As the 2008 legislative session looms near, news that the state is in an economic recession and has the worst unemployment rate since 2001 has put the Governor and legislative members on high alert and on the defensive. DFL legislators have been actively holding press conferences promoting their 2008 priorities while the Governor has been reinforcing his no-new-taxes pledge. With a lagging economy and a $364 million deficit, the legislature has a lot of problems to fix with a very limited budget. In an election year where all 134 House seats are up for election, this session has the makings to be highly contentious.

State In Official Recession

Minnesota's economic health received another negative report this week with the announcement that the state shed 2,300 jobs in December and 23,000 in the last six months. State unemployment rates are now at their highest level since 2001.

Combined with a sluggish economy that projects a $373 million budget deficit, the economic conditions were enough to prompt state economist Tom Stinson to declare Minnesota’s economy to be in a recession. DFL leaders in the legislature believe that Gov. Tim Pawlenty’s vetoes of last session’s transportation, tax and supplemental bonding bills helped to push the state into this situation, while Gov. Pawlenty has cautioned against being overly pessimistic about the situation. Eyes will now turn toward the February economic forecast to see what, if any, changes are on the horizon. Needless to say, this economic climate will have an effect on the legislature’s work when they convene on February 12.

To read more about the state’s economy, go to http://www.twincities.com/ci_7977052?IADID=Search-www.twincities.com-www.twincities.com&nclick_check=1.

Governor Announces His Capital Investment Proposal

Earlier this week, Gov. Pawlenty unveiled his bonding proposal, totaling $965 million in general obligation bonds. His package establishes his priorities on transportation and infrastructure improvement, higher education, and environmental and economic development initiatives.

Approximately 40% of his proposal is dedicated to transportation—$225 million to local bridges and $30 million to local roads. Approximately 600 bridges will be repaired or replaced under his proposal. The Central Corridor Light Rail project would also receive $70 million, half of what was originally requested.

The University of Minnesota and MnSCU systems account for 24% of the total bonding package while environmental and economic development projects total 25%, including $50 million for the Governor’s Strategic Entrepreneurial Economic Development (SEED) initiative and additional funding for the Duluth Entertainment Convention Center.

In a press conference held shortly after the Governor’s announcement, Sen. Keith Langseth, chair of the Capital Investment Committee, criticized Gov. Pawlenty’s bonding proposal. While he felt the $965 million appropriated was encouraging, he questioned the distribution of bonds. Langseth stated the more than $250 million spent on local roads and bridges was largely political and not based on good policy. Langseth then went on to say that the Governor’s proposal had more to do with the I-35W bridge collapse and his veto of a comprehensive transportation bill than with trying to establish a long-term transportation solution. While he felt confident the Senate could come close to the Governor’s target, he was less certain they would agree on how the money should be spent.

For more information on Governor Pawlenty’s bonding proposal, go to http://www.startribune.com/local/13766692.html.

To view the press conference and the DFL response go to http://www.senate.mn/media/media_list.php?ls=85&archive_year=2008&category=updatespress&type=video#header.  

Health Care Commission

The 2007 session ended with big promises of health care reform. In response to legislative directives, a number of health care commissions and working groups were established. In addition to the Legislative Commission on Health Care Access, the Governor established his own committee, the Governor’s Transformation Task Force, to look at health care policy and funding reform.

The Transformation Task Force was charged with the task of creating a “statewide action plan for transforming the health care system to improve affordability, quality, access, and the health status of Minnesotans” while the Access Commission was to make recommendations on how to achieve universal health coverage for all Minnesotans. Both committees are scheduled to present their findings to the legislature when they convene in February.

Some of the groups’ key reforms include:

  • establishing systems to monitor the quality and care provided by doctors;
  • instituting public health programs to reduce risky behaviors such as smoking, obesity, and alcohol and drugs;
  • increasing the number of primary care physicians to help establish patient/provider relationships;
  • reforming the current payment system;
  • improving automation and communication to enhance outreach efforts; and
  • streamlining administration.

