Special Legislative Session Update

Minnesota has reopened, and we can all breath a sigh of relief. In the flurry of activity after Gov. Dayton made his announcement, it was hard to keep track of exactly what happened, what was passed, and what impact the legislation will have on those of us who have lake places or forest land in Minnesota.  Here is a brief re-cap of what happened, and what did not happen.

Property Taxes

The longest state shutdown in the country's history came to a end on July 20th when Dayton agreed to abandon his proposal to raise income taxes on the state's wealthiest and instead adopt a Republican proposal to raise $1.4 billion in one-time money by delaying school aid payments and selling bonds based on future proceeds from the state's tobacco settlement. In return Republicans accepted Gov. Dayton's demand that they drop controversial social issue proposals, eliminate a proposed 15 percent reduction in the state's workforce and pass a $500 million bonding bill.

Few people are happy with the compromise.  Minnesota has had systemic and growing budget deficits almost every biennium (excluding 2005) for about a decade and the current package will not alter our state's structural budget imbalance. The combination of cuts, shifts and borrowing the Governor signed on July 20th means that the state will almost certainly be in the red again when budget discussions start up in 2013. Politics in Minnesota reports a projected $1.9 billion shortfall in the 2014-15 biennium with some bloggers pointing to Senate research to claim a $4.1 billion deficit.

Crisis Into Opportunity

When Gov. Dayton announced that he would "agree to, but not agree with" the republican leaderships basic budget plan, he did note that he was looking forward to some time without the Legislature in Saint Paul.  He said he hopes to use this time without the crush of a breakneck legislative session to meet with his Commissioners, and begin to make solid plans on ways to reform Minnesota's State and Local fiscal system.  MSRPO will continue to push for a broad State and Local Fiscal System overhaul, for incentives to increase public benefits on privately held shoreline, forest land, to make property taxes based on ability to pay and services received, and to increase transparency and accountability in the assessment and taxation process.

When Governor Dayton conceded to Republican demands, he made a point of mentioning that he would not support any further cuts to local government, citing a 75% property tax increase in the last few years.

Indeed, Finance and Commerce reports that property tax court challenges have climbed from 2,863 in 2008 to 5,080 in 2010, a record. Tax Court Chief Judge George Perez predicted that 2011 numbers would be even higher.

In the bill he signed on July 20th, the state held LGA payments at 2010 levels in an effort to stop the upward pressure on local property taxes.  The hope is that local communities may be able to trim budgets and not rely on yet more property tax increases to back fill revenue holes.

The final tax bill did not contain any changes to assessment practices that MSRPO had sought. There was no reform of the state business property tax, referendum market value formulas,  conservation easements, or other areas of the tax code.

Early in the session there was talk of ending the Sustainable Forestry Incentive Act, which gives forestland owners who implement a forest management plan on their land, and sign an eight year covenant that they will not subdivide the property a per acre payment.

This is a wonderful program and MSRPO and other conservation groups like the Minnesota Forestry Association have worked very hard on it over the years.  Families are the largest forest land owners in Minnesota, holding nearly 43% of the forest land in the state.  Yet they struggled under excessive taxes in their efforts to be good stewards of this land.  SFIA gives land owners the tools (professional expertise and revenue) to be able to manage their land sustainably for the long term benefit of all.  In the decade since its inception almost one million acres has been protected for future generations.  This land is not removed from local tax rolls, it is producing timber for industry, wildlife and watershed protection at a fraction of the cost of buying a conservation easement of fee title on the land.

Legislators argued that the majority of the money was going to a few large commercial interests that were already benefiting from other programs.  MSRPO reminded legislators of the benefits of the program for family forest land owners.  the final solution was to cap payments at $100,000 per owner and fix the per acre rate at $7 per acre, holding all of the small to medium family forest land operations harmless.

The tax bill also created a property tax working group to look at ways to improve the system.  MSRPO has advocated for such a review for years and will follow its proceedings closely, reporting on an progress made.  MSRPO Board member Tom Spitznagel is working very hard on the redesign caucus and working groups established last session.  The good news here is that many of the best and brightest in Minnesota are pulling together in non-partisan groups to look at real long-term solutions to Minnesota's systemic budget shortfalls.

