Reform 2.0 was the focus of the 2012 legislative session. We are proud of the successful work we’ve done to modernize government, making it more effective and affordable.
Government will never be able to live within its means with outdated, rigid public systems and entrenched bureaucracy. Our priorities over the legislative session instituted many reform initiatives that will help create a stronger private sector economy, raise student achievement, put more people in charge of their health care decisions, and reduce the cost of government.
We focused on three key reform areas. These included restoring confidence and growing the private sector economy, reforming education and health care, and reducing the cost of government.
Here’s how we did it:
Goal: Restore confidence and grow the economy
Republicans in the legislature traveled to dozens of cities and met with hundreds of business owners, local government leaders, and interested citizens to gather input on how to restore confidence and grow the private sector. We discussed the problems businesses face when dealing with government and drafted bills to alleviate these issues. The legislature passed, and the Governor signed three key pieces of legislation that will help meet this goal.
Created a jobs advocate at the Department of Economic Development to help businesses navigate the complex permitting process. Business leaders need a liaison that will assist them in meeting permitting requirements.
Streamlined environmental review and permitting to speed up the permitting process. Many businesses voiced concern over the cumbersome process.
Allowed business to hire outside consultants to write and facilitate the permitting process while requiring state officials to identity permit deficiencies within 30 days.
Bill targets tax relief, innovation, job placement and long-term growth
Saint Paul – (March 22, 2012) – The Minnesota House of Representatives today approved the Tax Relief and Job Creation Act by a vote of 72-62. The act is focused on three areas that will encourage long-term economic growth including statewide business property tax relief, investment in innovation and emerging industries, and job training and placement programs targeted toward Greater Minnesota and veterans.
“We need to do everything we can to make Minnesota a more attractive place to do business, encourage entrepreneurship and foster job creation,” said Speaker of the House Kurt Zellers (R-Maple Grove). “This will not happen with one-time spending focused on short term gain. Our Tax Relief and Job Creation Act is focused on business and employment growth, which will encourage long-term economic activity. It encourages businesses to stay here, expand here and create jobs here.”
The Tax Relief and Job Creation Act freezes the statewide tax on business property for one year and phases out the statewide tax on business property over 12 years beginning in 2014. It also excludes 70 percent of the first $150,000 of value for all business property in 2013, benefitting small businesses throughout the state especially those in Greater Minnesota.
“Minnesota’s business property tax rate ranks among the highest in the United States. Our property tax relief package helps create a stronger, competitive business climate by freezing the statewide business property tax rate for one year and phasing out this burdensome regressive tax to allow for more investment in products, services and employees,” said Rep. Greg Davids (R-Preston), chief author of the bill.
The Tax Relief and Job Creation Act also supports investment in technology and innovation, which will help make Minnesota a magnet for emerging and high growth industries. The Act:
Provides $5 million in increased funding for the Angel Investment Tax Credit. In 2011, the $16 million allocated to the program ran out in November resulting in numerous applications being rejected and Minnesota lost out on new jobs. The additional $5 million will result in more investment in Minnesota start-up companies.
Increases the Research and Development credit by $25 million, which will encourage entrepreneurship and make Minnesota a more attractive place to do business.
Provides an upfront sales tax exemption for small businesses. This will allow small business, less than $1 million and less than 20 employees, to invest in their business or hire additional employees rather than loaning that money to the state’s general fund.
Establishes the Technology Corporate Franchise Tax Certificate Transfer Program, which allows small, start-up biotech companies in Minnesota to transfer or sell their net operating loss carryovers to larger, more profitable companies. This helps small businesses to gain access to an immediate infusion of cash so they can invest in their operations and hire more employees.
“Our investment in innovation is a long-term investment strategy in entrepreneurship, business development and job creation to help Minnesota become a magnet for the high growth businesses such as medical devices, bio technology and the life science industry,” Zellers said.
The Tax Relief and Job Creation Act also creates a internship grant program that is aimed at attracting and keeping talent in Greater Minnesota. The program, which is administrated through the Office of Higher Education, provides a grant of up to $1250 per intern to employers. The Act also creates a permanent tax credit of up to $14,400 for employers who hire veterans who are disabled, unemployed or receive food stamps.
The bill will now be referred to the Minnesota Senate for consideration.
This week, a bill to pay back last year’s $430 million school shift passed Education Finance. It would also make the first repayment toward the $2 billion shift enacted by the DFL legislature a few years ago. Considering the state has $1.2 billion sitting in the bank, it makes sense to pay back what we owe. The Tax Committee will take this up next week.
This week in the spotlight:
The Education Reform Committee passed HF2161, providing for mayoral control of the Saint Paul and Minneapolis public school districts. Currently, these urban school districts operate in isolation from the mayor and the city’s political and civic leadership. Adopting an integrated governance approach would create a system where the city government and the school district are operated jointly under mayoral leadership for both accountability and management.
