December 2019, Volume XXXIII, No 9
The 2020 Minnesota legislative preview
Divided body faces a large surplus
lection-year politics and surplus dollars will be the center of attention when the Minnesota Legislature convenes at noon on Feb. 11, 2020. With 2020 being an all-important election year, the Governor and the Legislature must decide how to use a budget surplus of $1.322 billion.
Because a biennial budget was adopted at the end of the 2019 legislative session, the 2020 Legislature will likely consider supplemental changes to this budget along with a bonding bill and major policy changes.
Politics will play a big role
To accomplish anything in 2020, DFL Gov. Tim Walz, the DFL House, and the Republican Senate will once again need the type of compromise they achieved at the end of the 2019 legislative session. This may prove difficult. With control of the House and Senate up for grabs in November of 2020, partisan politics will play a big role in most issues discussed. Of note, Minnesota is currently the only state in the nation with a split Legislature.
While the DFL controls the House with a 74–58 margin and two open seats, and the Republicans control the Senate 35–32, both chambers will be contested in 2020. Whoever controls the House and Senate after the election will be able to write the legislative redistricting plan, which will set legislative districts until 2032. Because this is a big prize, it is expected that both parties will be jockeying to position themselves for the fall campaign while working to resolve their differences.
Partisan politics will play a big role in most issues discussed.
The 2019 legislative session came to a conclusion when Gov. Walz, the House, and the Senate agreed to a $48.3 billion biennial budget for fiscal years 2020–2021. This budget contained the following provisions: continuing the provider tax indefinitely while lowering it from 2% to 1.8%, an increase to K–12 education funding, and a cut to the second-tier income tax bracket. A number of issues remain to be addressed in the 2020 legislative session, including the following:
Supplemental Budget. According to Minnesota Management and Budget (MMB)’s November 2019 Economic Forecast, Minnesota’s budget and economy have improved over the last six months. Citing increased revenue collections and reductions in estimated spending, MMB predicts a budget surplus of $1.332 billion in the FY 2020–21 biennium. While MMB Commissioner Myron Frans cautioned against spending the entire surplus, lawmakers voiced a variety of different ideas, ranging from cutting taxes to increasing spending on health care, school safety, and road and bridge repairs. Gov. Walz is expected to submit a supplemental budget to the Legislature by early March of 2020.
Department of Human Services (DHS). Beginning with the resignation of Commissioner Tony Lourey, it has been a turbulent summer and fall for DHS. Gov. Walz appointed Pamela Wheelock as Interim Commissioner to replace Lourey before Jodi Harpstead, former Lutheran Social Services CEO, assumed the Commissioner’s role in September. In addition, it was revealed that DHS had awarded the White Earth Nation and Leach Lake Band of Ojibwe tribes $29 million in overpayments for opioid addiction treatments, going back a decade or more. Because the payment of this $29 million was ruled improper by the federal government, the full amount will have to be reimbursed to the federal Medicaid program by the tribes or the State of Minnesota. Additional overpayments to counties and chemical dependency treatment providers have also been identified, bringing the total amount of overpayments to more than $100 million. The Legislature will debate the best way to pay this money back, and will discuss plans to reform DHS with Harpstead at the helm.
Provider Tax. In 2019, the sunset on the provider tax was removed, and the tax was reduced from 2% to 1.8%. The provider tax funds the Health Care Access Fund, which is forecasted to have a $539 million balance at the end of the FY 2020–2021 biennium. Because this balance exists, House Republican Leader Kurt Daudt (R-Crown) has advocated an additional reduction to the provider tax. Gov. Walz opposes the idea, while Senate Republicans are focused on other tax-cutting measures. While this reduction is unlikely to occur, the provider tax will again be part of budget discussions.
Increasing insulin prices have caused diabetics to ration their insulin.
Minnesota Health Records Act Reform. Health care providers and business groups will continue their efforts to reform the Minnesota Health Records Act. These groups support conforming Minnesota law to HIPAA for purposes of authorizing the release of health records for treatment, payment, or health care operations. Proponents argue that the efficiencies that providers would realize by conforming to HIPAA would benefit the health care system. Privacy advocates and certain legislators concerned with patient privacy will oppose this effort.
Insulin. Since the end of the 2019 legislative session, House and Senate negotiators have worked to resolve differences in competing proposals to improve access to insulin. Concern has risen among lawmakers as reports of increasing insulin prices have caused diabetics to ration their insulin, causing significant health issues. The House proposal places a fee on manufacturers of insulin and uses the proceeds to pay for emergency doses of insulin for people in need. The Senate proposal would require manufacturers to supply doctors with insulin at no cost. The main point of contention in this issue will be the source of the funding for the proposals. Gov. Walz has asked legislators to not wait for the legislative session, but to resolve their differences as quickly as possible.
Bonding Bill. If anything is accomplished at the Legislature this session, it will be the bonding bill. While the bill will not have a direct impact on health care, nothing further will happen at the Legislature unless the bonding bill is passed. State agencies and local units of government have submitted more than $5.2 billion in bonding requests for capital improvements to MMB. Higher education, housing, transportation, and environmental spending highlight the long list of requests. Gov. Walz is required to submit recommendations to the Legislature by Jan. 15, 2020. There is significant support for passage of a bonding bill in 2020 amongst Republicans and DFLers. The challenge for these decision-makers will be the size of the bonding bills. Republicans will want a smaller bill, likely under $1 billion, while DFLers will want a larger bill, probably around $1.5 billion.
Legalization of marijuana. With the help of House Majority Leader Ryan Winker (DFL-Golden Valley), advocates for legalizing recreational marijuana have been preparing for months to advance a legalization bill in 2020. Rep. Winkler has been holding community meetings on the issue around Minnesota. He has also consulted with a variety of stakeholders, and even reached out to officials from Colorado, which legalized marijuana five years ago. It is likely Winkler will receive help from Gov. Walz, who supported legalization during the 2018 election campaign and has ordered state agencies to begin planning for the day when marijuana is legalized. Legalization will face strong opposition in the Senate, as Majority Leader Paul Gazelka (R-Nisswa) opposes the idea. Currently, 11 states and the District of Columbia have legalized marijuana.
There are multiple ways to keep informed on happenings at the state Capitol. Here is a list of services available to the public:
House Public Information Services provides several ways to receive nonpartisan news about the Legislature. Sign up for electronic notification at www.house.leg.state.mn.us/hinfo/subscribesw.asp.
Key Senate publications can be found at www.senate.mn/publications/index.php#header.
To learn more about individual House or Senate bills, or to track bills that may be introduced during the 2020 session, visit www.leg.state.mn.us/leg/legis.
Tom Hanson, JD, a Shareholder with Winthrop & Weinstine, represents clients before the Legislature and regulatory bodies. Prior to joining the firm, he worked for the Republican caucus in the Minnesota House of Representatives for eight years and served for eight years in Gov. Pawlenty’s administration, including four years as the Commissioner of Minnesota Management and Budget.
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John Reich, Director of Government Relations at Winthrop & Weinstine, has extensive experience in lobbying and strategy management. Prior to joining the firm, he worked for the DFL Caucus in the Minnesota House of Representatives for five years and served for four years in Gov. Dayton’s administration.