Despite the specter of lawsuits and a potential second special session, the Minnesota Legislature and Gov. Mark Dayton appear to have concluded their work on Minnesota’s 2018-2019 budget, as well as on separate omnibus tax and bonding bills. A general agreement was reached between the governor and legislative leaders on the final day of session, with details worked out and bills passed in an immediate special session spanning the week of May 22. It has remained unclear, however, as to whether additional negotiations would return legislators to St. Paul to reconsider elements of the tax bill, which included over $650 million in recurring tax cuts and significant impact on future state revenue and budget projections.
Earlier this year, Growth & Justice and its partners in the Minnesota Rural Equity Project announced support for 12 bipartisan, evidence-based policy priorities for the 2017 legislative session. Although Growth and Justice is concerned with the long-term budget implications of a likely unsustainable mix of new ongoing spending, reliance upon one-time funds, and excessive tax cuts, the session produced progress and new investment –– if only modest –– and supportive policy on most of the priorities in the project.
The following recap breaks down those 12 policy priorities, and the legislative action that followed, into three distinct categories: human capital, infrastructure, and tax equity. Check out our infograph for a visual representation of this recap.
Career Pathways: A workforce mismatch leaves too many in Greater Minnesota underemployed and too many employers unable to find skilled workers. The underemployed are disproportionately low-income workers and people of color who lack post-secondary credentials. More investment in new “fast-track” credentialing programs, featuring strong social supports and personal navigation to actual jobs in demand, will help move the underemployed into those high-skilled better paying jobs. (Links: MSPWIN and Growth & Justice provide detailed background research on the Career Pathway models and the Department of Employment and Economic Development’s Pathways to Prosperity Grant Program lists grantees in Greater Minnesota). The Jobs bill included base funding for existing local career pathway investment.
Driver Diversion Program: An estimated ten percent of Minnesota driver’s licenses are currently suspended, in many cases as a result of unpaid traffic fines and fees. For too many car-dependent Greater Minnesotans, it’s difficult to keep a job without a valid license. The Minnesota Driver Diversion Pilot Program (DDP) has enabled thousands of Minnesotans to obtain provisional reinstatement of their driver’s license so they can drive legally while paying off tickets according to a realistic payment plan. The program expires this year and is primarily available only in the Twin Cities and Duluth. The MABC backs legislation that makes it permanent and available statewide. (Links: Diversion pilot program details on the state Driver & Vehicle Services website, HF1671). The Public Safety bill included a two-year extension for the Driver Diversion Program, but no waiver for the $75 state surcharge on traffic tickets.
Early Childhood Care and Education: Demand is outstripping supply in rural areas for early childhood development needs and quality child-care, and the mismatch has been deemed a “crisis” by the Center for Rural Policy & Development. The Legislature must invest in a full toolbox of early childhood options and flexible funding streams so that our youngest children and their parents can access what they need to get a good start in those most crucial early years. Investments should be increased in: scholarships for high-quality programs for low-income families in the earliest years, voluntary pre-K programs in public schools, volunteer targeted home visiting programs, expansion of child-care recruitment and retention, and the Child Care Assistance Program for working parents. (Links: Sources for details and multiple legislative proposals and investments for early childhood include the MinneMinds coalition and Think Small.) The Education Finance bill included $100 million in new funds for the governor’s hallmark early childhood program and for targeted scholarships.
Getting to Work: Low-income rural workers often face special transportation challenges and lack public transit options. The “Getting to Work” bill provides funding for nonprofits that offer low-interest auto loans or leases, affordable car repairs, or donated vehicles to families that need a car to get to work. (Links: MABC map shows counties served by vehicle programs, HF875/SF758.) The Jobs bill included $200,000 as an initial investment for Getting to Work.
Local Education Partnerships: Higher education attainment levels in rural Minnesota lag behind the Twin Cities. Several Greater Minnesota communities (Itasca County, Austin, Red Wing, Northfield, St. Cloud, Southwest Initiative Foundation) are forming highly organized local partnerships focused on closing education disparities from birth through post-secondary completion, coordinating local efforts for early childhood education, after-school programs to mentoring and tutoring, post-secondary attainment and apprenticeships. The Legislature has begun to invest in the Education Partnership Coalition and should expand this investment to provide incentives for more partnerships. (Links: Strive Together, annual report from Education Partnerships Coalition, recent “Grow Our Own” summit, HF734/SF711. The Education bill included base funding for existing local education partnerships.
