Tennessen Law’s Recap of 2010 Minnesota Legislative Session

Prepared by Nina Pribyl and Robert Tennessen

Budget Economy

The April 2010 Economic Update from the Minnesota Department of Management & Budgetreports that state revenues for February and March were $41 million (1.9%) below forecast.The shortfall was primarily due to the timing of receipts and refunds rather than a sign of a weaker economy. Fiscal year 2010 revenues now total $10.342 billion. The delay in expected receipt of federal funds accounts for $12 million of the shortfall.

Although not official, current data indicates that real GDP has grown for three consecutive quarters, possibly indicating an end to the recession. However, consumer confidence remains low due to high unemployment, slow wage growth and tight credit. It is expected that restrained household spending will continue until 2011. The economy will probably remain fragile until consumer confidence and household spending improve.

The initial plan legislators and the Governor developed to balance the budget included $408 million in federal money the state expected to receive for extension of enhanced Medicaid match funding. However, the state did not receive the funds before adjournment of the legislative session. The expected budget shortfall was $536 million for the current biennium ending June 30, 2011.

Budget balancing efforts were further complicated by a Minnesota Supreme Court ruling that the $2.7 billion in unallotments made by Governor Pawlenty in 2009 exceeded his executive authority. The ruling affected $2.5 billion of unallotments which were then added to the $536 million shortfall, bringing the total state deficit to over $3 billion.

Budget negotiations between the legislature and the Governor continued through the final weekend and into the early morning hours on Monday, May 17th. A special session was called for May 17th to pass the final negotiated budget legislation. The budget agreement did not make additional cuts to public safety, military and veterans’ affairs, or corrections and it maintains the revisions made to the General Assistance Medical Care program contained in SF460/CH200. The bill makes cuts to health care and other areas and includes delayed aid payments to schools. It ratifies some of the governor’s unallotments from 2009 including the state aid cuts to local governments and cuts to higher education, delays corporate and sales tax refunds by six months, and cuts most state agency budgets by 1.5%. If the expected $408 million in federal money is received, it will be used to shore-up the state’s seriously depleted cash flow account.

Transportation was cut $1.65 million for 2010 and $11.65 million for 2011. The appropriation to the Metropolitan Council for bus transit system operations was reduced by $1.5 million in 2010 and $10.06 million in 2011. The final budget bill extends early Medical Assistance to childless adults making less than $8,000 per year, who would otherwise not be allowed to enroll in the program until 2014 as part of federal health care reforms. Minnesota is one of a few states authorized to use this Medicaid option in 2011, and the state can qualify for $1.4 billion in additional federal money over the next three years for the program.

A final budget bill that resolves the state’s budget deficit without raising state taxes was passed on May 17th and signed by the governor on May 21st. HF1/CH1

Business and Jobs Development

Tax Credits. The omnibus jobs bill contains a package of tax credits designed to stimulate economic development and create jobs. Some highlights include:

Angel Investor Tax Credit. Provides a 25 percent tax credit for investing in Minnesota high technology, bioscience, alternative energy, and green manufacturing companies, in an attempt to help businesses stay and grow in Minnesota and make it easier for startup companies to find private investors. It is estimated that angel tax credits will encourage $44 million in private investments in emerging Minnesota companies in 2010 and potentially create more than 6,000 new jobs.

Research and Development Tax Credit. The R&D tax credit is doubled (from 5% to 10%) for R&D expenditures up to $2 million, benefiting both existing and smaller startup companies. This tax credit allows businesses to redirect profits towards discovering new products and technologies.

Historic Structure Rehabilitation Credit. This credit is similar to a federal tax credit that provides incentives for renovating aging historic buildings. It is designed to assist job creation in the building trades which are suffering high unemployment rates.

The tax incentives are partially offset by repeal of the state’s low-income motor fuels tax credit. Elimination of the tax credit will save approximately $30.1 million. HF2695/CH216

Solar Rebate Program. H.F. 3033 creates a new $21 million rebate program for residents and businesses that install solar panels. Funding for the program will come from the Renewable Development Fund primarily funded by Xcel Energy and redistributed through renewable energy research and development grants. The money will be transferred annually in $2 million to $5 million increments into a special rebate program account over the next five years. To qualify, the solar panels must be manufactured in Minnesota. The bill is included in Article 5, Sec. 3 of the omnibus environment, energy and natural resources bill. SF3275/CH361

Corporate Law

The Minnesota State Bar Association and the Minnesota Secretary of State’s business service division proposed changes to laws pertaining to business organizations, resulting in a new law to take effect August 1, 2010. S.F. 2705 makes changes regarding appointment and removal of corporate officers, cumulative voting by a simple majority in publicly held corporations,amending articles of incorporation with regard to share dividends, location of corporate records, and amending bylaws and articles of incorporation for nonprofits. It also modifies requirements for filing documents with the Secretary of State’s office. SF2705/CH250

