TAXES AND SUPPLEMENTAL BUDGET, VETOES EXPECTED
No legislative session is the same and each year new issues rise to the top. With just three months planned for the 2018 session, the legislature had a number of issues it hoped to address – bonding, elder abuse, the opioid crisis, fixing the new Minnesota License and Registration System (MNLARS), and of course, federal tax conformity. However, the school shooting in Parkland, FL also turned everyone’s attention to school safety, becoming a priority of both Governor Dayton and the legislature.
Political differences greatly impacted the chance to reach a bipartisan agreement. Governor Dayton vetoed the first tax bill last week saying he would not agree to a tax bill without a deal on education funding, including his call for $138 million in emergency aid. Despite that threat, the legislature sent the Governor two new bills – a supplemental budget bill and a last minute budget and tax bill.
Below are brief summaries of both bills. Should Governor Dayton sign them into law, a more detailed summary will be provided. However, it is widely assumed Governor Dayton will veto both.
Budget bill #1
School safety provisions
- $18 per adjusted pupil in safe schools aid for FY19 only. $5.50 per adjusted pupil unit in FY20 and later.
- $6 per adjusted pupil unit in aid for Intermediate School Districts (FY19 only)
- $7.50 per adjusted pupil unit in aid for other cooperative units (FY19), $3.50 per adjusted pupil unit (FY20 and later)
- Additional flexibility to use LTFMR for school safety improvements (FY20 and FY21 only)
- $5 million for school-linked mental health grants
Key policy provisions
- Special education working group
- Summative rating system
- School discipline
- Civics graduation requirement
- Lead testing and mitigation
Budget/Tax bill #2
- Tax conformity provisions from first tax bill and other tax policy changes
- $50 million in additional per-pupil aid for school safety (FY19 only, taken from state budget reserve and)
- Two percent staff development set aside waived (FY19 only)
- Community service fund transfer authority for all school districts, upon approval by MDE Commissioner (FY19 only)
PENSION BILL PASSES
After weeks of uncertainty, the House finally voted on the Omnibus Pension Bill. The bill was the last bill taken up before adjournment, passing with unanimous support in both bodies. Governor Dayton is expected to sign the bill. Key provisions include:
- Employer contribution increased by 1.25% (7.5% to 8.75%) phased in over six years, funded through a pension adjustment mechanism funded by a state aid
- Employee contribution increased .25% over six years (7.5% to 7.75%)
- COLA reduced by 1% for five years and then increased by .01% per year until reaching 1.5%
- Rate of return assumption reduced from 8.5% to 7.5%