House passes first omnibus budget bill

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A large tax cut for businesses, particularly small ones, is one of the many highlights supporters point to in the first omnibus budget bill to receive approval from the House.

Containing provisions relating to jobs and economic development, commerce, housing and energy, HF729 was passed 73-59 by the House late Wednesday. If approved by the Senate, it would head to the desk of Gov. Mark Dayton.

“This is the best jobs bill this House has seen in 10 years,” said Rep. Tim Mahoney (DFL-St. Paul), who sponsors the bill with Sen. David Tomassoni (DFL-Chisholm). “We will see jobs from this bill.”

The bill calls for $461.8 million in spending, of which $366.85 million would come from the General Fund.

Mahoney and Rep. Joe Atkins (DFL-Inver Grove Heights) said the $346 million tax cut to businesses cannot be understated. The funds would come from a reduction in the rate that employers pay on their unemployment assessment.

“It may well be the most significant business tax cut in the state’s history,” Atkins said.

“Every employer in the state will get a tax cut because of this bill,” Mahoney added.

Under the program, jointly operated by the federal and state government, business owners pay a base rate for their employees. Funds are used for the payment of unemployment benefits. However, special assessments were also needed during the recession to help pay the federal government which had loaned Minnesota money when its trust fund ran dry. Despite the fund being solvent, employers are still paying assessments.

If the Unemployment Insurance Trust Fund has $800 million in it by this September, there will be rate reductions, including another one year later. Supporters said that means that every employee is worth at least $150 and up to $450 as a tax break to that employer, and they hope that business owners use that money to advance their business by buying new equipment or train their employees to improve their skills and make more money.

Rep. Greg Davids (R-Preston) said Mahoney and other supporters should temper their excitement because the cut would have happened anyway, but this bill just accelerates it by one year.

“To stand on this House floor and make it sound like this Legislature is doing good thing for businesses is extremely inaccurate,” he said.

Mahoney said the bill would provide $66 million in new money for job creation.

Among the financial aspects of the economic development portion of the bill is $30 million in new money for the Minnesota Investment Fund — $10 million more than the original House bill — that awards funds to local units of government which provide loans to assist expanding businesses. Mahoney noted that in the past eight years, the Department of Employment and Economic Development estimates it has funded 53 projects through the program that has led to more than $587 million in private investment.

Further, the bill includes $24 million in new money — $5.5 million more than the original House bill — for a job creation fund that will enable DEED to use the funds to help businesses make capital investments and create jobs in the state.

The lone overseas Minnesota trade office is now in China. The bill provides an additional $1.63 million for three more offices in yet-to-be-determined locales to help Minnesota businesses sell their goods in foreign markets.

In the area of workforce development, the bill, in part, provides $3 million for the FastTRAC program, which helps those with barriers to finding a job, such as a language barrier or not having a GED, secure employment.

“Workforce development is job training,” said Rep. Bob Gunther (R-Fairmont). “I think it’s very necessary to have the best prepared workforce that we can.”

The bill would also allocate $987,000 in fiscal year 2014, on a onetime basis, for a pilot customized training program for manufacturing industries. DEED would work with the Minnesota State Colleges and Universities system to base the manufacturing apprenticeship program at four campuses with a goal of creating skilled workers for current and projected manufacturing openings.

To encourage state licensure of foreign-trained health care professionals, the bill would allocate $450,000 for DEED to “collaborate with health-related licensing boards and Minnesota workforce centers to award grants to foreign-trained health care professionals sufficient to cover the actual costs of taking a course to prepare health care professionals for required licensing examinations and the fee for the state licensing examinations.” This would affect about 250 people.

Several different programs designed to assist disabled Minnesotans participate in the workforce are funded at levels identical to current funding and to the governor’s proposed budget: Vocational Rehabilitation Services; Extended Employment; Centers for Independent Living; State Services for the Blind; and Supported Employment.

In hopes of attracting more television and film production to the state, the bill would provide $10 million in funding to the Minnesota Film and TV Board to offer financial incentives, such as production cost rebates. The board’s oversight would be moved from the Administration Department to DEED.

There are no new fees in the bill, but it does raise some current ones for accountants, barbers and cosmetologists. There is also some restructuring of fees in the elevator and plumbing areas.

Energy

The centerpiece of the energy language merged into the bill is the state’s first proposed solar energy production standard that would create a target of 1.5 percent of the state’s total electrical generation through photovoltaic solar installations by 2020.

That figure is lower than the 4 percent by 2025 standard proposed in the House omnibus energy policy bill that passed last week. (The Senate had proposed a 1 percent target by 2020.)

Only the state’s investor-owned utilities, namely Xcel Energy, would be subject to the solar standard. Smaller utilities like municipal power agencies and cooperative electrical producers would be exempt from the requirement. A House provision that would excuse iron ore mining and paper and taconite processing plants from the standard is also included in the compromise language.

Supporters of the standard, like Rep. Melissa Hortman (DFL-Brooklyn Park), who sponsored the omnibus energy bill in the House, have said it will help jump-start the state’s solar industry, boost the small number of solar installation manufacturers in the state and create jobs. Critics have said it will lead to higher energy costs and push the state toward a more unreliable form of energy.

Other energy provisions included in the bill include:

  • incentives to residential and commercial customers who install solar panels on their homes and businesses;
  • an incentive for “Made in Minnesota” photovoltaic energy systems; and
  • adopted Senate language that would direct utilities to submit plans for community solar programs that allow multiple individuals or businesses to purchase and utilize a single solar installation.

Commerce

Atkins, chair of the House Commerce and Consumer Protection Finance and Policy Committee, said the bill largely follows the governor’s recommendations in areas overseen by his committee. Many of the agencies it oversees are fee-based.

“We kept everything in the House and got more than what we went in with,” he said.

The bill spends $700,000 for the Office of Broadband Development within the Commerce Department to improve broadband service within the state in order to drive job creation, serve the ongoing needs of the state’s education system and improve accessibility for underserved communities and populations.

The bill also includes an additional $11 million for Explore Minnesota Tourism to encourage economic activity throughout the state.

“We’ve better protected consumers and also increased business responsiveness within the Commerce Department,” Atkins said.

Housing

The bill contains a $22 million ongoing base funding increase for the Minnesota Housing Finance Agency.

“This is the first significant increase that we’ve had in over a decade,” said Rep. Karen Clark (DFL-Mpls), chair of the House Housing Finance and Policy Committee. “It will really help us address our homeless issues statewide.”

Gunther noted the bill includes a onetime $10 million appropriation for housing in communities and regions that, in part, have low housing vacancy rates, have cooperatively developed a plan that identifies current and future housing needs or have a significant portion of area employees who commute more than 30 miles to their job. This, he said, is especially important in parts of Greater Minnesota.