Connecting state and local government leaders

Taking Center Stage in Minnesota’s Legislature: Infrastructure, Taxes and Health Insurance Costs

The Minnesota State Capitol in St. Paul

The Minnesota State Capitol in St. Paul Shutterstock


Connecting state and local government leaders

Now in control of both the state House and Senate, Republican leaders look to tackle escalating health insurance premiums.

With a new legislative session underway in Minnesota, Gov. Mark Dayton this week released proposals calling for millions of dollars in infrastructure spending and tax cuts, as Republican lawmakers unveiled legislation to assist residents faced with escalating health insurance costs.

Dayton issued his infrastructure plan Wednesday. It calls for $1.5 billion of borrowing in the form of general obligation bonds. A similar measure failed in the Legislature last year by one vote.

The tax cut bill the governor put forward would cost the state about $300 million in the next two-year budget cycle, with a significant portion of that sum covering tax credits for lower income households.

It, too, is familiar, mirroring a tax measure state lawmakers approved last year.

But Dayton’s administration said that bill contained a drafting error that would have cost the state around $100 million. The governor did not sign the legislation.

“The bonding bill and the tax bill are both bills that I would’ve wished had passed last year,” Dayton said at a news conference on Thursday.

There's currently some leeway in the state's finances. Minnesota is set to have a $1.4 billion surplus headed into the 2018-2019 budget cycle, despite slower revenue growth, according to a state forecast from November.

Republicans Thursday introduced legislation that would transfer about $300 million from the state’s budget reserve account to assist state residents with paying health insurance premiums. Of that amount, roughly $15 million would go to reimburse insurers for costs tied to some customers.

Insurance prices through the state’s Affordable Care Act marketplace, known as MNsure, are rising sharply.

“The number one issue that Minnesotans care about right now is the health insurance crisis,” Minnesota House Speaker Kurt Daudt, a Republican, said at a Thursday press conference.

Within the GOP legislation are provisions that go beyond near term premium relief. One would eliminate a requirement for insurers on the state’s health care marketplace to be nonprofit entities.

“If you’re going to spend $300 million, you should make some changes in the underlying problem,” said Republican state Sen. Michelle Benson, a sponsor of the Senate bill.

Republicans leaders pledged to move forward with the health insurance legislation quickly.

Dayton said Thursday he had not yet thoroughly studied the GOP proposals. But he indicated that his preference would have been to sign bills that focused more narrowly on assisting people with high premium costs, rather than other changes to the state’s health insurance system.

“I’m glad that they have bills,” the governor said of the state legislators. “I wish they were the simple, straightforward relief bills that could’ve been passed this week in the House.”

The governor expressed an openness to making changes to MNsure, but said they should be considered carefully. “I have no investment in protecting the status quo,” Dayton said. “It’s had very serious negative effects on Minnesotans.”

Minnesota’s legislative session kicked off Tuesday.

The partisan balance changed in the state’s government after the November election, when Republicans took control of the state Senate. They now have a lock on both chambers of the Legislature. Dayton is a member of the Democratic-Farmer-Labor party.

His office said the bond financing package would help pay for over 240 projects involving infrastructure such as roads, bridges, ports, water systems, university campuses and railways.

The tax cuts the governor has proposed would be extended to more than 450,000 people, according to information from his office.

Among the largest provisions is a $93.9 million expansion of what’s known as the Working Family Tax Credit, which targets lower income workers. Dayton’s plan is to make 107,000 new households eligible, on top of the more than 260,000 that currently receive the credit. Another major component of the plan seeks to increase the number of families that can get childcare tax credits to 95,000 from 33,000—a $61 million move.

The governor is also backing proposals to reduce taxes and regulatory compliance costs for farmers. Various types of assistance to local government entities are also tucked in the tax cut package, including $62 million over four years to help school districts repay bond levies. And the bill aims to eliminate a number of “tax loopholes” for corporations.

The governor alluded Thursday to broader uncertainty hanging over the Affordable Care Act, also called Obamacare. Republicans now in control of Congress and President-elect Donald Trump have rallied around the idea that the current version of the law should be scrapped.

“Who knows what Washington is going to do,” Dayton said.

Bill Lucia is Senior Reporter for Government Executive's Route Fifty and is based in Washington, D.C.

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