Wha' Happened?

That's what a lot of folks are asking after the Legislature adjourned for the biennium last evening just before midnight.  The Legislature did finish its work, sending the Governor a tax/school safety bill, a supplemental budget bill, a bonding bill, and a pension bill and the fate of each of those bills now lies with the Governor.

The Governor did veto the tax bill the first time through and with the threat of the veto looming over the omnibus supplemental appropriations bill, the Legislature decided to attach a $50 million appropriation to the vetoed tax bill (with minor changes) to the Governor.  The school funding portion of that bill does three things:

• Moves $50 million from the budget reserve to a one-time school safety appropriation.  Uses of this one-time revenue would be limited to the uses currently prescribed in the school safety revenue law.
• Allows school board to unilaterally waive the 2% staff development set-aside currently mandated by law and use that revenue flexibly.
• Calls for more aggressive marketing of the school trust lands to get more money into school districts (and to replenish the $50 million moved from the budget reserve to schools).

There is a clear strategy in the Legislature's approach.  First off, the $50 million in one-time money in school safety revenue is a strong statement toward the initial need of school districts in upgrading their school safety efforts, both in terms of facilities and personnel.  The problem, of course, it is one-time money and if I had one considerable disappointment as to how the school safety issue was handled as the session wound down was the downplaying of school safety needs beyond next year.  The Governor's budget recommendations and the House bill both devoted considerable resources to school safety needs beyond the coming school year, but the Senate greatly reduced funding for the next biennium after the initial bump for next year and that position held the day (or night).  I get the argument that this wasn't a budget year and that the next Legislature needs to fashion the appropriate level of school safety revenue in the context of next year's biennial budget, but I also realize that priorities change year-to-year and I find it hard to believe the need for school safety improvements--especially on-going investments in student support services--is going to diminish.  In order to hire additional school support personnel with school safety revenue, districts need assurance that those dollars are going to be there and not pulled away.  That commitment is absent from the Legislature's approach, making this increase in school safety revenue less useful than it would have been had their been an on-going appropriation at the increased level.

While no new revenue is generated with the ability of districts to waive the 2% staff development set-aside, some districts may benefit from the increased flexibility.  What wasn't said yesterday is that districts and their bargaining units already have the ability to come to an agreement on a partial or complete waiving of the set-aside in addressing budget shortfalls.

The increased marketing of the school trust lands has been a goal of a number of education-related groups and it is a welcome addition to this year's discussion, although it came up late.

There is also $25 million in the bonding bill for school safety facility upgrades.  This will not be handled through general obligation bonding, but instead will be a grant program administered by the Minnesota Department of Education.  The maximum grant is $500,000 and half of the money must go to school districts outside the 11-county metropolitan area.  Grants will be awarded on a first-come/first-served basis.  I have linked the bill and the language governing these grants--Section 4, Subdivision 3, is found on the bottom of page 8 through the top of page 10.

HF 1226--Bonding Bill

The omnibus supplemental budget bill underwent some minor changes on Friday night, with eight sections relating to new mandates removed from the bill, but the framework of the funding provisions remain as I described in an entry last week remain the same.

Perhaps the best news of the night came with the passage of the final bill in both the House and Senate, which was the pension bill.  Despite assurances from legislators of every stripe that the bill would pass (and it passed unanimously), when the clock was winding down, pulses were quickening.  There was a rumor that the fate of the pension bill was tied to the passage of the bonding bill by the Senate.  The bonding bill failed in the Senate on a straight party-line vote last week because the bonding bill requires a 60% of the Senate (or 41 votes) to pass.  The revised bonding bill garnered 42 votes and shortly after that vote was announced, the pension bill moved through final passage in the House.  Coincidence?  Maybe.  But there was that rumor.  Speaking of rumors:

The Governor has stated that he plans to veto both the school safety/tax bill and the omnibus supplemental budget bill.  Because he received these bills in the last three days of the legislative session, he has two weeks to either sign them, veto them, or allow them to become law without his signature.  I am sure he will be deluged with advice from every quarter on to what to do and I am not going to venture a guess as to what direction he will go, although if I were a betting person (the ability of which will undoubtedly be discussed next session in the wake of the recent United States Supreme Court ruling on sports betting), I would say he won't waver from his statements regarding his intentions.

Big-Time Congratulations in Order.  Congratulations to House Research tax analysts Steve Hinze and Joel Michael for being recognized by the National Conference of State Legislatures for excellence in public finance policy.  Both Steve and Joel are knowledgeable, professional, and effective in dealing with legislators and the public.  They do great work and it was great to see them awarded honors commensurate with their talents.