No global agreement

The 2009 legislative session came to an end at midnight last night with no global agreement. Legislative leaders and the governor were not able to resolve their differences, so the governor has said he will unallot the gap remaining after the line-item vetoes in the spending bills. It is anticipated that the Minnesota State Colleges and Universities system will receive an unallotment of approximately $70 million in 2011, the second year of the biennium. An unallotment is considered one-time.

With minutes to spare, the House and Senate did pass a $2.7 billion tax bill that would resolve the state's deficit through a $1 billion tax increase and a one-time shift. The bill passed the House 82-47, and minutes later, the Senate approved the bill by a vote of 35-1. The bill will certainly be vetoed by the governor.

Also in the final hours last night, HF 2251 was passed that revises the tuition cap language for the system given the anticipated cut to the system in 2011. Instead of capping tuition at 5 percent each year and using federal stimulus funds to buy it down to 3 percent each year, the language now reads that tuition is capped at 5 percent each year, but federal stimulus funds are to only be used to buy tuition down to 3 percent in FY 2010. Legislation no longer requires a federal stimulus buy-down in FY 2011.

A pension conference committee met yesterday to work through the differences between the House and Senate. The pension bill originally contained an article that would have increased teachers’ pension contributions to address deficiencies in several teachers’ pension funds. The article was removed over concerns that Gov. Tim Pawlenty opposed it and might veto the bill if it were included. The conference committee report did pass last night by the House and Senate and is headed to the governor. The bill includes a provision that permits the Minnesota State Colleges and Universities system to establish an early separation incentive program for its employees.

DFL legislative leaders will be traveling throughout the state today to discuss the 2009 legislative session. Stops will include St. Paul, Duluth, Bemidji, Moorhead, St. Cloud, Mankato, and Rochester.

Lawmakers will return to St. Paul for the 2010 legislative session at noon February 4, 2010.

Please watch for the 2009 Mandates and Curiosities report that summarizes all legislation related to higher education that passed this session. The report will be available here at the end of June.

Final day of session

Today is the final day of the 2009 legislative session. Lawmakers have until midnight tonight to wrap things up. The tax conference committee will be meeting this morning at 9:00 in room 15 of the Capitol. The Senate also goes into session at 9:00 a.m. and the House goes in at 9:30 a.m.

On the House floor last night, members tried to override the governor's veto of the tax bill. 90 votes are needed for an override. Senator Majority Leader Tony Sertich, DFL-Chisholm, said on the floor that the least lawmakers could do is have a balance of compromise. The effort to override the governor’s veto was defeated 85-49.

The tax bill, HF 885, was vetoed by the governor May 8. The bill was an attempt by legislators to reduce cuts to K-12 schools, hospitals and nursing homes by creating a new 4th tier tax bracket for the state’s top earners, increasing alcohol taxes and adding a surtax on income made by credit card companies charging excessive interest rates.

The governor and the Legislature have been at odds as to how to resolve the budget deficit. The governor’s position has been no new taxes, but to rely on cuts, shifts and use of appropriation bonds. The Legislature has said that appropriation bonds would be “borrowing against the future.”

Offers and counteroffers have gone back and forth over the weekend and the governor has signed the major finance bills, although some received line-item vetoes, including the higher education bill and bonding bill. The governor has said he is prepared to unallot spending proposals if no compromise is reached.

The governor took action on the bonding bill. HEAPR projects were funded at $40 million, however all the other projects were line-item vetoed. You can see the letter from the governor at the link here.

The governor signed the higher education omnibus appropriation bill, however he did line-item veto three areas in the bill, the funding for the TEACH program, the funding for the Power of You program, which was $500,000 for the current program and the $500,000 one-time funds for the pilot expansion. He also line-item vetoed the $40,000 for the Cook County program. You can find the details here.

With the attempt to override the governor's veto of the tax bill defeated, and legislators and the governor still not having reached a global agreement, further cuts to higher education by the governor could be a possibility.

The governor did sign the K-12 Education bill and the State Government bill without any line-item vetoes. He also signed the contract ratification bill that includes the IFO contract for 2010-11.

We will continue to keep you posted throughout the day.

At the Capitol:
Legislative schedules are available for the House and Senate.

Governor vows to end session on time

Yesterday at the Capitol
Gov. Tim Pawlenty said yesterday that he will use line-item vetoes and his authority to unallot to balance the state budget deficit. He said there will not be a special session or government shutdown. The Legislature has passed budget bills that leave a $3 billion shortfall between spending and revenues. The tax bill passed by the Legislature attempts to resolve that shortfall, but the governor has said he will not sign a bill with any tax increases.

Gov. Pawlenty said his intent is to sign all the omnibus finance bills sent to him, however, he has said some will be line-item vetoed. Without providing any specifics, Pawlenty said the end result will resemble his budget proposal in January.

Pawlenty did say he would rather work out a compromise with legislative leaders. "There's still a good chunk of time between now and midnight Monday. … I prefer to reach an agreed upon solution."

Speaker Margaret Anderson Kelliher, DFL-Minneapolis, responded to the governor's plan by saying Minnesotans expect to know where the governor is planning to cut. DFL leaders invited the governor to attend the Legislative Commission on Planning and Fiscal Policy to discuss his plans in public. Majority Leader Tony Sertich, DFL-Chisholm, said lawmakers would like to see the details behind his plan.

Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, said he thinks it's important to find a calm and reasonable solution to find an end to the session, and said this is a time to be states people and not make rash decisions. Pogemiller said the governor is showing a willingness to compromise by signing the budget bills.

We shall see what progresses today and over the weekend.

At the Capitol:
Legislative schedules are available for the House and Senate.