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Minnesota Legislature convenes this week

ST. PAUL - Democrats last year said that when Minnesota lawmakers meet Tuesday it will begin the health care legislative session. After a Minneapolis bridge fell into the Mississippi River on Aug. 1, it appeared it could turn into the transportat...

ST. PAUL - Democrats last year said that when Minnesota lawmakers meet Tuesday it will begin the health care legislative session.

After a Minneapolis bridge fell into the Mississippi River on Aug. 1, it appeared it could turn into the transportation session.

In recent weeks, talk has turned to a bum economy and accompanying job losses, setting up the possibility that lawmakers will make it the economy session.

Lack of money to spend, when combined with generally rocky relations between Republican Gov. Tim Pawlenty and the Democratic-Farmer-Labor Party-controlled Legislature, leads to Sen. Rod Skoe's prediction: "I think it is going to be an extremely difficult session."

The Clearbrook Democrat summed up the feeling of many legislators who hoped more could get done beyond the basics.

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The basics in an even-numbered year center on approving a public works package funded by the state selling bonds, which probably will go ahead as planned since they are repaid over a couple of decades, not out of current revenues.

Because so much of what legislators do involves spending taxpayers' money, policymakers are downplaying hopes for increasing spending. In fact, the talk is that already-appropriated money could be cut to battle a projected deficit.

At the end of November, economists predicted the state would face a $373 million deficit. Now, it appears likely to grow, perhaps to $600 million or more.

"It could get worse, it could get better, but obviously, part of the session's going to have to be dealing with that deficit," Pawlenty said. "It's serious and it's important but it's not so large or overwhelming that it can't be addressed without too much tumult."

Many Democrats hold out hope that they can find a way to obtain new revenues such as tax or fee increases.

Tackling the deficit

Lawmakers will decide how to tackle the deficit after new economic and budget outlooks late this month, but one assistant House majority leader said cuts will be needed.

"I think we are going to tighten our belt," said Rep. Frank Moe, DFL-Bemidji. "We are going to have to find efficiencies in government."

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The session begins at noon Tuesday and must end by May 19, although a few predict the session will not stretch that long.

The first major 2008 legislative action probably will come Thursday when leading lawmakers expect the House and Senate to debate a proposed constitutional amendment to slightly raise the sales tax to fund outdoors and arts programs. It is somewhat controversial, but is expected to pass.

A House environment committee member, Rep. Denny McNamara, R-Hastings, is one who would prefer the amendment focus on the outdoors and habitat conservation.

"Folks have spoken," McNamara said. "They want the arts issues in there, too, and so let's let it have a vote."

Sen. Steve Murphy, DFL-Red Wing, said it sends the wrong message to take up a constitutional amendment helping "ducks and geese and Shakespeare" before approving more money for transportation and veterans' needs.

Murphy will lead an effort to produce what most predict will be the second major bill this session. He plans to unveil a road, bridge and transit funding bill in time for his transportation committee to review it Thursday. The House probably will act on its equivalent this month, too.

"Our plan is to move as quickly as possible with a funding bill," Murphy said.

Tax, fee increases

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The Democrats' plan is expected to include some tax and fee increases, including raising the gasoline tax a nickel to a dime a gallon.

Rep. Doug Magnus, the top House Republican on transportation issues, was fuming over the Democrats' plan, calling it a "take it or leave it" approach similar to how major spending bills were handled at the end of the 2007 legislative session.

"It looks like they're continuing the same thing," Magnus said. "On one hand, they say, 'Gee, it looks like the Republicans don't want to negotiate.' And then, here comes a bill. I've got no idea what's in this bill."

The Senate should decide whether to remove Lt. Gov. Carol Molnau from her job as transportation commissioner early in the session, then move beyond the controversial issue, said Sen. Dan Skogen, DFL-Hewitt.

"I hope that doesn't throw gas on the fire that makes it a very partisan session," he said.

With at least two major health care reform proposals on the table, Pawlenty said he is optimistic he and the Legislature can compromise. There will be efforts to expand insurance coverage to the uninsured and to find ways to slow cost increases for those who already have health insurance.

