Slapshots and budget-chops

You might be forgiven for thinking that a pair of provisions dealing with ice hockey are relatively small items in the conference report on SF2081, the omnibus economic development finance bill. After all, the bill includes budget cuts for jobs and housing at a time when the state is experiencing a jobs and housing crisis — something the bill’s sponsor isn’t happy about.

“The story, members, is about cuts. Because that’s what it’s all about this year,” Rep. Tom Rukavina (DFL-Virginia) told House members on the floor May 5.

But in the debate that followed, the story was actually all about hockey, as House Republicans seized on a provision that would forgive nearly $33 million of a $48 million state loan to St. Paul for the Xcel Energy Center.

The city has asked the state to forgive the loan to help pay for “The Pond” — a proposed multi-use hockey rink across the street from the Xcel. Calling the provision a “bailout,” House Minority Leader Marty Seifert (R-Marshall) noted that it comes at a time of record budget deficits for the state.

“Go back to your coffee shop, go back to your hardware store like I did in Marshall … and ask people if you think this is an opportune time for us to be forgiving over $30 million that’s owed to the state of Minnesota,” Seifert said.

Supporters defended the provision as an important economic development project. Rep. Tim Mahoney (DFL-St. Paul), who sponsored the proposal, noted that St. Paul would still be required to make its scheduled loan payments through 2014, leaving no impact on the state’s current budget crisis.

“St. Paul agreed to a bad deal, and we’re back here asking you to fix that bad deal,” Mahoney said, summarizing a common argument among supporters who believe the Xcel should’ve been paid for with state bonds instead of a loan.

St. Paul’s proposed new ice arena wasn’t the only hockey-related provision that drew fire. As amended by conference committee, the bill also includes a Senate-sponsored provision that would designate ice hockey as the official state sport.

“We’re sending a pretty bad message to the rest of the athletes … if we’re making one sport as the sport of the state of Minnesota,” said Rep. Bob Dettmer (R-Forest Lake).

Painful cuts

In the end, the House voted 74-57 to pass the conference report. Having been approved 38-23 the previous day by the Senate, the bill now awaits action by Gov. Tim Pawlenty.

Editor’s note: Governor Pawlenty vetoed the bill, citing the Xcel/ice pond provisions as his main reason.

The conference committee report spends significantly less than the bill passed 78-50 by the House on April 24. During negotiations with executive agency staff, it became clear that the governor would not sign off on a House plan to raise the workforce development fee paid by Minnesota employers from 0.10 percent of taxable wages to 0.14 percent for the next biennium. Instead, a compromise was reached at a 0.12 percent raise — a difference of about $15.4 million in revenue, the loss of which forced House conferees to accept deeper agency budget cuts.

The Housing Finance Agency, which the House had tried to hold harmless in its budget proposals, would have to take a 3.5 percent cut. Programs facing base reductions include the Housing Challenge Program, the Homeownership Assistance Fund and the Affordable Rental Investment Fund.

Rep. Karen Clark (DFL-Mpls), who chairs the House Housing Finance and Policy and Public Health Finance Division, said she felt “terrible” about the cuts, and blames the governor for not letting them raise more revenue.

“The thing about housing is it just returns back so much to the community,” Clark said. “It was disappointing to not be able to more fully fund housing as we had in the House bill.”

Business and workforce development programs funded through the Department of Employment and Economic Development also take reductions in the conference report, to the tune of 3.9 percent. The increase in the workforce development fee should sustain many current programs; however, one that did not make the final cut was the wage subsidy pilot project proposed by Rukavina and based on the 1980s-era Minnesota Emergency Employment Development program. A $15 million request for the project was included in the House language.

Other budget cuts include:

• 3.5 percent for Explore Minnesota Tourism;

• 6.2 percent for the Minnesota Historical Society; and

• 16.6 percent for the Board of the Arts.

In all cases, the governor had proposed deeper cuts — up to 50 percent, in the case of the arts board. Rukavina said he is not proud of the cuts, but that there was no way around them.

“We cut, we cut, we cut. We can’t create jobs when we’re cutting, but we did the best we could,” he said.

Policy

A House proposal to strengthen prevailing wage requirements for state contractors is included in the conference report with some modified language suggested by the Department of Labor and Industry. The provisions come from legislation sponsored by Mahoney.

Also included is a requirement that public employers purchase uniforms and safety equipment only manufactured in the United States. Sponsored by Rukavina, the proposal would take effect Jan. 1, 2010, or after current state contracts expire, whichever is later.

The bill would establish an 18-member bipartisan Economic Development Strategy Working Group to establish an overall economic growth strategy for the state. Made up of six senators, six House members and six public members, the group would work under the umbrella of the Legislative Coordinating Commission. Mahoney sponsors the provision.

The Board of Barber and Cosmetologist Examiners would be split into two separate boards. Rep. Bob Gunther (R-Fairmont), who played a role in the 2004 merging of the Board of Barbers with the Cosmetology Division of the Commerce Department, said the proposal was drafted at the request of barbers who opposed the merger from the beginning.

A provision sponsored by Rep. Frank Hornstein (DFL-Mpls) that would allow Delta Airlines flight attendants taking unpaid furloughs as part of their contracts to collect unemployment benefits is also included in the conference report.