Even as Gov. Mark Dayton and top state lawmakers vow no state money to help build a new Minneapolis stadium for the Major League Soccer franchise announced Wednesday, leaders of the House and Senate are preparing to mount a push to approve Super Bowl-related tax breaks requested by the NFL.
Minneapolis is hosting the 2018 Super Bowl. Senate Majority Leader Tom Bakk, DFL-Cook, said Wednesday that last year, he and the other three top legislative leaders signed a letter to the NFL promising their best effort to secure Super Bowl-related tax breaks that several previous host cities extended.
The letter was requested by leaders of Minnesota's Super Bowl host committee and was included in their ultimately successful bid package to the NFL, Bakk said. House Speaker Kurt Daudt and Senate Minority Leader David Hann confirmed this account.
"We had an agreement we would help them try to figure out how to do this," Daudt said.
Bakk said he met a month ago with Ecolab CEO Doug Baker, a leader of the host committee. Baker told him the NFL was requesting $2.8 million in tax breaks over Super Bowl weekend, specifically in exemptions to taxes on hotel occupancy, sales taxes on NFL events and the state income taxes that team players, coaches and owners competing in the big game would normally be subject to.
"We didn't absolutely commit, but I do feel the four of us felt like now that we've got it, it wouldn't be fair not to follow through," Bakk said. He said recent Super Bowl hosts Indianapolis and New Orleans extended similar tax breaks.
Bakk said he and Daudt agree to try to find room for the provision in this year's catch-all tax bill. Daudt said even though the cost to the state is relatively small, he expects the issue to be controversial.
"If we can find a way to make that work and a way to pay for it, I'm happy to look at it," Daudt said. "Obviously it's going to require some discussion."
Dayton said Wednesday he is not in on discussions between Bakk, Daudt and the host group, though he previously had made public appearances with members of the group to tout Minnesota's bid.
"I believe that having to pay the income taxes of millionaire players and multimillionaire owners is excessive," Dayton said, openly questioning whether the provision could find sufficient support in the Legislature. Dayton said he likely wouldn't veto such a provision, but also said he would not promote it.
Details of the Super Bowl tax breaks emerged even as an official announcement came down Wednesday from Major League Soccer that it awarded a Minnesota franchise to an ownership group led by another Minnesota business titan, former UnitedHealth CEO Bill McGuire. That bid has been linked to the ongoing construction of the new football stadium, since that facility has been designed to potentiall accomodate professional soccer.
Despite that, McGuire's group is mulling a new stadium on the other side of downtown. Under the state's stadium agreement with the Vikings, team owners Zygi and Mark Wilf would have exclusive ownership rights to any soccer team that played in the Vikings stadium for the first five years.
Bakk, Daudt and Dayton have all said they do not support state subsidies for a separate soccer stadium. That has led to suggestions of pressure from the Vikings, but Bakk said that's not the case.
"We're building a stadium that can be used for soccer. We're not going to build a second one," Bakk said, adding he thinks that would be hugely unpopular with voters.
Bakk noted that the Vikings won't own the new stadium, and suggested McGuire's group could play in a temporary spot for five years before relocating to the Vikings stadium.
Republican leaders in the Minnesota House proposed $40 billion in total state spending over the next two years, including $2 billion in unspecified tax relief.
The GOP spending plan, outlined Tuesday, is about $3 billion less than DFL Gov. Mark Dayton's proposed $43 billion budget plan for 2016-17. Dayton wants considerably less in tax relief, proposing a total of about $200 million in tax credits for child care, working families and school supply purchases.
"Our priority, really, is to put money in the pockets of hard working Minnesota families," House Speaker Kurt Daudt said. However, GOP leaders have not yet laid out how they plan to distribute $2 billion in tax relief other than to say it won't be in direct rebate checks.
The $2 billion tax cut proposal matches the size of the state's forecasted $1.9 billion budget surplus, which many Republicans have argued should be entirely returned to taxpayers.
Under the Republican budget targets, most sectors of state government spending would see small spending increases from the current two-year cycle to the next. However, in some cases the GOP plan does not factor growth in the cost of delivering state services that's fueled by inflation, rising population and other factors.
As a result, some areas, most notably health and human services programs, would see a scaling back in the volume of assistance provided.