Minnesota’s urban school districts struggle with financial and academic challenges. Some studies indicate that mayoral control of education with an appointed school board raises student achievement and improves financial status by reducing administrative expenses. By providing the mayor with more control over the school district, there can be more stability, discipline, and accountability in education. Furthermore, mayors have extensive influence with municipal and business leaders in the community as well as state officials. This gives them an advantage that superintendants and school boards typically don’t have, allowing them to promote and coordinate educational interests with community leaders.
Other bills moving through committee:
The Commerce Committee passed HF2251, transferring regulation power of HMOs from the Department of Health to the Department of Commerce. This will create more transparency and efficiency in the system since the DOC already regulates health insurance.
Rep. Erickson’s “Innovation Delivery of Education Services and Sharing of District Resources” bill passed K-12 Education Finance. This five-year project would allow school districts to form partnerships to share resources as well as innovative ideas with the purpose of raising student achievement. This initiative will give our students access to programs and equipment that might not otherwise be available to them.
The Government Operations Committee approved HF2244, a bill that creates a new authority to manage school trust lands instead of the Department of Natural Resources.
In the media:
Rep. Pam Myrah’s bill requiring transparency in public employee separation payments was featured in two favorable editorials. The Star Tribune wrote “the measure is a step in the right direction. Minnesota's data practices rules need stronger, clearer language about payouts to public employees.” The Pioneer Press was also supportive of the bill. Click here to read more.
We are now five weeks into the 2012 Legislative session and the Republican plan is working.
Minnesota Management and Budget released the February forecast this week, showing an increased budget surplus, a continuation of November’s forecast. In total, the state now has a $1.2 billion surplus, a much brighter outlook than last year’s $6.1 billion deficit. This revenue growth was not a result of new taxes. Rather, it was due to needed reforms contributing to an economic climate more conducive to long-term growth. However, this is only the beginning and there is more to be done.
Our Reform 2.0 agenda will create a business and entrepreneur friendly climate by decreasing regulation, reforming government, and lowering the tax burden. In addition to a positive budget forecast, more reform bills passed the House this week:
HF 1850 or the “gainsharing” bill passed the House. This will increase the financial share of savings state employees are eligible to receive for bringing forward government reform ideas.
HF 545 directs state agencies to do an analysis of the potential impact of loss of federal funds either through the federal government becoming insolvent or slowing of federal funds to the state. Washington’s inability to balance its budget is a reminder that we must always be ready to address the impact loss of federal funds may have on state government.
HF 1560 designates the Office of Administrative Hearings (OAH) as the final decision maker in contested cases over agency rule-making. Under current law, if a state agency makes a new rule, citizens and businesses have the right to contest if they feel it was unfairly made. Contested cases are heard by an administrative law judge in the OAH but the agency has the power to reverse the OAH decision. HF 1560 creates a more level playing field for businesses and citizens by removing current bias in contested cases.
HF 1812 allows the Commissioner of Administration to enter into or approve a state agency contract for waste removal. Under current law, before a state agency can enter into a contract with an outside vendor for services, they must find that no current state employee is able and available to perform the needed services. In other words, instead of looking to private sector waste management companies, current law mandates that a state employee must handle capitol area trash. This bill is common sense and removes an unnecessary statute.
Education Reform Continues
HF 273 provides parents in low-income school districts with the option of sending their child to a better performing school. Increasing choices for parents is a major part of the education initiatives in Reform 2.0. Last year, the Wall Street Journal named 2011 the “Year of Choice,” recognizing a national trend of significant expansions in school choice programs. Unfortunately, Minnesota is still lagging behind. Keeping low-income students in poor performing schools expands the achievement gap and leaves children behind in poverty. Every parent and child in Minnesota should have access to the best school that meets their needs and HF 273 is a step towards this goal.
In other education reform news, newspapers across the state are endorsing the “Last in, First Out” bill that passed the House and Senate. The Fairmont Sentinel argued “seniority as the sole basis for job retention has long been a thorn in the side. It is an absurdity sparked by unionism that everyone knows has nothing to do with life in the real world. What should count? Productivity.”
The LIFO bill allows school districts to consider more than just seniority when making layoff decisions. We are hopeful Governor Dayton will do what’s best for students and sign it into law.
Thursday: Mayor Control of Mpls/St. Paul schools (HF 2621) and Empowering parents to request school district intervention in a persistently low-performing school. (HF 2580) in Education Reform.
School districts, while still protecting the rights of teachers, need all the tools they can to ensure that the best qualified teachers retain their positions when cuts have to be made.
Monday, July 16, 2012 at 9:56AM