Blueprint Recommendations Advance at the Capitol
Over the summer and into the fall of 2014, American Experiment released a wide ranging set of policy recommendations for state lawmakers. We call it the Minnesota Policy Blueprint: Prescription for Prosperity. We’re pleased to report lawmakers gave serious consideration to a large number of policies that fell in line with our recommendations during the 2015 legislative session. In fact, many of the most important policy debates during the session were directly informed and some even initiated by the analyses and recommendations found in the Blueprint. That said, and as we’ve said before, this is a long-term project. It will take more than a few legislative sessions before the Center’s recommendations are fully debated, let alone passed into law. Here are the highlights from the 2015 legislative session.
Taxes: Unfortunately, the House and the Senate could not come to agreement on a tax bill and so the session ended without any reduction in taxes, despite a $2 billion surplus. However, lawmakers left over $1 billion in unspent revenue which will be available for tax relief next year. Though nothing became law, two important Blueprint recommendations were adopted in the House omnibus tax bill. The bill raised the estate tax exemption to the federal amount and phased out the statewide property tax on businesses and recreational property. Importantly, these issues also received favorable treatment from some DFLers in the Senate, making it more likely they will be revisited next year.
Education: The House tax bill would have also increased the current education tax credit and allowed it to be applied to tuition for private schools, an important part of our school choice recommendations. Again, no agreement was reached on a tax bill and so the education tax credit remains as is. Two additional bills to promote school choice were introduced this session, a bill to provide educational savings accounts for special needs students and a bill to create a tax credit for private school scholarship donations. Neither bill was included in a final agreement. While the governor has already vetoed the education bill—a bill that raised education spending by $400 million—the House and the Senate did agree to significantly improve teacher licensure to give a level of reciprocity to teachers who have earned licenses in different states. They also agreed to increase funding for preschool programs by $60 million—$30 million of which goes to scholarships giving low-income parents meaningful choices compared to Governor Dayton’s demand to push all four-year olds into public schools.
Transportation and Met Council: The big and best transportation news is that light rail did not receive any funds from the state and the metro area tax for transit did not pass. This comes on the heels of the news that Southwest light rail is going to cost $2 billion, a development that caused an uproar near the end of session. As the Center’s recent poll reported, Minnesotans want roads and bridges funded with existing tax revenues, not new taxes. This is exactly what the Blueprint recommends and the position the House continues to hold. There were not any substantial changes to the Met Council, but the House formed a new subcommittee on the Met Council which began hearings that will continue over the summer. A number of House bills heard in committee supported Blueprint recommendations to give local elected officials and the legislature more control over the Met Council.
Healthcare: The House health and human services bill largely followed the Blueprint’s recommendation to convert MinnesotaCare (the state’s public health care program for working adults and families) into a premium subsidy program that empowers enrollees to afford individual health insurance. Though this conversion did not find agreement in the Senate, provisions to increase cost sharing in MinnesotaCare making enrollees more responsible for their care are now on the governor’s desk. There was also an agreement to allow people to purchase health insurance outside MNsure with tax credits through a federal waiver, which is an important first step to bring more options and flexibility to the health insurance market. Additionally, a bill to allow employers to fund individually-owned and portable health plans, a lead Blueprint recommendation, was introduced with bipartisan support in both the House and the Senate and is now ready for a full discussion next year.
Energy: Very little energy policy made it across the finish line. However, a number of Blueprint recommendations were passed by the House, including provisions to dramatically improve the state’s energy efficiency program and renewable energy standard.
Pensions: Some progress, however small, was made to improve the current defined benefit pension plans by, as the Blueprint recommends, using more realistic assumptions for pension math. With the exception of the Teachers Retirement Association, pension funds adopted a new, more realistic assumed rate of return on pension fund investments of 8.0 percent. While this assumption (also used to calculate unfunded liabilities) is still wildly indefensible, it is a move in the right direction. But it is just a band aid. Pensions will continue posing a financial threat to the state until they fully fund their promises and move to a 401(k)-style defined contribution model.
State Spending: The budget grows by about $500 million over the base spending level, which is about $1 billion more than the House proposed and $1 billion less than the Senate and governor proposed. Any increase in spending is too much, considering the state’s already high tax burden. However, one bright spot is that spending on health and human services is reduced by $300 million. Midsession the Blueprint’s recommendation to adopt a Legislative Budget Office to estimate spending and revenue impacts of proposed legislation received a strong endorsement from both Senate Majority Leader Tom Bakk and Speaker of the House Kurt Daudt. Though their bills never became law, there may still be opportunities to implement the policy on a smaller scale without it.
The Blueprint was a great resource for lawmakers in the 2015 session and will continue to be in the future. We’ve been following up on a number of priority issues at the Capitol and bolstering these priorities with additional research. And when we visit we spot individual chapters, the summary and the book pulled from the shelf on desks throughout the Capitol. The Blueprint is absolutely not gathering dust on a bookshelf as is the fate of so many policy efforts. Lawmakers thank us over and over for providing such high quality research and ideas.
It is a privilege to represent the ideal of the American Experiment at the Capitol. We have the harder, more nuanced argument compared to the left’s constant push to simply increase spending.
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