With this week marking the second deadline and the beginning of Easter-Passover break, the Legislature buzzed with excitement and activity. Using the recommendations from the Governor's supplemental budget as a starting point, DFL leaders in the House and Senate released their respective budget targets. The Health Insurance Exchange legislation had significant debate before final passage and committees continued working hard to pass policy bills before the deadline.

House Budget Targets

The House budget targets $37.8 billion in general fund expenditures for FY2014-15. DFL leadership plans to eliminate the current $627 million budget deficit, pay back the $854 million K-12 school shift, and invest an additional $1 billion in education, including all-day every-day kindergarten programs. The House budget raises revenue via a new fourth-tier income tax on the wealthiest 2 percent of Minnesotans and will consider additional revenue proposals.

The House suggested a new tax surcharge on Minnesotans who make more than $500,000 per year to pay back the school shift. The surcharge would "blink off" after the debt is retired in two years. The new fourth and fifth tier tax brackets would add up to about 11 percent, putting Minnesota's rate second only to California. House leaders indicated that the business-to-business taxes are off the table, but all other proposals will be under consideration by the Tax Committee.

Senate Budget Targets

The Senate budget calls for roughly $38.2 billion in general fund expenditures for FY2014-15, which amounts to an increase of 8.5 percent from the current biennium. DFL leadership plans to pay off the $627 million deficit, provide funding for all-day, every-day kindergarten programs, provide property tax relief, and invest in other programs totaling $1.4 billion.

Senate Majority Leader Bakk (DFL-Cook) voiced support for a number of revenue proposals, including affiliate nexus for online sales, increased tobacco taxes, and imposing sales tax on clothing. The Tax Committee will ultimately create the final package, but Sen. Bakk hinted that a new top tier income tax bracket may cover the top 5 percent of earners in Minnesota. The main difference between the budget targets is that the House plans to pay back the school shift in FY2014-15, while the Senate and Governor Dayton propose to wait until FY2016-17.

Health Insurance Exchange

On Monday, the Senate spent the morning debating the conference committee report for HF5, sponsored by Sen. Lourey (DFL-Kerrick). HF5 establishes the state-based health insurance exchange, an online tool through which individuals and small businesses can purchase health plans. In a 39-28 party line vote, the Senate passed the legislation, and

Governor Dayton signed HF5 into law on Wednesday. On Thursday, the Governor announced that he is beginning to search for individuals to serve on the MNSure board, which will govern the exchange. Open enrollment for MNSure begins this year.

Silica Sand Mining Regulations

Legislation pertaining to increased regulation of silica sand mining was heard in multiple House and Senate Committees this week. The House Taxes Committee heard HF1336, sponsored by Rep. Hansen (DFL-South St. Paul), which increases the existing aggregate tax on silica sand, imposes a tax on raw sand that is mined, and imposes a percentage tax on processed sand. While the bill was laid over for possible inclusion in the Omnibus Tax Bill, Rep. Hansen expressed a commitment to continue working on it.

SF1018, sponsored by Sen. Schmit (DFL-Red Wing), was heard this week in the Senate Environment and Energy Committee and in the Senate State and Local Government Committee. This bill requires the development of silica sand criteria and standards, establishes a silica sand technical assistance team, establishes a procedure for rulemaking, and provides appropriations. The bill passed through the committee and was referred to the Finance Division.

HF906, sponsored by Rep. Hansen, is the companion to SF1018. The bill was heard in the House Environment, Natural Resources, and Agriculture Finance Committee on Thursday. The bill was ultimately laid on the table for possible inclusion in the Omnibus Environment, Natural Resources, and Agriculture Bill.