Broadband Access: High-speed internet access is the great equalizer for Greater Minnesota, allowing homes, businesses, and students to connect to the 21st century economy and culture through everyday applications in distance learning, e-commerce, telehealth, and precision agriculture. Minnesota’s Border to Border competitive matching grant program has utilized $65 million in state funds to deliver scalable, technology-neutral high-speed internet access to an estimated 25,000 homes and businesses, and hundreds of community anchor institutions – such as libraries, hospitals, and schools. However, nearly half of Greater Minnesota is still considered underserved by state standards. The grant program should be expanded and other options considered toward universal statewide access. (Links: Key proposals are in Gov. Dayton’s budget request for Greater Minnesota and a similar bill by Duluth Sen. Erik Simonson, HF841/SF234.) The Jobs bill included $20 million for broadband.
Clean Water Infrastructure: A combination of aging infrastructure and stricter federal and state regulations has left many rural communities searching for ways to fund expensive upgrades required of their water treatment facilities. The Governor has recognized that cities need help and proposed $167 million in state bonding money to support clean water grant and loan programs. These investments are absolutely critical to allow our cities to comply with clean water rules without imposing massive rate increases on businesses and residents. (Links: Coalition of Greater Minnesota Cities, Public Facilities Authority, SF 684 / HF 642). The Bonding bill included $116.9 million for the Public Facilities Authority for water and wastewater infrastructure grant and loan programs.
Transportation: Rural areas rely on interregional highways and local city streets as vital economic connectors. With the state facing a funding shortfall for its transportation needs, Greater Minnesota needs creative solutions. Corridors of Commerce, a program created in 2013, provides funding to expand interregional corridors, reduce bottlenecks, and remove barriers to commerce. This program needs a permanent, ongoing funding source to ensure that important expansion and safety projects don’t go ignored. In addition, cities large and small have expressed serious concerns about their ability to keep up with the maintenance and repair of their streets. The Legislature has recognized these priorities in the past with one-time funding, but now is the time to search for long-term funding solutions to these problems. (Links: Corridors of Commerce, Coalition of Greater Minnesota Cities, Transportation Alliance). Approximately $300 million in general fund surplus and an addition $250 million in bonding was appropriated for new transportation spending.
Workforce Housing Tax Credits: Many communities in Greater Minnesota are ready and able to grow, but they are stymied by a shortage of housing for middle-income workers. Initiatives that encourage the construction of workforce housing will allow Minnesota communities to continue to grow and expand their tax base. The Legislature should support tax incentives and other programs to encourage developers, investors, and local businesses to invest in the construction of middle-income housing where the market is currently not working. (Links: Greater Minnesota Partnership, SF 785/HF 1020). The Tax bill did not include Workforce Housing Tax Credits; however, it did include authorization for Tax Increment Financing for workforce housing projects. In addition, the Jobs bill included $2 million per year from 2018-2021 in grant funding for workforce housing in Greater Minnesota.
Farm Land Tax Relief: Local property taxes on farm land have increased 114 percent over the last decade while commodity prices have declined, imposing hardship for many farmers but also making it more difficult for rural school districts to enact needed levies for education improvements. Gov. Dayton’s tax proposal invest $34 million to cut school district levies by 40 percent on farm land. (Links: Support comes from farm groups such as Small Grains, HF893/SF726. The Tax bill included the governor’s proposed farm land school levy relief.
Local Government Aid: Many Greater Minnesota cities rely on Local Government Aid (LGA) to allow them to provide quality public services and restrain property taxes. Unfortunately, LGA is currently $45.5 million short of its 2002 funding level. Supporting an increase in LGA means ensuring that all Minnesotans can continue to rely on excellent public services no matter where they live within the state. (Links: Dept. of Revenue – LGA, Coalition of Greater Minnesota Cities, SF476 /HF 672). The Tax Bill includes $15 million in additional funding for LGA. However, the state’s commitment to this important program remains well below 2002 funding levels.
Working Family Tax Credit: Rural regions have significantly higher percentages of low-income workers and families struggling to earn a living wage. An expansion of eligibility and benefits under the Working Family Tax Credit would put tens of millions of dollars in the hands of these families and the local economies. (Links: This supporting data and a map, by the Minnesota Budget Project, shows how rural counties have benefitted from current Working Family Credits, HF893/SF726). The Tax Bill lowered the age requirement for eligibility for the Working Family Tax Credit for households without children from 25 to 21, beginning in 2020, and added $7 million for certain married couples, starting in 2019.