Funding Infrastructure: Transportation, Buildings and Facilities Preservation, Parks and Trails

A $999 million capital investment bonding bill was passed by the legislature. The governor used his line item veto authority to reduce it to $680 million. The bill includes bonding for capital projects at the University of Minnesota and MnSCU, natural resources asset preservation and flood hazard mitigation grants, dam renovation and removal, state park rehabilitation and state trail rehabilitation, acquisition and development, transportation projects including bridges,Greater Minnesota transit, rail service improvements, extending the Northstar commuter rail to St. Cloud, regional airport projects, and transit capital improvements. HF2700/CH189

Education

No K-12 education bill was passed this session. The House adopted the conference committee report and re-passed the bill, but the Senate rejected adoption of the conference committeereport. The bill did not cut education funding and included some policy reforms, such as statewide physical education standards and stronger teacher licensing requirements. However, it did not include major changes, such as alternative teacher licensing and teacher evaluations linked to student performance that were necessary for the state to make a second application for a federal “Race to the Top” grant worth $175 million. The report was rejected by the Senate mainly due to the inclusion of a provision giving school boards temporary authority, until July 1, 2016, to extend expiring levy referendums by a written resolution and without submitting the renewal to voters. HF2072 Conference Committee Report. The legislature’s attempt to take up the bill in Special Session failed. SS/HF2

Elections

The date of the state’s primary election was changed to the second Tuesday in August from the traditional September primary. This change became necessary to meet a federal mandate contained in the Military and Overseas Voter Empowerment Act which changed the required period for absentee ballots to be returned and counted for primaries and elections from 30 days to 45 days. SF2251/CH184

Environment

Safe Disposal of Prescription Drugs. Effective April 11, 2010, a new law expands the list of people who may legally collect, store, transport and destroy leftover prescription and nonprescription drugs categorized as legend drugs. A provision included in the law allows for “reverse distribution” permitting drugs to be returned to their producers or distributors for handling. HF1217/CH223

Flood Relief. A bill to help local communities with clean up costs associated with spring flooding was passed providing $3.69 million to the 24 counties declared federal disaster areas. This amount would constitute the state portion of the disaster relief. The federal government will pay 75% of the damages and the remaining 25% is customarily picked up by the state. SF3379/CH377

Good Samaritan Law Expansion

Minnesota’s “Good Samaritan” law was expanded to include businesses, nonprofits and other entities when providing help in a declared emergency or disaster. They will receive the immunity from civil damages or administrative sanctions currently provided to individuals who act in a good-faith manner. HF2709/CH224

Guns at School

The maximum penalty for knowingly possessing, storing or keeping a firearm on school grounds will increase from 2 years imprisonment and a $5,000 fine to 5 years imprisonment and a $10,000 fine. The new law also reduces the charge for using or brandishing a replica firearm or BB gun while on school property to a gross misdemeanor, and reduces the charge forpossessing, storing or keeping a replica firearm or BB gun on school property to a misdemeanor. The penalty changes are intended to give judges more latitude in sentencing. SF2339/CH268

Kelsey Smith Act

The “Kelsey Smith Act,” named after Kansas teenager Kelsey Smith who was abducted and killed in 2007, will allow law enforcement officials to track down missing persons by tracing their cell phones. The law requires cell phone service providers to divulge a customers’ location information when the individual is believed to be missing and at risk of death or serious injury. Law enforcement officials were able to find Kelsey Smith’s body after her parents finally compelled her cell phone company to trace the location of her cell phone. HF2639/CH342

Landlords and Tenants

Landlord-Tenant Law. A new law contains provisions governing landlord and tenant issues regarding late fees, attorneys’ fees, receipts for cash payments, deposit of screening fees, false statements on applications, utility metering, and tenant rights after foreclosure of landlord’s right to the property. HF2668/CH315

Utility Shutoffs. H.F. 3259 requires that utilities providing heat, electric or water to notify residents of a property when a landlord falls behind in paying for services before the utility service is shut off so that the tenants have an opportunity to pay for continued service. The notice of landlord non-payment must be posted in a conspicuous location in or on the building. HF3259/CH210

Privacy and Public Records Laws

Business Screening Services. The objective of S.F. 2322 is to ensure the accuracy of criminal record information disseminated by companies providing business screening services. The new law requires that a criminal record must have been updated within 30 days of receipt of the information or verified as current by the source within the previous 90 days, and that it include the date the record was collected. The law also requires that if a disputed record is found to be sealed, expunged or the subject of a pardon, the service must promptly delete the record. SF2322/CH240

Sealing and Expungment of Criminal Records. To facilitate the ability of individuals with a criminal record to be reintegrated into society, a person with a record of an arrest, indictment, trial or verdict for a minor violation of drug laws may petition to have their records sealed. Provided that the petitioner completes a diversion program or stay of adjudication, it is agreedto by the prosecutor, and the petitioner has not been charged with a new crime for one year, then in limited circumstances the act authorizes sealing of certain criminal records without filing a petition. SF560/CH381

