Major issues as the 2017 Legislature gets underway

One thing Republicans and DFLers agree on is that they need to tackle health insurance premiums right away.

Leaders from both parties tried but failed to address soaring premiums in the private market when a special session never came to pass in 2016. Now lawmakers are looking for an early breakthrough in the new session.

DFL Gov. Mark Dayton said he wants to see the Legislature immediately pass his plan, which would provide a 25 percent rebate for people who wouldn't be able to get other help with their surging premiums. About 121,000 Minnesotans are facing steep health insurance premium hikes, but make too much to qualify for federal tax credits.

Republicans said they also want to act quickly, but warn they are at the mercy of the federal government, as fellow Republicans in Washington work to dismantle the Affordable Care Act.

House Speaker Kurt Daudt, R-Crown, said more substantive reforms will take time.

Minnesota's financial forecast for the next two years brought mixed news for the state's elected leaders.

A projected $1.4 billion surplus helps lawmakers avoid a fight over major cuts. But uncertainty about the new presidential administration — and expectations for slower economic growth — could leave the Legislature wary of spending too much, either.

DFL Gov. Mark Dayton will release his own budget blueprint soon. He said his focus would be on protecting state agency budgets and programs, specifically in education, transportation and water quality.

"They all relate to jobs," he said, citing all as prerequisites for economic growth.

Dayton said he'd propose using part of the surplus for the relief he wants for health insurance customers socked by soaring premiums. He also wants to protect the state's budget reserves.

Republicans and DFLers are also considering a public works borrowing package.

For Republicans, tax cuts will be a major priority.

"We do have a surplus in the state budget, and I think Minnesotans deserve to get some of their money back," said House Speaker Kurt Daudt, R-Crown.

But DFL Gov. Mark Dayton will put out his own tax cut proposal, one he said would be focused on middle income families — "including providing relief in the cost of child care," he said.

It's not yet clear what Republicans will propose. Last year, House Republicans and the Senate DFL majority passed a $259 million package that included tax cuts for families contributing to savings plans, reductions in property taxes for farmers and student loan tax credits. But Dayton vetoed the bill over a drafting error he said could have cost the state money.

Dayton says he's open to most of the provisions in that bill. But now that Republicans have full control of the Legislature, it's likely they'll go back to the drawing board with hopes of setting a bigger overall tax cut.

For two years, DFL Gov. Mark Dayton and lawmakers tried and failed to craft a transportation deal that could raise billions of dollars in the next 10 years to help maintain the state's 20,000 bridges and 140,000 mile highway system — the nation's fifth largest.

The reason for the deadlock is money. The DFL governor wants to raise fuel taxes, which would mean dedicated funds that can't be raided when a recession hits and lawmakers go looking for money.

"A 10-cent-per-gallon increase costs the average Minnesota motorist $75 per year," Dayton said. "It's so overblown," he said of tax hike complaints from Republicans.

Republicans want to dedicate general fund dollars to transportation, saying that there should be plenty of money in the budget without need for a tax increase.

Sen. Scott Newman, R-Hutchinson, the incoming chairman of the Transportation Committee, said he has one goal: "Get a transportation bill passed."

Intense conflict on the environmental front marked the last two years at the State Capitol.

Faced with alarming reports about the state's water quality, DFL Gov. Mark Dayton rolled out a proposal to require buffer strips around waterways to protect them from pollutants, principally in farm country.

It became law, but Dayton and DFL allies took a big political hit for it, with critics saying it was hampering economic growth.

This may be a year of an environmental truce. Sen. Carrie Ruud, R-Breezy Point, the incoming chairwoman of the Senate's Environment Committee, has a sunnier view of the state's pollution control officers.

"I hate to demonize the government as horrible people who make it impossible to do business in Minnesota," she said.

Dayton will roll out a public works plan that would spend tens of millions of dollars to improve water infrastructure, like wastewater treatment plants to help clean up farm pollution.