"That's real cuts to people in this state in a time of huge budget surpluses," said House Minority Leader Paul Thissen, DFL-Minneapolis.
For instance, Republicans proposed spending $11.6 billion on health and human services in 2016-17. That's about $440 million more than is being spent on such programs in 2014-15. However, the Minnesota Management and Budget office estimated that delivering those same services in 2016-17 as in 2014-15 would cost a total of $12.8 billion.
That gives DFLers ammunition to characterize the Republican plan as cutting more than $1 billion from human services. Republicans take issue with that terminology, arguing that cancelling anticipated spending shouldn't be characterized as a cut.
"What Democrats did is hide spending in the next biennium," Daudt said.
Republicans provided few details of how they'd achieve that $1 billion in health and human services program reductions. House Ways and Means Chairman Jim Knoblach, R-St. Cloud, said he hopes a large portion comes from culling ineligible people from the rolls of MinnesotaCare. Further details will emerge in the coming weeks as House committees chew over spending levels, he said.
Republicans would dedicate real new dollars to both public schools and public colleges, although by $775 million less than what Dayton wants in additional new resources. While Dayton's proposed funding boost for higher education would allow two more years of tuition freezes at University of Minnesota and MNSCU schools, Knoblach said the GOP plan would probably only allow such a freeze at one or the other.
Republicans would significantly trim spending in a couple areas. Agencies administering environmental and economic development programs would get less money in the next two years than they did in the last two.
Republicans would boost spending in some areas besides schools. Knoblach said they'd seek to add $160 million over two years for nursing homes, and changes to the state formula by which tax money is distributed to nursing homes. Dayton wants less than that, calling for a $25 million increase.
The Republican plan also directs $100 million into state reserve funds, and leaves $319 million unallocated for the time being. Knoblach said that could later be added to the reserves, could serve as a hedge against a future economic downturn or might still be spent in some fashion.
Republicans did not factor into their total budget number more than $600 million in general fund dollars they want to divert to road and bridge repairs in the next two years. If that spending is factored, the gap between the Dayton and GOP plans would shrink slightly.
With the House GOP at about $40 billion in spending and Dayton at $43 billion, Senate DFLers are planning to unveil their own budget priorities this Friday. Senate Majority Leader Tom Bakk, DFL-Cook, has said his total spending figure would likely fall somewhere between Dayton and Daudt.
After Friday, lawmakers leave St. Paul for a 10-day spring break. Upon returning, they'll launch into a six-week home stretch that will largely be focused on passing a final state budget ahead of the May 18 adjournment deadline.
The House on Monday will debate and vote on legislation that would create a minimum-wage exception for tipped employees, a measure expected to draw hours of debate among legislators.
Sponsored by Republican Rep. Pat Garofalo of Farmington, the bill is an effort to revise the minimum-wage law passed last year by a DFL-controlled Legislature.
Garofalo and other supporters of the legislation said it would relieve pressure on restaurants who are seeing their labor costs grow after the Legislature raised the state's wage floor last year.
The first of three phased-in pay hikes went into effect last summer, raising the state’s wage floor to $8 an hour. It will rise to $9.50 an hour by 2016. Beginning in 2018, the minimum wage will be indexed to inflation.
Crafted and supported by the Minnesota Restaurant Association, Garofalo’s bill would cap the minimum wage for tipped employees at $8 an hour. The proposed pay change would apply only if those workers earned a total of at least $12 an hour in a two-week pay period, after factoring in tips. If they don’t, they would earn the prevailing state minimum wage.
Restaurant workers and labor unions oppose the bill, saying it would effectively freeze wages while the cost of living continues to rise.
Senate Majority Leader Tom Bakk said last month that Garofalo’s bill is unlikely to find much support in the DFL-led Senate. Gov. Mark Dayton opposes creating an exemption for tipped employees, a spokesman said.
Republican leaders of the Minnesota Legislature said Monday they have a plan to raise $7 billion over the next decade, without raising the gas tax, to pay for repairs to roads and bridges.
House Speaker Kurt Daudt and other GOP lawmakers unveiled their proposal at a State Capitol press conference. It's a counterpoint to earlier, 10-year transportation proposals from Gov. Mark Dayton and Senate Democrats, who both favor a larger, $11 billion roads-and-transit plan funded with a new wholesale gas tax to accompany the existing per-gallon tax, higher license tab fees and a Twin Cities sales tax increase for transit projects.
