Five things to look for in the 2016 Legislative Session
In 2014 Center of the American Experiment developed the Minnesota Policy Blueprint,
a comprehensive set of policy recommendations broadly aimed at enabling all Minnesotans to thrive in their personal and financial pursuits. In 2015, a number of important recommendations gained traction in the Minnesota legislature.
Looking to 2016, the legislative session will be short because it is not a budget year. This short timeframe means every proposal considered at the Capitol will face stiff competition to get the attention necessary to pass, but there are at least five key Blueprint recommendations with a reasonable chance and some with a strong chance for passage. Here’s what to look for.
1. Look for an increase in transportation funding without a tax increase:
Move Minnesota is a large coalition of more than 150 non-profits and businesses that was founded to demand increased funding for roads, bridges and transit. In 2014, it recommended funding the increase by initiating a five percent sales tax on motor fuels and by increasing the metro sales tax by 3/4 cent. That recommendation dominated the transportation conversation until the Blueprint supplied an alternative.
The Blueprint supported more money for roads and bridges, but instead of raising taxes, it proposed to do so through a portion of the existing sales taxes. Republican legislators in the House largely adopted this proposal and improved on it by tying transportation funding from the sales to taxes on auto-related items. After the November economic forecast bumped the projected budget surplus to $1.9 billion, Governor Dayton conceded, “I think a gas tax increase is dead.” This concession paves the way to use the existing sales tax revenue for funding.
2. Look for southwest light rail to die:
While nearly every roadblock to SWLRT has been removed, the Met Council must still win legislative approval to start construction. The Council originally argued it could complete funding by selling revenue bonds. But under pressure to avoid serious conflict with the legislature—created in part by the Center’s work—its Chairman Adam Duininck in September pledged to get final approval from the legislature. The Blueprint recommends putting a moratorium on all light rail projects because these projects receive disproportionate amounts of transit funding and have not sufficiently proven themselves. It will be hard to stop the momentum of SWLRT, but there may be enough lawmakers who view it as a wasteful $2 billion disruption to the current transportation network to try.
3. Look for the estate tax exemption to increase:
Minnesota’s onerous estate tax continues to motivate wealthy people to move to other states —and take their income, investments, charitable giving, and community involvement along with them. The Blueprint recommends eliminating the estate tax, and an election-year appetite to cut taxes may increase chances the legislature may increase the estate tax exemption to the federal amount, a significant second-best option. CurrentMinnesota tax law exempts estates valued up to $1.6 million, which will increase to $2 million by 2018. Raising the exemption to the federal amount, currently $5.45 million, would exempt the large majority of estates currently subject to the tax. The concept received hearings in both the House and the Senate last year.
4. Look for a reduction in the statewide general property tax on business and recreational property:
Like the estate tax, the Blueprint recommends eliminating the statewide general tax and, like the estate tax, second best proposals to lower the tax were considered in both the House and the Senate in 2015 and those remain on the table for 2016. Lowering the statewide general property tax may be the best opportunity for a significant and sound tax cut in the 2016 session. The Pioneer Press reported in November “there appears to bipartisan agreement” the tax is too high and “it is the top priority for the state’s two largest business organizations.”
5. Look for an expansion of school choice:
American Experiment’s education priorities have long included expanding opportunities for kids, especially low income kids, to choose alternative education opportunities. Some of the best chances to advance choice in years are now surfacing thanks to growing legislative leadership. More than 15 legislators joined Mitch Pearlstein at a school choice conference in Chicago in December. Also, Rep. Jim Knoblach successfully guided a proposal to add private school tuition as an eligible expense to the education tax credit into the House omnibus tax bill last session. Presumably, this idea will remain on the negotiating table in 2016. Finally, the larger surplus makes passage of other choice proposals, such as tax credits for donations to scholarship programs, a real possibility in 2016.