April 7, 2008

Six weeks remain until May 19, the constitutional deadline for legislative adjournment. We are monitoring and lobbying the omnibus budget bill and many other omnibus policy bills as we identify the measures that are beneficial or detrimental to businesses. Much of our attention this week will be focused on the House and Senate floor sessions and the respective tax committees.

STATE BUDGET 
Significant costs would be imposed on businesses under the House and Senate budget bills, which passed both bodies last week (HF 1812, Carlson, DFL-Crystal/SF 3813, Cohen, DFL-St. Paul). The two bills offer similar approaches to closing the projected shortfall for FY 2008-2009, but they also differ greatly in many respects. These bills set the stage for difficult negotiations in the conference committee and a showdown with Governor Pawlenty over his priorities.

In the House bill, three measures are detrimental to the state's business environment. First, the repeal of the foreign operating corporation (FOC) structure would threaten the ability of Minnesota companies' foreign operations to compete with their international counterparts. If this law is to be changed, we support the exact FOC language agreed to by the House and Senate in 2007 and currently in the Governor's Supplemental Budget proposal. Second, we oppose repeal of the foreign royalties deduction; this deduction is one reason why Minnesota has benefited from significant investment in research-and-development facilities and the high-paying jobs that go with these facilities. Third, we oppose the "tax haven" language which would impose additional taxes on businesses operating in certain foreign markets.

The Senate bill contains the FOC language negotiated in 2007 which the Minnesota Chamber worked to minimize its impact. However, three measures are priority concerns. First, changes to how the statewide property tax is calculated and removal of cabins from the statewide property tax would shift the burden to commercial-industrial property. Together, these changes would increase property taxes paid by Minnesota employers by nearly $200 million over the next three years and substantially more in the future. Second, language redefines wages as used in the IRS Code with regard to independent contractors and could expose employers to increased penalties. Third, we oppose accelerating the collection of the June sales and excise taxes from 80 percent to 90 percent, which is simply an accounting gimmick to help balance the budget.

Call to action: Conference committee members are expected to be announced today. To get a list of the conferees, call: House information (651) 296-2146 or (800) 657-3550; Senate information - (651) 296-0504 or (888) 234-1112. Please call your legislators and underscore that there is ample growth in state revenues to balance the budget without raising general fund taxes. In addition, tell them that the House tax provisions jeopardize Minnesota's position as a center for research and development and international business.

Click here to send a letter to your legislators on the state budget:www.minnesotaprosperity.org.

HEALTH CARE 
Our focus remains on the major health care reform bill advancing in the House and Senate (HF 3391, Huntley, DFL-Duluth/SF 3099, Berglin, DFL-Minneapolis). The Senate version still contains many of the proposed taxes and assessments that are at cross-purposes with the Minnesota Chamber's goal of reducing costs. In contrast, the House version has eliminated the extra cost measures. However, the House bill also has stripped key measures - such as quality disclosure - that are essential to achieving true health care reform in the marketplace.

We continue to work with the Governor and the Legislature to encourage them to adopt those reforms that are consistent with our Business Plan for Health Care Reform - and accomplish this without enacting new taxes and assessments.

Call to action: The House bill is expected to be heard on the floor this week. Please tell your House members to reinstate provisions that will help consumers be better shoppers with their health care dollars and thus improve the quality of care delivered by doctors and hospitals.

LABOR/MANAGEMENT 
Several proposed changes in labor/management law - previously included in the House Higher Ed and Workforce Development omnibus bill and the Senate Economic Development budget bill - are now included in the House and Senate budget bills (HF 1812 /SF 3813).

The House version has several objectionable measures regarding unemployment insurance and workers' compensation. Among those we oppose: "double dipping" for benefits by allowing terminated employees to collect severance pay and unemployment benefits; new criteria for extending unemployment benefits that would likely bankrupt the Unemployment Insurance fund by 2010 and trigger an automatic rate increase for employers; a $14 million transfer from the workers' compensation special fund to the general fund which could increase employer rates and establishes a bad precedent for use of these funds.

In the Senate bill, we oppose a $25 million transfer from the workers' compensation assigned risk plan to the general fund.

Call to action: Two messages demand your attention. No. 1, workers' compensation funds should be used solely for their intended purpose - compensating injured workers. No. 2, expanding the use of unemployment insurance threatens to jeopardize the health of the fund and likely will result in higher business assessments.

HIGHER EDUCATION/WORKFORCE DEVELOPMENT 
Floor votes are expected this week in both the House and Senate on the Higher Ed and Workforce Development omnibus policy bill (HF 3722, Rukavina, DFL-Virginia/SF 2942, Pappas, DFL-St. Paul). Our concerns are with the House bill. We oppose: taking money from the State Grant Program to fund other programs; a requirement that replacements for all four trustees retiring this year from the Minnesota State Colleges and Universities Board be nominated by organized labor; transferring money from the Workforce Development Fund into the general fund. Also in the House bill, we support the reduction in the student share of tuition by using a federal Pell Grant to increase the State Grant Program, and we support modifications to eligibility requirements for the State Grant Program.

Floor votes are expected this week in both the House and Senate on the K-12 omnibus policy bill. Again, we oppose measures in the House bill. We oppose the proposal to let students receive a high school diploma without passing the state-required GRAD test - the Minnesota Graduation-Required Assessments for Diploma. We also oppose adding the proposed growth model to school district report cards. We support these models if they focus on getting every student to reach state standards; this proposal fails to do so.

Call to action: Minnesota employers are experiencing an acute shortage of workers. Please tell your legislators to preserve - if not increase - the pool of money available for the State Grant Program. Also, tell them you oppose any measures that hinder the public's ability to evaluate the outcomes received for the dollars spent in both the K-12 and higher education systems.

For daily updates on key legislation being lobbied by the Minnesota Chamber of Commerce, visit www.mnchamber.com and click on "legislative bill tracker." Contact your lawmakers on this legislation, and share your views.

Not sure who your elected officials are? Visit www.MinnesotaProsperity.org to find them and see how they are voting.