Minnesota’s economy is still a long way from recovery, according to recent reports from the Department of Employment and Economic Development. But on April 24, the House passed a funding package for jobs and housing programs that might help ease the current economic pain for some Minnesotans.
“We’ve done our best to try to backfill programs that were cut by the governor and do creative things that will put people back to work in the state of Minnesota,” said Rep. Tom Rukavina (DFL-Virginia), the sponsor of HF1169/SF2081*.
Known as the omnibus economic development finance bill, the proposed legislation would provide biennial funding for DEED, the Housing Finance Agency, the Department of Labor and Industry and other state agencies dealing with economic development issues. The bill proposes $269.2 million in General Fund spending — $17.5 million more than Gov. Tim Pawlenty recommended.
In addition, the bill would pump an extra $35.4 million into jobs programs by temporarily raising the workforce development fee paid by employers. The fee, which pays for the state’s dislocated worker program, among others, would be raised for the duration of the next biennium and returned to its current rate thereafter.
The new revenue would go toward several programs, notably a $15 million pilot program similar to the Minnesota Emergency Employment Development wage subsidy that helped employers hire laid-off workers in the early 1980s. Rukavina said the program would be targeted at areas within the state that suffer from particularly high unemployment rates.
The provision has become a source of some controversy, especially among Republicans who say it would place an added burden on employers who have already been hit hard by the recession. Rep. Keith Downey (R-Edina) unsuccessfully offered an amendment to remove the section of the bill.
“These are difficult times. There’s a lot of unemployment in the state; this is going to help it,” Rukavina said.
In addition to the economic development provisions, the bill includes funding for the state’s housing programs taken from a bill sponsored by Rep. Karen Clark (DFL-Mpls).
The housing portion of the bill would largely fund HFA programs at levels similar to what was proposed in Pawlenty’s budget recommendations. It does not include Pawlenty’s proposed 5 percent cut to the economic development and housing challenge program, and it includes $300,000 for a demonstration project for high-risk adults.
Appropriations for cultural heritage purposes are also included in the bill, incorporated from legislation sponsored by Rep. Mary Murphy (DFL-Hermantown). These include $45.3 million for the Minnesota Historical Society, $20.6 million for Explore Minnesota Tourism and $19.1 million for the Board of the Arts. Operating budget reductions are included for all three of these agencies; however, Pawlenty has proposed deeper cuts. In addition, the governor’s proposal to transition the arts board into a private nonprofit and cut its funding completely in the next biennium is not included in the bill.
Passed 78-50 by the House, differences between House and Senate language will be resolved in a conference committee. Sen. David Tomassoni (DFL-Chisholm) is the Senate sponsor.
A section of the bill would forgive the bulk of a $48 million no-interest loan that the City of St. Paul took out more than a decade ago to help build the Xcel Energy Center. Under the provision, St. Paul would continue to make payments to the state until 2014, when the remaining $32.8 million balance of the loan would be forgiven. The city intends to use the money it would have spent on repayment of the loan to finance construction of The Pond — a proposed 120,000-square foot, three-level ice arena across the street from the Xcel.
Supporters argue the city was unfairly made to take out a loan for the Xcel while similar projects in other cities have often been funded directly with state bonding dollars; however, opponents said the city should honor the terms of its original loan. Rep. Sarah Anderson (R-Plymouth) offered and then later withdrew an amendment that would have removed it from the bill. She called the idea “ridiculous” in a time of economic hardship for the state.
“The money for this is not just going into the city coffers; it’s being used for economic development in the City of St. Paul,” countered Rep. Tim Mahoney (DFL-St. Paul), who sponsored the provision as a standalone bill.
Uniforms, safety equipment and other apparel purchased by public employers for their employees would have to be made in the United States, under a provision sponsored by Rukavina. The provision also states that preference should be given to manufacturers who pay their employees an average annual income equal to at least 150 percent of the federal poverty guidelines. An exception would be granted in situations where no U.S. manufacturers produce a specific piece of equipment. Anderson unsuccessfully offered an amendment to delete the section from the bill, arguing it amounted to a large unfunded mandate on communities.
“I just can’t make apologies for the fact that I believe in the American worker,” Rukavina said of the provision.
Rep. Frank Hornstein (DFL-Mpls) successfully amended the bill with a provision that would allow Delta Airlines flight attendants taking unpaid furloughs as part of their contracts to collect unemployment benefits. He said other states had passed similar laws on the subject.
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