Capitol Update #13

April 1, 2011

Budget Bills Finalized

Senate Republicans moved almost all their budget bills through the committee process and the
full Senate during the past two weeks. Only two bills – the tax bill and transportation budget –
remain to be voted upon by the full Senate before negotiations can begin with the House. As I
said in last week’s update, I will provide an overview and some commentary on those bills
covered in the Finance Committee this week.

State Government
The state government budget shouldered a large portion of the Republicans’ proposed budget
reductions, a 53.3% reduction from projected department funding.
The bill eliminates current health insurance plans for state employees and, instead, offers high-
deductible Health Savings Accounts combined with catastrophic coverage. The budget also
imposes a two-year salary freeze on state employees and calls for a 15% state workforce
reduction. Senate Democrats offered amendments to exempt some of the most critical staff in the
state, namely nurses, Mn/DOT transportation generalists (including snow-plow drivers, bridge
inspectors and employees being asked to respond to current flood emergencies), corrections staff
with high levels of offender contact, and military and veterans’ affairs staff. The amendments to
exempt military and veterans’ affairs staff prevailed, as did the exemption for corrections officers.
Amendments were also offered to remove the high-deductible HSA and retain the current state
employee health plan.
The State Government Budget Bill also includes $217 million in estimated cost-savings for
improving the way the state purchases goods and tracks tax compliance. I am strongly supportive
of these efforts to modernize our state’s purchasing and tax compliance efforts. However, after
working on redesign and cost savings efforts for many years, I know well that while the savings
potential is great, such savings can only be estimated, and I don’t find it appropriate to book such
savings ahead of the fact in our state budget. State agencies testified that the $217 million figure
is unrealistic, because Minnesota is already in the process of implementing many of the initiatives
proposed to generate these savings, and the timeline for realization of these dollars does not allow
for the savings to be booked now in a responsible manner. In addition, the same bill cuts the state
workforce by 15%, eliminating much of the support staff that would be needed to actually
increase tax audits and compliance efforts.
We must move forward and apply pressure to our state agencies to continue to implement these
innovative approaches. It is the only responsible thing to do as state lawmakers. We should
remain wary, though, of budgeting for savings that have not been fully fleshed out, as this has the
potential to add greater challenges to our structural deficit and indirectly under fund the very cost-
savings efforts that have the potential for tremendous long-term savings.
I had the privilege of hosting the Almquist family in my office this morning. Seth, whose art piece hangs on my office
wall, is a student at Kimberly Lane Elementary School in Wayzata.

Employment and Economic Development

The Jobs and Economic Growth Omnibus Budget bill was heard on the Senate floor this week.
Much of the conversation was focused on a transfer of $45 million out of the IRRRB Doug
Johnson Fund. This fund is paid for by a taconite production tax paid by northern Minnesota
mining operations in lieu of property taxes.
This $45 million represents 70% of the total $65 million budget reduction for the Department of
Employment and Economic Development (DEED), Department of Labor and Industry (DOLI),
Housing Finance Agency and Explore Minnesota, which are all under the purview of the Jobs and
Economic Growth Committee. These local property tax dollars are intended for economic
development purposes and to ensure the economic viability of the Iron Range after depletion of
minerals in the area, and this would be the first time that local property tax dollars were used to
balance our state budget.

Health and Human Services

The proposed Health and Human Services budget omnibus bill was the subject of much debate on
the Senate floor this week. A few of the bill’s provisions include:
· Repealing the early expansion of Medicaid signed by Gov. Dayton earlier this year,
· Moving thousands of low-income Minnesotans off Medicaid and MinnesotaCare and on to
high-deductible private insurance plans.
· Eliminating optional services for Medical Assistance and MinnesotaCare recipients, including
chiropractic, podiatry, therapies, eyeglasses, and prosthetics.
· Cutting funding for child care and adoption grants, prescription drug assistance, mental health
crisis grants, developmental disability family supports, children’s mental health screening,
family planning and more.
· Eliminating state loan forgiveness programs for medical training.
I opposed this bill, because putting low-income people into high-deductible plans is not realistic.
On their incomes, they cannot afford the high premiums and deductibles offered under private
health insurance plans. More likely, they will opt for no coverage at all and end up in expensive
hospital emergency rooms, with all Minnesotans footing the bill. I do applaud the chair, Senator
David Hann, for his commitment to find Health Policy reforms. We are on an unsustainable
course. My preference would be to renegotiate our current contracts with Minnesota Care
providers, eliminating the cap and asking for policy and cost reforms to be implemented.
The bill also contains a controversial ban on human cloning, (which includes embryonic stem cell
research) that criminalizes cutting-edge, cell-level research that seeks cures for devastating
diseases. I am very concerned that putting this provision into law will place a chilling effect on
Minnesota’s bioscience industry and jobs. We have already heard that programs in other states, as
a result of these proposed restrictions, are recruiting members of the research community in our
state. Minnesota is a leader in the area of bioscience, and we must not move backward in our
support for medical research. It goes without saying that we are opposed to actual human cloning.
The bill was approved along a party-line vote, and faces a likely veto. Governor Dayton has
promised he will veto any bill that includes the repeal of Early Medicaid enrollment.

Looking Forward
In my last update, I stated that I would vote for the omnibus education bill, so that I could
participate in the conference committee process. Upon reflection, I did not do that. There were
provisions in the bill which I opposed, and my concern was about my relationship with the
teachers in our community. I feared that my green vote would send a signal to teachers that I was
taking back the olive branch I had extended when I asked them for their help and their partnership
in solving our current budget and policy challenges. I appreciate Chair Olson’s work on this bill
and am proud of the strong reforms it contains. Yet some of the provisions are lightning rod
issues, and I would rather tread more softly. It is my hope that, at some point, I can be at the table
as we craft our final bills.
Thank you again for the privilege of representing you in the Minnesota Senate. I hope you will
feel free to share with me your thoughts on these bills as the session progresses.

Sincerely,