In many respects the 2017 Legislative session has now entered its most critical phase.
On Friday, April 29th the Republican Majority House and Senate Leadership announced the “Targets" for each of the major Omnibus Budget Conference Committees. "Targets" is the legislative term used for the total amount of spending that each Conference Committee must NOT EXCEED as they resolve differences between the House and Senate budget bills. The Legislative Leadership also announced that those budget Conference Committees will wrap up their work within the next few days. The resulting Conference Committee Reports (the compromises between Senate and House) will then go for a vote by the full Senate and House membership. Conference Committee Reports are not amendable on the floor of the full House and Senate so their approval is a straight up yea or nay vote by each member of the Legislature. Since the Republicans are in the majority in both bodies we would be very surprised if the Conference Committee Reports were not approved.
However, that does not mean the Legislature is about to finish deliberations on the State's budget nor the 2017 Session. After the vote by the Senate and House each Omnibus Bill will be delivered to the Governor who will have three days to "sign", veto, "line-item veto" or allow them to become law without his signature.
Over the many past weeks of legislative deliberation, the Governor and his Administration have informed the legislature of numerous and significant disagreements they have with certain provisions and budget allocations in these bills. Since it appears that many of those provisions and budget allocations will be in the Conference Committee Reports it is widely expected that some of these bills in whole or in part may be vetoed by Governor Dayton.
The Minnesota State Constitution requires adjournment of the Legislature on Monday, May 22nd at midnight. The coming weeks at the Capitol are critical because they begin the complicated and sometimes dramatic negotiations between the Legislative and Executive branches in adopting the State of Minnesota's new biennial budget. These negotiations will receive much news media coverage over the coming weeks.
There are significant differences of opinion between Governor Dayton (and the DFL Legislative minority) and the Republican controlled Legislature in respect to the new biennial budget and many of its policies. These differences, despite a $1.6 BILLION projected biennial surplus, have predictably lead to a level of conflict between the two branches of government and parties that must now be resolved.
Perhaps the greatest pressures to all sides are that if a compromise is not reached, Minnesota State Government will have no funding as of July 1st. This would likely lead to a partial or complete shutdown of many or most State government operations - many of you have regrettably experienced this before. Most assuredly over the coming weeks avoiding a State shutdown will be in the forefront of the minds of legislators and the Governor. Few people around the Capitol predict, including me, that these negotiations will reach such a terrible event - let's hope that is correct.
Of course, if no compromise is found by the May 22nd Constitutional adjournment, a Special Session of the Legislature will be called by the Governor. A Special Session could be called immediately in late May or perhaps after additional negotiations are allowed to take place. It is everyone's hope and aim to resolve these differences by May 22nd to make a Special Session or the threat of a State shutdown unnecessary. All of us will see how this all plays out but expect the next few weeks to be a bit of a bumpy ride at the Capitol.
In addition to the Omnibus budget bills this legislative session is also considering important matters pertaining to the Minnesota State employee's pension system. While pension issues do not garner much media attention, they are extremely important and a major focus for MMA. Sound pension fund management is vital to all State employee's futures and a key part of the financial stability and integrity of Minnesota's state government. Pension policy, albeit complicated, is a subject that truly deserves much more public attention than it usually receives.
This year the Joint Legislative Pension Commission (the committee of the Legislature assigned oversight responsibility of the State's pension system) has been considering a number of reforms aimed at strengthening the solvency of the pension system for the years to come. These reforms include updating of certain financial factors (more cautious) used in the calculation of investment returns of the pension assets. In order to protect the long term pension interest of our members MMA (as well as all other public employee unions) is supportive of these reforms.
Additionally and very importantly a proposal by Governor Dayton to use some of the $1.6 billion State surplus to reduce the amount of unfunded liability in the various pension funds is part of this year’s discussions. Although the Minnesota pension system is among the stronger and more secure in the nation, reducing unfunded liability would greatly strengthen that security for employees, State government and the taxpayers. MMA believes that this would be a very positive reform for all and is very grateful to Governor Dayton for his farsighted leadership in bringing this proposal forward.
While the primary reason to reduce this unfunded liability is for the long term security of pensioners and taxpayers, it is also worth noting that a well-funded pension system is among the factors considered by national credit rating agencies in determining the credit worthiness and therefore the interest rate that each states pay for their long term capital debt - in other words, a more secure pension system can help keep the State's borrowing rates lower which mean less taxpayer cost.
Within the next few days we expect a pension bill to be presented by the Joint Legislative Pension Commission. Details have not been yet unveiled so it difficult to predict what specially will be in that bill. MMA and other public employee unions are eager to see that all reforms are of a positive nature and do not limit Minnesota's strong and secure pension system and/or be injurious to pensioners and current and State employees. We also want to be sure to maintain an attractive benefit package that will encourage new generations of Minnesotans to make a professional life in public service. Minnesota has a lot at stake in maintaining its secure and strong pension system. Whether you are 26 or 86 years old this affects and should matter to you. Call or write your legislative representatives to tell them that supporting Dayton’s pension reforms matter to you and the economic viability of your region.
Because the funding necessary for Governor Dayton's proposal to reduced unfunded liability comes from the State's general fund these pension issues will be part of the larger budget negotiations that will occupy the coming weeks. Once again the events of the next few weeks will be important to all Minnesotans and certainly MMA members.
MMA is working diligently to be sure your interests are represented and voices heard. We will be there for you and do our best to represent you and keep you informed.