Minnesota House Speaker Margaret Anderson Kelliher recently seemed to scale back her expectations on what can be accomplished on health care in coming months, given the lack of money.

Economists say there is little state lawmakers can do quickly enough to help the stagnant economy, but many legislators disagree, claiming public works and transportation funding puts people to work.

"How can that not have a positive effect on the economy when you get jobs out there?" Skoe asked.

Moe agreed. "Our main job is jobs. We need to do what we can with this session to try to jump-start the economy."

One of the major problems facing lawmakers is whether they can get along with Pawlenty.

Rep. Morrie Lanning, R-Moorhead, said an on-going dispute over transportation funding does not bode well.

The good news to all of this is, according to Lanning, that it could be worse. Lawmakers last year could have spent $300 million more than they did, driving this year's deficit even higher.

The economy and resulting drop in state revenues probably won't affect public works spending to a great extent, but how bonding money is spent will be a debate.

"The House bill is going to have more for higher education than what the governor has proposed and something less for roads the bridges," Lanning said.

Repairs, upgrades

Regardless of the projects funded, he predicted more than $1 billion will be spent on things ranging from repairing colleges to upgrading local roads and bridges.

Lanning predicted a transportation bill, separate from bonding, will spend more than one Pawlenty vetoed last year. The larger a bill becomes, he added, the lower the chance lawmakers will override another Pawlenty veto.

A recent poll shows transportation the fifth most important issue to Minnesotans, so Lanning said there are other issues that deserve more attention.

"The transportation advocates have been very successful at hyping this issue," Lanning said.

Senate Capital Investment Chairman Keith Langseth, DFL-Glyndon, said passing a bonding bill early in the legislative session could help create jobs.

"Through strategic investments, we can immediately generate thousands of jobs in our region and across Minnesota, and lay the foundation for sustainable, long-term economic growth," Langseth said.

Skogen said he is optimistic there will be agreement on key legislative issues this year, but said some of those compromises could be derailed by lingering disputes stemming from the Minneapolis bridge collapse and state response to southeastern Minnesota flooding.

A projected state budget deficit will make competition for new funding fierce, but lawmakers will begin discussing ways to change how schools are financed.

Skogen said the school finance reform task he has served on will make some school funding recommendations to the Legislature this year. There will be no major changes until at least 2009, the next budget-drafting year, he said.

Pawlenty vetoed a comprehensive tax bill the Legislature approved last year that would have increased state payments to cities known as Local Government Aid. The governor objected to a controversial inflation provision.

Some lawmakers want to boost state payments to cities, known as Local Government Aid.

Pawlenty said LGA was cut in 2003, and cities in 2004 said they needed to raise property taxes to make up for cuts. And many have done the same thing every year since more than making up for the 2003 cuts, he said.

"But when you raise taxes to make up for the LGA cuts, their levies don't go down after that," he said. "They have raised property taxes dramatically higher, a multiple of any LGA cuts that they experienced in 2003."

LGA funding did not decrease during the past year, Pawlenty added.

Skoe, who leads a Senate committee dealing with Local Government Aid, said a growing deficit means LGA will get no more money this year.

"There won't be an LGA discussion without new money going into the formula," Skoe said.

The LGA pie

Some suburbs are pushing for a cut of the LGA pie, which now mostly goes to Minneapolis, St. Paul and rural communities.

Skoe said a big topic from last year, property tax cuts, also can't happen without new money.

Moe said the key to creating jobs is to focus on bonding and transportation projects "that are ready to be put on the ground." He said both transportation and bonding bills contain projects that could begin this summer.

"We're fast-tracking our bonding bill," Moe said.

To try to ensure the constitutional amendment, transportation and bonding bills get done quickly, Moe said he thinks lawmakers will work through the first couple of weekends of the session.

Lawmakers and Pawlenty again will discuss energy issues. Some of the legislation likely will reflect recommendations made recently by a governor-appointed climate change advisory group.

Pawlenty said work this year also could build on a plan approved in 2007 to reduce greenhouse gas emissions in Minnesota.

"Now, we need to undertake the tactics and mechanics of making sure that happens," he said.

