Taxes top state lawmakers' agendas in second half of the legislative session

Heated debates over school safety and a Medicaid work requirement await Minnesota lawmakers as they return to St. Paul this week for the second half of the legislative session, where they also must zero in on basics like taxes and infrastructures.

Legislators and Gov. Mark Dayton have six weeks to complete major proposed revisions to the state tax code in response to the recent federal tax overhaul, to finalize a public works infrastructure spending plan and to make progress on a handful of controversial policy proposals.

Adapting state tax law to the federal changes "is probably the most difficult and the most important" issue still facing lawmakers, said Senate Majority Leader Paul Gazelka, R-Nisswa. "Will we come to a place that we can agree? That will be the biggest hurdle, I think, of the session."

While most top Capitol players have called taxes the top priority this year, much of the session's debate thus far has centered around other issues. Contention over gun restrictions and school safety, and whether those two issues should be connected, have brought high schoolers calling for gun control and National Rifle Association members to the Capitol.

Republicans, who control the House and Senate, want to focus on bolstering school building security and mental health services. Dayton agrees with those efforts, but also supports gun control measures.

GOP leadership has generally opposed gun restrictions, though House Speaker Kurt Daudt said he is open to having more hearings on them.

Some at the Capitol have speculated that the complicated tax overhaul could force lawmakers to return for a special session after the regular session concludes on May 21. Daudt, R-Crown, said House Republicans are committed to avoiding that.

"I don't think anyone has interest in extending this into a special session and I don't think that would be productive," he said.

House Republicans will put forward their tax plan shortly after they return to the Capitol, Daudt said. He said they would not increase taxes and want to keep the state competitive by reducing taxes in some areas. They might propose using some of the state's projected $329 million surplus to do that, he said.

Dayton presented a tax package several weeks ago that emphasizes tax cuts for middle and lower-income residents. It repeals tax breaks added last session for businesses, tobacco and wealthy estates — a move the GOP opposes.

But the governor remained optimistic when recently asked about how the session is proceeding.

"The next two months, close to it, after they come back is where the real crunch occurs, and we'll have to see what happens then," Dayton said. "But I'd say so far it's boded well."

Dayton said he was encouraged by the House and Senate's passage of legislative funding, public employee contracts and $10 million to continue fixes to the Minnesota Licensing and Registration System (MNLARS).

Legislators begrudgingly approved Dayton's request for emergency funding to continue work on the state's vehicle licensing system after a problematic rollout last year. Lawmakers added requirements giving them more oversight of the project, which has already cost the state at least $93 million.

In addition to the $10 million, the governor is seeking another $33 million this session to finish repairing the glitchy system. That request could become a bargaining chip during negotiations with legislators over spending and policy priorities.

Much of the spending debate could play out late in the session, when the Legislature dives into the public works bonding bill. Dayton proposed a package of $1.5 billion in construction projects, with big investments in colleges and universities, as well as Department of Natural Resources and water infrastructure. House and Senate GOP leaders said around $800 million is a better starting point.

Other major spending proposals progressing in the Legislature would dedicate millions to combating opioid addiction and covering unfunded pension liabilities.

The House opioid bill uses $20 million from the general fund next year for treatment and prevention, while Dayton supports a fee on pharmaceutical companies to help cover costs. The fee is also included in the Senate version of the bill.

And the Senate unanimously passed pension legislation that trims some public employee benefits and dedicates more state funding to cover ongoing costs, including $27 million in 2019 and $113 million over the following two years. Dayton supports the bill, but the House has not yet moved forward on it.

The most vehement partisan standoffs, however, have been about gun restrictions, a Medicaid work requirement and sexual harassment.

Republican legislators proposed the work requirement that would effect an estimated 125,000 recipients of Minnesota's Medicaid program. People would need to work or volunteer 80 hours a month to get the benefit, unless they qualify for an exemption. Dayton opposes the measure, which has been approved in party line votes by the House and Senate health and human services committees.

Sexual harassment prevention was at the top of many lawmakers' priority lists heading into the session. A senator and representative resigned in November after they were accused of sexual harassment.

The House created a Subcommittee on Workplace Safety and Respect that has been looking into policy changes. DFL representatives, frustrated that the subcommittee has not yet proposed any legislation, took turns calling for action on the House floor the week before the break. House Majority Leader Joyce Peppin, chairwoman of the subcommittee, replied that she doesn't want a "slipshod" proposal and still intends to put together a bipartisan plan.

However, Rep. Jamie Becker-Finn, DFL-Roseville, announced Thursday that she will convene a new working group on the issue.

"This type of behavior has gone on unchecked for decades," Becker-Finn said in a statement. "It's time to clean house."

Jessie Van Berkel • 651-925-5044