The tax bill that Gov. Dayton vetoed at the end of the regular session included a slow phase-out of the State Business Property Tax, a tax that includes seasonal recreational property.  The money raised from this tax did not go to local communities, but disappears into the general fund black hole.  Property tax is not connected to ability to pay, and so is particularly draconian for business in a down turn AND seasonal property that produces no revenue to offset this added expense.  Gov. Dayton did not specifically object to the State Business Tax phase-out in his veto letter, but unfortunately the phase-out was not part of the final tax bill signed into law July 20th.

Aquatic Invasive Species

During the regular session, one of the few bills to make it to Governor Dayton's desk was the Aquatic Invasive Species law.  The bill, SF 1115, signed into law the day before Memorial day weekend:

  • Defines decontamination, suggesting the Western Regional Panel on Aquatic Nuisance Species guidelines.
  • Defines "Inspector" to include anyone certified by the Commissioner, even if they are not a licenced peace officer.  Empowers these inspectors to be able to order inspection anywhere in the state, and if needed order decontamination of water related equipment before it is put into waters of the state.
  • Makes "compliance with aquatic invasive species inspection requirements... an express condition of operating or transporting water related equipment" in Minnesota.
  • Empowers conservation or peace officers to set up "check stations," to check for AIS.
  • Requires water related service providers to complete AIS training to get a permit.
  • Disburses AIS penalties to the issuing agency, thereby creating further incentive for local law enforcement to enforce AIS regulations.
  • Requires boat owners to display an educational rules decal (supplied at no cost by the DNR) on their boats.  This will keep the AIS message constantly in front of all boat operators, even those who are not the owner and may not know the rules.
  • Gives the commissioner increased leeway in dealing with fishing tournaments by the addition of,  "The commissioner may require mandatory decontamination of boats participating in fishing contests on infested waters."
  • The bill was effective the day after Gov. Dayton signed it on Saturday, May 28, 2011.

The bill did not increase either civil or criminal penalties for violating AIS rules.

When the Legislative session ended in May, there was no appropriations bill passed to implement the AIS program.  Funding for AIS was part of the final budget solution passed on July 20th however.

Including the money that comes from the AIS surcharge on boat registrations and general fund dollars that have traditionally gone into AIS work, there were a number of one time transfers that will provide $8,743,000 in 2012 and $10,754,000 in 2013 for AIS work.  While this represents almost a doubling of the state's previous AIS budget, and represents a significant commitment, this increase is due to one- time funds, meaning we will have to return to the legislature to secure a reliable and predictable funding source for this work.

As the dust settles from the shutdown, MSRPO and a number of groups will be working with the DNR to establish best management practices to prevent the spread and manage AIS in Minnesota.  The work will be ongoing, but we have made a very very significant first step towards implementing a plan.

Moving Forward

Over the next few months MSRPO will be actively working to build coalitions with organizations that have a shared constituency.  We will work to increase our membership base and grass roots power.  Please do take a moment to forward our emails to friends, associates and others who share our values.  the more people involved, the more power our collective voices will have.

This week Executive Director Jeff Forester met with Minnesota Water's new Executive Director Lois Sinn Lindquist to celebrate the progress made on AIS during the last session and to welcome Lois to her new role as leader of Minnesota Waters.  Lois commended the work MSRPO did last session and recognized the critical activism of the COLA Collaborative.  Said Lois, who worked on the AIS issue at the local level last session, "The energy generated around this work is palpable, meaningful and could be measurable."

Said MSRPO Executive Director Jeff Forester, "Already Lois and Minnesota Waters have made a major contribution by promoting  a presentation at Douglas County by Dr. Daniel Malloy into promising research and strategies for control and containment of zebra mussels."

Recognizing a potential for strong collaboration between the two groups and the strengths each bring to the table as we push issues where our agendas meet.  There is no doubt that a strong partnership and engaged citizenry will benefit our shared constituents, and Minnesota's lakes and rivers.

MSRPO will continue to pursue other meaningful collaborations and partnerships with other outdoor, conservation, hunting, fishing and policy groups to benefit both our members and the state as a whole.

As always, we will keep you informed via these email newsletters.  As you see your state legislators at the grocery store or at town hall meetings, be sure to thank them for the work they did on AIS this session, and encourage them to take a stand on forging a permanent solution to Minnesota's perennial budget woes.

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