"We think this is what Minnesotans have been asking for," Daudt said. "They've been telling us they want an investment in our road and bridge infrastructure, and they don't want a gas tax increase."
The Republican proposal creates what its backers dubbed the "Transportation Stability Fund." It would re- direct to roads and bridge projects a series of existing vehicle-related sales taxes that currenty feed the state's general treasury. Those include a sales tax on auto parts, a sales tax on rental vehicles, and a sales tax on vehicle leasing.
"If you ask Minnesotans if the money they spend on cars should be used on roads and bridges, the answer would be yes," said Sen. John Pederson, R-St. Cloud, the lead Senate Republican on transportation.
Between them, those existing sources would raise $3 billion over a decade for immediate repairs to roads and bridges, and highway improvements in economically strategic areas. Other major sources of funding in the GOP proposal are $1.3 billion from highway bonds, $1 billion in general bonding, $1.2 billion from "realigning resources" at the Minnesota Department of Transportation and $228 million from the projected $1.9 billion state budget surplus.
By proposing to shift existing sales taxes from the general fund, and skimming a portion of the surplus for roads, Republicans set the terms of a coming clash with Dayton and Senate DFLers. Leading Democrats including the governor have said they oppose taking money out of the general fund for transportation, arguing it leaves less money for schools and other state priorities.
Daudt said the sheer size fo the nearly $2 billion surplus leaves lawmakers room to shift some toward roads and bridges without shorting other priorities.
The GOP proposal also includes far less money for transit projects than what Dayton and many DFL lawmakers have sought. While the proposed metro sales tax hike in several DFL proposals would raise hundreds of millions in new, annual transit funds, the GOP plan directs a total of $64 million to transit statewide over the next two years. That would be split equally between transit in the metro area and outstate Minnesota, meaning just $16 million yearly for Twin Cities projects.
Crouching and sitting on a classroom floor, Gov. Mark Dayton mingled with four-year-olds Friday as he made a pitch for a hefty state spending increase for universal access to preschool in Minnesota.
"You look like you're 65," observed one little boy. "Close. I'm 68," said Dayton, who interacted with kids for about 20 minutes as they sat in a group and later worked on iPads.
Dayton wants lawmakers to approve $348 million in new state spending so that every public school in the state could provide such classes. It's the biggest single general fund spending increase Dayton has proposed this year, and comprises about a fifth of the state's projected $1.9 billion budget surplus.
The group of about 15 children in the pre-kindergarten class at Newport Elementary School were well-behaved despite an unusually large crowd of adults accompanying the governor -- aides and security, area state legislators, school district officials and reporters. Their teachers later said the good showing by the kids was a testament to the benefits of early learning.
"We notice a huge difference between students who do pre-K and those who don't," said Brittany Vasecka, a pre-kindergarten teacher at the school. The classes are half-day and run five days a week.
In all, 80 percent of students in the South Washington County district attend pre-kindergarten classes, district officials said. Under Dayton's proposal, both districts that already provide pre-kindergarten classes and those that don't would both be recipients of the money.
"I don't think we should penalize the school districts that have made this commitment," Dayton said.
But some education advocacy groups have jumped on that lack of a distinction. On Thursday, a business-backed nonprofit called Parent Aware for School Readiness released an analysis contending that about 70,000 low-income kids between birth and age 3 could have access to needed early learning programs if about $100 million less were to be spent on the universal preschool initiative.
In a news release, the group said that districts with high numbers of "wealthier families whose children are already likely to be ready for kindergarten" don't need the funding Dayton's proposal would provide.
“That ought to be focused on younger children from low income families,” said Ericca Maas, executive director of the group.
If Dayton and lawmakers were to make preschool access universal to four-year-olds, Maas said, “then next year all of us advocates will be back here saying, ‘what about the three-year-olds.’”
Dayton said he’d be open to more funding for even earlier learning programs. But he said diverting some money away from universal preschool access would run the risk of “pitting four-year-olds against three- and two-year-olds,” Dayton said.
This year, Dayton must navigate the proposal through a GOP-led House, which has different priorities for both the budget surplus and in state management of schools. House Speaker Kurt Daudt and other Republicans, while calling universal preschool a worthy goal, have also suggested some means testing might be needed.