Published by the Government Relations Group END OF SESSION • 2005 Bitter Legislative Session’s End Is Welcome News To EDITOR’S CORNER Legislators, Minnesotans Peter J. Coyle The memory of the recently Jim McGreevy completed 2005 regular and special sessions still lingers, which makes Thank goodness it’s over. Back in As usual, though, it was the it hard to refocus one’s thoughts on January, no one expected the 2005 controversial items that received the 2006 regular session. As part legislative session would most of the attention. The first of the wind-up of the 2005 special last for a full six months, endure big fight erupted over Governor an eight-week special session and Pawlenty’s support of a gaming session, legislative leaders decided to a week-long partial government bill proposed by the state’s three delay the start of the ‘06 session until shutdown. No one expected junior largest Indian tribes. Later, he March 1, 2006, leaving plenty of legislators would openly challenge drew bipartisan ire when he vetoed time for emotions to cool and reflec- their leaders, culminating in the a transportation funding bill that tive planning to potentially occur. creation of the “Bipartisan Rump Group” — a loose coalition of nearly As regular observers of the legisla- 80 legislators who unsuccessfully tive process, it appears to us that attempted to cobble together a session-ending compromise. the combined effect of partisan PAGE Finally, no one expected Minnesota When all the philosophy differences, revenue Governor to propose, shortfalls and real spending 1 negotiate and later sign an increase shouting was requirements have frustrated legis- in the cigarette tax. This year’s lative decision-making. If broad legislative session is testament to over, both sides agreement cannot be reached on the the fact that Minnesota politics maximum amount to tax and spend, always has the capacity to surprise. it is pretty hard for individual legis- Thankfully, not everything was compromised... discord and partisanship. Early lators or committees to make more in the session, the legislature discrete decisions on a program- passed the long-delayed Bonding by-program basis. Even the best- Bill. The legislation provided some would have provided a long-term intended policy objectives can be $950 million to public and private revenue source for transportation thwarted and we believe that current entities for the construction and infrastructure development, but legislative leaders are sincerely well- rehabilitation of buildings and other also increased the state’s gas tax. intended, though they have very projects, including $37 million to get This session’s big honking the Northstar commuter rail line up fight was over how to close the different approaches to managing and running between state’s $466 million budget deficit. government. Therefore, at the risk and Big Lake, Minnesota. In Governor Pawlenty fought the urge of offending those actually elected addition, the legislature adopted a to raise taxes up until two weeks to serve in the legislature, we make phase-in of the “single sales factor” before the end of the regular legis- this modest suggestion for reform: tax initiative. The proposal was one lative session. With his plan to the businesses community has long partner with the Indian tribes in a Beginning in 2006, legislative leaders sought. Also, DFL legislators and new gaming venture losing support, should empanel a joint committee Governor Pawlenty compromised he turned to the state’s smokers to and created the Q Comp system — a ante up an additional 75 cents more of the House and Senate to consider program that allows a portion of K- for a pack of smokes. Democrats a binding resolution establishing 12 teacher salaries to be based on accused Governor Pawlenty of flip- revenue and spending targets for classroom performance as opposed to years of service. Continued on page 3 Continued on page 4

©2005 Larkin, Hoffman, Daly & Lindgren, Ltd. Political Consensus Still Lacking On Transportation Funding Peter J. Coyle

