another round of cuts for state government, the single biggest purchaser of healthcare in Minnesota’s economy.
As legislators and Gov. Tim Pawlenty struggle to solve the deficit, they are looking to cut between $400 million and $1.8 billion from projected state payments to hospitals, health plans, nursing homes and other providers. With health and human services accounting for about 27 percent of the state budget—second only to K-12 education—there will undoubtedly be hurtful cuts to several areas of the healthcare budget. Even Minnesotans who have private insurance could see the effect in higher premiums or larger deductibles, because unpaid costs in the public sector are often shifted to private payers.
Pawlenty’s office argues that while they want to limit the damage done by these cuts, the current exponential growth in health care costs could in no way be sustained. Last year, the State paid approximately $7 billion for medical care and insurance, or nearly one-fourth of all health care spending in Minnesota. Pawlenty's proposal would directly cut $336.6 million in revenues for hospitals. Indirectly, hospitals say, the cuts would cost them another $430 million in unpaid medical bills incurred by the newly uninsured who would be dropped from MinnesotaCare but still need care.
The House proposed a $1.5 billion tax increase that would overhaul the state's tax code, replacing the home mortgage, property tax and charitable deductions with more limited tax credits, raising taxes on alcohol, cigarettes, business property and the highest incomes. The Senate proposed a $2.2 billion income tax increase that would affect every level of taxpayer. The House and Senate Tax Chairs have been meeting day and night in Conference Committee in attempts to resolve differences. Pawlenty remains opposed to any tax increases, but the DFL has been debating whether or not to attempt an override on its tax proposal. The Senate has a veto-proof DFL majority, and the House is only three votes shy. 
Republican Wants Constitutional Amendment to decide on Nuclear Power
Representative Laura Brod (R-New Prague), introduced a bill on Thursday that would allow voters in 2010 to amend the State’s Constitution to allow for the repeal of Minnesota’s ban on the construction of new nuclear power facilities. Brod stated that, "The Legislature has continued to drop the ball on nuclear energy,'' Brod said." We’re not putting one of the cleanest forms of energy on the table for discussion. We need to put some new things on the table and remove barriers to energy. For me, this was the way to do it.''
Voters across Minnesota would consider the question brought forth by Brod, “"Shall the Minnesota Constitution be amended to grant authority to the Minnesota Public Utilities Commission, or its successor, to issue a certificate of need for the construction of a nuclear electric generating plant?''
Representative Bill Hilty (DFL-Finlayson), Chair of the Energy Committee in the House, heard over seven hours of testimony and discussion on this issue in his committee, where the bill repealing the nuclear moratorium failed to pass.
The nuclear moratorium was put in place in 1994 during a heated debate over where to put highly radioactive nuclear waste generated the Prairie Island nuclear generating plant. The longtime federal option, building a permanent repository at Yucca Mountain in Nevada, has been sidetracked by the Obama administration's decision to remove funding for it in the upcoming federal budget.

For up-to-date information about the Minnesota Legislature, tune into Almanac: At the Capitol. This lively and informative program is aired Wednesdays during the legislative session on Twin Cities Public Television at 7:00 PM on Channel 17 and at 10:00 PM on Channel 2.
Almanac: At the Capitol is seen on all public television stations throughout Minnesota and in Fargo. Winthrop & Weinstine is the exclusive law-firm partner and a sponsor of the program.
For more information and to see previous broadcasts, check out the Almanac: At the Capitol Web site at
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