A look ahead at the legislative session

The major federal tax overhaul has given the Legislature important work to do with Minnesota's tax code.

The state's code is linked to the federal, especially in determining the level of income subject to state taxes.

Lawmakers pass a law most years, known at the Capitol as "tax conformity," to bring the state tax code into alignment with the federal code.

If they don't this year, Minnesota would use the old federal tax code to compute state taxes. It would be a confusing mess for taxpayers and the state.

But if lawmakers simply conform to all the federal changes, many Minnesotans will see taxes go up substantially.

Expect a big fight between DFL Gov. Mark Dayton and Republican legislators over how to update the tax system. Tax lobbyists will be looking out for clients, from big corporations to farmers, trying to protect their interests.

J. PATRICK COOLICAN

One of legislators' first priorities will be securing the funding they need to continue functioning.

Dayton vetoed the House and Senate budgets in May during a dispute over tax cuts and other budget items. The veto violated constitutional separation of powers, legislators argued. They sued the governor, but the state's Supreme Court ruled in Dayton's favor.

House Speaker Kurt Daudt said the governor promised if lawmakers sent him a clean bill when the session started, he would pass it. Dayton, who is in his final year in office, said he wants to put the issue behind him and focus on other priorities.

But DFL lawmakers seemed less likely to let the bill go without negotiations. Senate Minority Leader Tom Bakk said the bill should include state employee contracts with cost-of-living increases for workers.

JESSIE VAN BERKEL

Dayton proposed a $1.5 billion bonding bill, much of which would go toward maintaining colleges, universities and state infrastructure.

GOP lawmakers want a smaller bill focused on transportation and wastewater management. Daudt said he also wants to maintain state infrastructure, but would prefer no more than $800 million in bonding. Senate Majority Leader Paul Gazelka said he expects the bill will look similar to the $990 million bill passed last year. He wants to include funding for mental health crisis centers.

A "healthy-sized" bill is critical for job creation, House Minority Leader Melissa Hortman said, and they should do projects before interest races and inflation climb.

"We have deferred maintenance all over the state that's going to get more expensive, and the list is just going to grow," said Bakk, who wants an additional bill with just maintenance funding.

JESSIE VAN BERKEL

The #MeToo movement and sexual harassment allegations against two legislators, who resigned last year, spurred the governor and lawmakers to review policies and training.

Dayton's administration recently reported on planned changes, including the creation of an independent office to receive and investigate complaints.

Rep. Erin Maye Quade, who spoke out about being sexually harassed, and others have called for a task force to develop policy recommendations for the Legislature. House and Senate leaders have proposed other approaches.

Gazelka asked the Senate's human resources department and legal counsel to review and update sexual harassment policies. House Majority Leader Joyce Peppin will chair a subcommittee that will bring in employment law professionals and other experts to develop policy recommendations.

JESSIE VAN BERKEL

Minnesota's problematic new vehicle licensing and registration system, MNLARS, continues to need repairs, and the costs continue to climb. The agencies managing the system rollout asked in January for an additional $43 million for improvements.

Legislators, fed up with complaints and the ballooning price tag, are calling for change. Senate Transportation Committee Chairman Scott Newman, R-Hutchinson, has said he doesn't want to authorize new money to Minnesota IT Services or the Department of Public Safety, which are handling the system rollout, until people are held accountable for failures. Republican lawmakers said they need to rethink the IT office's role in future projects.

"This is the second major rollout that has just been a fiasco," Gazelka said, noting the troubled implementation of the state's health insurance exchange.

JESSIE VAN BERKEL

Health care

Health care funding is a "ticking time bomb" legislators will have to address in next year's budget, Daudt said, "but hopefully we will make progress this year."

Another health issue, prescription opioid addiction, could see more immediate action. Dayton and a bipartisan group of lawmakers want to tax the opioids. The so-called "penny-a-pill" tax would generate about $20 million a year for prevention, treatment, emergency response and law enforcement.