Tax changes are top priority as Minnesota Legislature convenes Tuesday

Minnesota lawmakers will return to St. Paul on Tuesday with a complex to-do list for the short legislative session, with three months to reconfigure the state tax code, decide how much to pay for infrastructure upkeep, and try to improve how sexual harassment is handled at the Capitol.

To check off some of those items, the Republican-led House and Senate will have to find common ground with DFL Gov. Mark Dayton amid election-year politics and following a bruising legal battle. Dayton and GOP leaders spent half of last year fighting in court after the governor vetoed the Legislature's budget. The Legislature sued but the Minnesota Supreme Court ultimately ruled it was within Dayton's power to do so.

That leaves legislators needing to immediately draft a new budget bill to allow them to keep operating. Dayton, in his final year in office, has said he's ready to sign off on a new legislative budget and move on. But in a signal that the process might not be so smooth, some DFLers are suggesting the new legislative budget should be linked with approving new contracts for state employees.

Despite the near certainty of complications, Dayton said he and lawmakers would have to figure out how to work together to adjust the state tax code.

"Everybody in Minnesota has a stake in what we can accomplish this session," Dayton said at an event with the four legislative leaders last week. "We're going to have to work together or we're going to have a stalemate, and Minnesotans will have extremely complicated tax forms to be filling out a year from now."

Senate Majority Leader Paul Gazelka said tax changes are his highest priority this session. Both he and House Speaker Kurt Daudt said they want to realign the state's tax code as closely as possible to the federal code so taxpayers aren't left with confusing paperwork. But simply conforming wholesale to the federal changes would dramatically raise some Minnesotans' taxes, meaning Dayton and lawmakers will have to get creative.

"Now is not the time to be increasing taxes on Minnesotans," Daudt said. His goal is "to try to pass conformity while giving that extra revenue back to the people who paid it in."

On a sunnier note, legislative leaders have predicted that a state budget forecast coming at the end of February will show a surplus. They have plenty of ideas for how to spend the money: from education to repairing the state's problematic vehicle licensing and registration system to investing in roads and bridges.

But the big spending debate this session will center on what to include in a public works bonding bill.

Dayton has proposed a $1.5 billion bonding bill. He and DFLers want to invest in more maintenance of colleges, universities and state infrastructure. Republicans, who want a significantly smaller bill, have said transportation and wastewater treatment upgrades should be priorities.

Before legislators wade into tax conformity and infrastructure, they have administrative business to handle.

House members have mandatory sexual harassment and implicit bias training Wednesday, Daudt said. And senators who missed previous sexual harassment training sessions must attend one Thursday. Training is one of many steps both legislative bodies are taking to prevent sexual harassment and improve how complaints are handled. Those efforts follow accusations last year of sexual harassment against a representative and a senator. Both men resigned.

In the Senate, a debate over who presides over their proceedings could take place right away.

Senate President Michelle Fischbach automatically ascended to the lieutenant governor's job when former Lt. Gov. Tina Smith left the post. Democrats argue Fischbach cannot hold both jobs at once, while Republicans say she can, noting other senators have done it. The GOP's majority in the Senate is at stake in the debate. If Fischbach loses her seat, the Senate would be temporarily split, with 33 Republicans and 33 DFLers, until a special election is held to replace her.

"I'm going to fight like crazy to keep the majority," Gazelka said. The GOP's narrow majority last session made it difficult to pass legislation, he said, and it would be challenging with an even split.

A wild card is whether Republicans will bring any issues to voters as constitutional amendments on the November ballot, a way for the party to push policy priorities while avoiding a Dayton veto.

Daudt said he is interested in potential amendments, including dedicating sales tax money from auto parts to repair roads and bridges; and allowing the governor to choose his or her lieutenant governor in the event of an opening — which would prevent a repeat of the Fischbach debacle.

Jessie Van Berkel • 651-925-5044