Pawlenty added: "There are reasonable steps we can and should take to clean up our environment."

'Green-collar' jobs

Sen. Yvonne Prettner Solon, DFL-Duluth, plans legislation designed to attract what is being called "green collar" jobs, work that revolves around good environmental practices. A recent study showed a potential for 18,000 green jobs in the state.

"With the recent announcement that Minnesota's unemployment rate reached its highest level since March of 2004 and with the news that we are rapidly losing construction jobs, it is clear that the Legislature needs to take swift action to develop new jobs," said Solon, chairwoman of the Senate Energy, Utilities, Technology and Communication Committee. "The green collar industry is a natural place to look to for development."

Solon's legislation will attempt to attract renewable energy facilities such as wind turbine makers.

"Instead of using wind turbines built outside of the country or state, we need to work to ensure that these products carry a 'Made in Minnesota' sticker," she said.

The Legislature may need to consider shrinking the size of its public works borrowing package if the projected state budget deficit worsens, McNamara said.

There probably is little the Legislature can do this spring to boost job growth and economic development in the short term, McNamara said. Previously passed bonding bills are the ones creating jobs right now.

"We'll be potentially into an improving economy before a lot of that takes place," he said of jobs filled for 2008 bonding bill projects.

But, McNamara said, businesses should not be saddled with tax increases.

"We've got to be careful of the tax burden," he said. "We don't want to slow down their investment and job creation."

Constitutional

amendment

McNamara said he will propose a constitutional amendment allowing the state to fund state highway and bridge projects by repaying bonds with general tax revenue. Current law allows that type of state borrowing only for local roads and bridges.

Many Democrats oppose expanding borrowing authority for transportation projects.

"All I'm asking for is people to vote," McNamara said.

After the Minneapolis bridge collapse and the subsequent scrutiny of other bridges and roads, McNamara said, there will be pressure on lawmakers to support whatever transportation funding bill Democrats bring forward.

Magnus said he will offer a bill that authorizes the Minnesota Department of Transportation to spend additional federal funding after the bridge collapse, after a DFL-controlled legislative panel did not meet last month to sign off on the spending authority.

"They're holding that hostage to force me to vote for their secret (transportation funding) bill," Magnus said.

If the Legislature overrides the governor's veto of a transportation bill, then putting together a public works construction package could be easier, said Sen. Gary Kubly, DFL-Granite Falls.

Pawlenty's bonding bill includes a record amount of borrowing for local bridges and roads. Passing a transportation finance bill would make some of that borrowing unnecessary, thereby freeing up bond money for other projects, Kubly said.

"It makes it easier to get the votes that you need," he said.

Kubly said it may not be possible to pass a comprehensive transportation bill in the session's first couple of weeks.

"There's always a lot of optimistic talk," he said.

Veterans' initiatives

The Legislature and governor may be able to agree on some veterans' initiatives, but even that issue will become tricky if those proposals are costly, said Kubly, who sits on a veterans committee.

Rep. Sandy Wollschlager, DFL-Cannon Falls, summarized the mood of many of her colleagues: "I think we are going to accomplish some things. It is not going to be a banner year."

The outdoors and arts amendment should pass, she said, even though many outdoors advocates do not like including arts funding. But, she added, they had more than a decade to pass an outdoors-only amendment and failed.

Wollschlager told about a Minneapolis colleague who turned to her and asked "what is game?" while a committee was discussing game and fish legislation. The Cannon Falls lawmaker said that illustrates why some urban lawmakers did not support the amendment until arts were included.

With a quarter of the state's population living in Hennepin County, Wollschlager said, urbanites must be involved in the proposal.

Sen. Kathy Saltzman, a Woodbury Democrat and transportation committee member, questioned whether the Pawlenty administration and the Department of Transportation even agree with legislators about the severity of the funding shortage for road and bridge improvements.

Policymakers should maintain a long-term view when considering ways to improve the state's economy, Saltzman said. She intends to propose legislation that would provide tax credits and incentives to small businesses conducting research and development. Those are the firms likely to create jobs in the future, she said.

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