State legislative leaders and Governor tax increase to fund transportation part of the 2006-07 budget cycle, Tim Pawlenty agree that a long-term, only if it was first approved by was pretty bleak. multi-billion dollar funding plan the voters in a statewide election. Having been burned once on the is needed to address Minnesota’s Notwithstanding support for a politics of transportation funding, current and projected transportation gas tax increase from the likes of House leadership took care for the funding objectives—they just cannot House Speaker (R- rest of the regular session not to find a means to fund a plan that Kenyon)and House Transportation allow gas tax proponents another is acceptable to all. Toward the Policy Committee chair, Ron Erhardt “vehicle” for forcing a politically end of the 2005 regular session, (R-Edina), and the virtual certainty embarrassing vote on a tax increase. Governor Pawlenty was put in the that such a tax increase would pass While conference committees of the awkward position of having to veto in the DFL-controlled Senate, any House and Senate met regularly a transportation funding bill, passed new tax was repeatedly rejected by to discuss proposals relating to with Republican support, because Governor Pawlenty. taxes, health care, agriculture and it contained a proposed 10-cent-a House members, gallon increase in the gasoline tax. frustrated by the lack By the end of the 2005 special of movement on an session, legislative leaders did agree issue regarded as to maintain current funding for critical to the health The central question roads, bridges and transit and to of the state, forced place on the ballot for voter approval a vote on a gas tax was whether Governor a proposed reallocation of motor increase in connection vehicle excise taxes. However, the with a multi-billion Pawlenty would endorse PAGE objective of establishing a sustained dollar House spending new funding source for transpor- bill. After a rancorous any type of tax increase to 2 tation could not be achieved. debate, which ended The 2005 regular session began, in the early morning as such sessions usually do, with hours, the House fund transportation. hope and optimism for reaching passed a funding consensus on broad areas of public package valued at policy, including transportation more than $7 billion funding. The central question, over the next decade. Primary environment, etc., a conference which proved pivotal by the end of funding for the package came from committee to discuss unresolved the session, was whether Governor the proposed 10-cent-a-gallon gas transportation issues was never Pawlenty would endorse any type of tax increase (spread over two years), convened. tax increase to fund transportation. a $20 increase in license tab fees As has become common place He announced early in the session and a local option “wheelage” tax. in recent years, the final resolution his support for capital bonding to In addition, voters would be asked to to the biennial budget debate, assist with financing the commuter approve a major reallocation of the including funding for transportation, rail line between Minneapolis and motor vehicle excise tax. Currently, was negotiated behind closed doors Big Lake, Minnesota. Ultimately, the only about half of the tax on motor by legislative leaders and Governor legislature did approve $37 million in vehicles goes to fund transpor- Pawlenty. The final $3.9 billion bonding authority for the NorthStar tation, including transit. If passed funding package included placing the line. Previously Governor Pawlenty in November 2006, the revenue motor vehicle excise tax reallocation had opposed such bonding as finan- from this tax would be permanently on the ballot in November 2006 and cially unwarranted. Transportation reallocated to transportation and maintained funding for current and advocates hoped that his change of transit—an increase of hundreds of immediately planned road projects. heart on this project would signal a millions of dollars. However, the net amount of new broader shift in attitude, but at the Governor Pawlenty quickly dollars allocated to transportation end of the session, they were left vetoed the funding bill based on was only about $40 million over disappointed. the tax increases. From that point the amount requested by Governor Throughout his term as forward, it became apparent that Pawlenty back in March 2005. ■ governor, Pawlenty has maintained the goal of establishing a major new that he would support a dedicated funding plan for transportation, as Governor, Legislators Agree LEGISLATURE SESSION’S END On Minimum Wage Hike Continued From Page 1 Jim McGreevy flopping on taxes after spending the last two years accusing him of choosing his allegiance to his “no For the last two legislative sessions, State Senator (DFL-St. new taxes” pledge over his duty Paul) authored the Senate DFL’s attempt to raise the state’s minimum wage. to the state. Governor Pawlenty The four-term St. Paul legislator is an ardent supporter of liberal causes responded bysaying the DFL never and, in her view, increasing the wage was at the top of the list. “We ought met a tax they didn’t want to raise. to be able to ensure that individuals who work hard all day are able to come When all the shouting was home and take care of their families’ basic needs without needing to rely over, both sides compromised and on extra help or government assistance,” Senator Anderson said during the raised the level of funding for K-12 2004 legislative session. education by 4% in each year of She had to wait until 2005 to claim victory when Senate DFLers, House the biennium, did not cut anyone Republicans and Governor Pawlenty compromised to increase the state’s off the MinnesotaCare subsidized minimum wage from $5.15 an hour to a high of $6.15 for workers of large health insurance program or other employers starting August 1, 2005. Senator Anderson and her colleagues public health plans, gave low- sought an increase of $2 an hour over two years. However, Governor income workers a minimum wage Pawlenty, House Republicans and most in the business community refused hike, and addressed some short- to support such a large increase. term transportation infrastructure Whether it’s in Washington, where Massachusetts Senator Edward M. issues. What will the future bring Kennedy sponsors a minimum wage bill every session, or a State Capitol from the legislature and the gover- like Minnesota’s, the minimum wage is always a controversial issue. What nor’s office? Don’t expect much. brought such politically-diverse players as Governor Pawlenty and Iron Next year’s legislative session starts Range liberal Tom Rukavina (DFL-Virginia) together on this issue? The on March 1, 2006. In addition, all biggest factor was that the wage has not been raised since 1997. Governor 201 legislators and the state’s chief Pawlenty’s spokesman, Brian McClung, also stated his boss viewed a $1 executive are up for re-election in increase as a reasonable amount and “the right thing to do.” November 2006. That means the PAGE Not everyone agreed with the compromise. Many in Minnesota’s 2006 Great-Minnesota-Legislative- business community viewed the increase as a significant defeat. Buzz Get-Together will likely be long on 3 Anderson of the Minnesota Retailers Association is concerned the increase rhetoric, short on substance…but, “pushes up all wages” since many employers use the minimum wage at least, they’re likely to end on time as a base for all other employee pay rates. Few were as blunt as State (we think!). ■ Representative Randy Demmer (R-Hayfield), though, who said lawmakers were sending the following message to Minnesota businesses: “we love to have ya here, so we can screw ya.” ■ QUOTES OF THE SESSION The session that was … in their own words.