While some members have expressed concern over the large fiscal impact of such sweeping reforms, with estimates running as high as approximately $700 million, Sen. Linda Berglin, chair of the Senate’s Health and Human Services Budget Committee, disagrees. She argues that streamlining the system to make it more efficient will result in enough savings to pay for itself. Regardless of the long-term savings, any policy changes that will require a significant investment at the outset will likely face opposition during such a financially strapped year. One revenue raising proposal under consideration is to raise Minnesota’s provider, which was originally created to subsidize the MinnesotaCare health care coverage program. That proposal may be the path of least resistance, but it is sure to meet stiff opposition from the provider community.

Both the Health Care Access Commission and Governor’s Transformation Task Force are expected to come out with final recommendations by February 1.

For more information or to view the preliminary recommendations from the Governor’s Transformation Task Force, go to

http://www.health.state.mn.us/divs/hpsc/hep/transform/.

To view preliminary recommendations from the Health Care Access Commission Working Groups, click on http://www.commissions.leg.state.mn.us/lchca/lchca.htm.

For more information on the health care commissions, go to http://www.startribune.com/local/13734781.html.

Legislature Shake-Up: All Politics Are Local

In what promises to be an active 2008 election, political pundits will be watching not only what happens on the national scene but also what occurs at the local level. With all members of the Minnesota House of Representatives up for re-election and a handful of prominent legislators retiring, there could be a significant shift in House membership.

Rep. Dennis Ozment (R-Rosemount) has decided to retire after 24 years in the legislature. Ozment is the long-serving Republican in the Minnesota House of Representatives and is currently the chair for the Claims Committee, which pushed for emergency relief for I-35W bridge collapse victims. Known for his moderate views and his ability to work with both sides of the aisle, he is the only Republican to chair a committee under the current DFL majority.

Ozment’s impending retirement will make a tenuous situation for the state Republican Party. The DFL-controlled House is just five seats shy of a veto-proof majority. While some parts of Rosemount and Dakota County lean Republican, Apple Valley has trended toward the DFL in recent elections. His departure will no doubt create a frenzy of interest from both political parties as Democrats try to pick up another seat and Republicans attempt to hold on to their members.

In a surprise move last month, the first African-American woman ever to serve in the legislature announced her retirement next year. Rep. Neva Walker (DFL-Minneapolis) will finish her fourth term this year and will not seek re-election. In a letter to her constituents, Walker—known for her advocacy for civil rights, affordable housing and public health—said she would remain committed to her work in social justice. In what is deemed a DFL stronghold, a number of community activists and party progressives have thrown their hat in the ring as the next possible successor.

http://minnesota.publicradio.org/display/web/2008/01/02/walkerretires/?rsssource=1.

Another unexpected statement came from first-term Rep. Scott Kranz (DFL-Blaine), who announced he would not be running for re-election in 2008. A former Social Studies teacher, Kranz served on the Education Finance Division, Housing Policy and Finance Division, and the Public Safety and Civil Justice Committee. No reason was given for his decision to leave.

State Rep. Erik Paulsen (R-Eden Prairie) will be vacating his seat in 2008 to run for Congress in the 3rd Congressional District. Paulsen is the only Republican candidate hoping to replace Republican Rep. Jim Ramstad. Erik has served in the legislature since 1995 and was House Majority Leader under Speaker Steve Sviggum from 2003 to 2006. While this is a typically safe Republican district, it will no doubt garner attention from the Democrats as they try to pick up another seat.

Molnau Confirmation

The 2008 legislative session could begin with a highly partisan and long-anticipated controversy: the confirmation of Lieutenant Governor and Transportation Commissioner Carol Molnau.

While Molnau has repeatedly been under fire for department mismanagement and lack of transportation funding, the collapse of the I-35W bridge increased scrutiny of her leadership at MnDOT. Despite numerous calls for her resignation, Molnau has refused to step down.

“The lieutenant governor is holding two jobs at the same time,” said Sen. Steve Murphy (DFL-Red Wing). “She has done an abysmal job as transportation commissioner. I doubt she will survive the process.” While some DFL legislators were concerned that the confirmation hearings would hinder their ability to rally Republican votes for a veto override on a transportation funding package, Senate leadership has decided to move forward with the process.

For more on the confirmation process, go to: http://www.startribune.com/politics/state/13799756.html.

Important Dates

February 12: The legislative session begins.

February 28: February forecast is released.