“Compromise is not a four-letter word. “It just seems like a wise thing to balance your All the good ideas don’t come from Democrats, checkbook first and then start spending.” and all the good ideas don’t come from Republicans; — State Senator (DFL-Minneapolis) the best ideas come from talking to each other.” — State Senator Sheila Kiscaden (I-Rochester) "Mr. Chair, there’s a difference between having an opinion and feeling you have to express it.” “The citizens of Minnesota want us to elevate the — Dan McElroy, Governor Pawlenty’s Chief of Staff conversation and stop shouting at each other and have civil discourse.” “I believe in every bill that I bring. — State Representative Maria Ruud (DFL-Eden Prairie) But I recognize that some have greater opportunities of being heard than others.” “Mr. Speaker, if you want to lower the limit to .08, — State Representative Joe Atkins (DFL-Inver Grove Heights) I just have one question: how is a guy in my district supposed to get to work when “You’d all be talking German right now, he could very well wake up at .08?” if it wasn’t for the Iron Range.” — State Representative Tom Rukavina (DFL-Virginia) — State Representative Tom Rukavina (DFL-Virginia) EDITOR’S CORNER • Continued From Page 1

the session. The joint committee would consider policy make-up of the legislature), the quagmire of budget-making and revenue presentations from all the affected “spending” witnessed in recent years in Minnesota seems likely to agencies and stakeholders to establish a global budget. Full continue. The articles in this issue of CapitolWatch reflect debate within the joint committee would result in a vote and this reality. In addition, Minnesota’s voters are politically recommendation of the resolution as the first item of business divided and the state’s general fund, while growing, is not when the bodies of the legislature convene. No other floor soon going to experience the excess funds witnessed in the action on policy or spending bills would be allowed until late 1990s. Moreover, the pressures of elections and partisan this process was complete. With a global budget established advantage-seeking continue to grow. One would hope, by joint resolution, the respective committees of the House perhaps naively, that the people’s work might be completed and Senate could proceed with their work. We presume in a more orderly process in the manner we propose, without the partisan tendencies of the bodies would still manifest intruding into the decision-making realm of policy commit- themselves over the course of a session. At the end of the day, tees, legislative caucuses and, yes, politics. however, both bodies could not raise nor spend more than We hope you enjoy this session-ending addition of authorized under the joint resolution. Larkin Hoffman’s CapitolWatch. As always, we welcome Absent a willingness to consider such a fundamental your comments and suggestions for improvement in our reform to the process (or a wholesale turnover in the political coverage of the . ■

Larkin Hoffman’s Government Relations Department

GERALD L. SECK PETER J. COYLE JAMES A. MCGREEVY, III Mr. Seck is a shareholder and Mr. Coyle is a shareholder and Mr. McGreevy is an attorney PAGE a member of the Government Chair of Larkin Hoffman Daly & with the Governmental Relations Relations Department at Larkin, Lindgren’s Government Relations Department at Larkin Hoffman 4 Hoffman Daly & Lindgren Ltd. Department. He is also a member Daly & Lindgren Ltd. Mr. Seck’s experience of the firm’s Land Use and Real Mr. McGreevy’s includes a clerkship Estate Department and serves on practice includes for Justice James C. the firm’s Board of Directors. handling matters Otis on the Minnesota Mr. Coyle’s before the Minnesota Supreme Court, government relations Legislature and legal director of the regulatory practice various state Minnesota Public encompasses local, agencies. Prior Interest Research Group, Executive state and federal to joining Larkin Hoffman, he Director of the Leech Lake Indian administrative served as an assistant to former Reservation Legal Services Project, agencies and the Majority Leader, and the Director of the Truk Office Minnesota Legislature. He repre- Roger D. Moe. Mr. McGreevy has of Micronesian Legal Services. sents private developers, landowners extensive experience in politics Mr. Seck has been an and businesses before state at the national and state level. active lobbyist at the Minnesota agencies, the Metropolitan Council, Mr. McGreevy completed Legislature since 1971 and has county boards and city councils. his undergraduate degree at lobbied for a variety of clients Mr. Coyle has previously Seton Hall University and earned and issues for governmental served as Staff Director and his J.D. from the University of units and private concerns. ■ Chief Counsel to United States Bridgeport in Connecticut. ■ Senator Rudy Boschwitz and the U.S. Senate Committee on Small Business in Washington, D.C. ■

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