No Privacy in Your Bank Records. H.F. 3139 makes it easier for the government to obtain a person’s financial records from their bank through either a judicial or administrative subpoena. A judicial subpoena can be obtained by anyone who files a lawsuit without a showing of relevance or necessity. An administrative subpoena can be issued by any government official or entity with statutory authority. HF3139/CH214

Change to Minnesota Data Practices Act. The Minnesota Newspapers Association promoted the addition of an administrative procedure to resolve conflicts it encounters under the Minnesota Data Practices Act. Due to the costs associated with using the procedure, it is of doubtful use to ordinary citizens whose privacy rights are violated. It would cost a citizen moreto use the new administrative procedure than the court judicial process. It is of primary benefit to a news organization that has the financial resources to use it. HF2899/CH297

Identify Theft. After August 1, 2010, it will be a felony to possess a “skimmer.” One such skimmer is a scanning or reencoder device used to obtain information from payment cards, drivers’ licenses or state-issued identification cards, with the intent to commit or abet a crime. The devices are very small and are used in a secretive manner to record information from the magnetic strip contained on the cards. Another type of skimmer device is used to retrieve a person’s information at a cash machine. SF2493/CH293

Public Documents. S.F. 1246 requires that, beginning January 1, 2013, all public documents at state and local government agencies, public school districts and colleges, and all other government entities must be stored in a format accessible to people with disabilities including the blind. Electronic documents will need to be stored in a format compatible with screenreader technologies used by the blind. The law also imposes certain training requirements on rehabilitation counselors who work with blind people. The penalty for violation of the law includes $500 per violation plus the attorney’s fees and other costs incurred by a disabled person who brings a suit for violation. SF1246/CH271

Securities Lending Options

Due to a state law requiring cities and municipalities to do business with Minnesota-based lenders and changes in the financial industry, cities and municipalities have been left only one securities lender option. H.F. 3065 allows cities and municipalities to use out of state banks that have a Minnesota bank office. It is anticipated that this change will save municipalities money and provide additional investment options. HF3065/CH234

Uniform Laws

The Minnesota Commissioners of the National Conference of Commissioners on Uniform State Laws supported three uniform acts that became law.

Uniform Foreign Country Money Judgments Recognition Act - Updates the 1962 uniformact by clarifying its application and providing procedures. The act simplifies international business by recognizing money judgments obtained in other nations for the purpose of enforcement. HF776/CH263

Uniform Arbitration Act - Updates the 1956 uniform act by adding procedural protections. HF1692/CH264

Uniform Unsworn Foreign Declarations Act - Affirms the validity of unsworn foreign declarations made by a declarant who is physically outside the boundaries of the United States when making the declaration and who may not have access to a notary. HF3318/CH295

Vikings Stadium Did Not Gain Traction

Bills to fund a multi-purpose stadium for the Vikings in Minneapolis failed. The initial funding proposal would have required the Vikings to pay $264 million in upfront costs toward a $791 million fixed-roof stadium. The remaining $527 million would have been financed over 40 years and paid from jersey sales subject to the 6.875% state sales tax ($16.9 million); a 1.5% surtax on area hotels ($8 million); a sports themed scratch off game ($5.5 million); and an increased rental car tax ($5.5 million). It also required the team to pay for any cost overruns and to sign a40 year lease. The Governor stated that he would veto any bill containing a tax increase.

The bill was amended by the House Local Government Division eliminating the tax increases as a funding source for the stadium. The amendment called for the Metropolitan Council to issue revenue bonds backed by a team contribution and a portion of the Minneapolis hospitality tax revenues currently being used to pay off debt for the Minneapolis Convention Center after that debt is paid in 2020.

The Vikings spokesman testified that team owners do not like the 40 year lease requirement but would consider it. He reminded legislators that the team’s current Metrodome lease expires in 2011 and he could not rule out the possibility of the team being relocated to another state. The Vikings have stated that they will not sign a new lease at the Metrodome once thecurrent lease expires in 2011. HF3825/SF3399

2010 Legislation

Among the bills signed into law this year:

Omnibus tax bill. HF3729/CH389

Omnibus state government operations policy bill. SF3134/CH392

Omnibus government data classifications bill. SF863/CH365

Omnibus employment and economic development policy bill. SF2510/CH347

Omnibus transportation policy bill. SF2540/CH351

Omnibus natural resources policy bill. SF2900/CH390

Omnibus environment, energy and natural resources policy and finance bill; outdoor heritage bill. SF3275/CH361

Omnibus agriculture and veterans policy bill. SF2737/CH333

Omnibus higher education policy bill. SF184/CH364

Omnibus liquor bill. SF2808/CH255

Omnibus campaign finance bill. SF80/CH327

Omnibus retirement bill. SF2918/CH359

Legislative-citizen commission on Minnesota resources (LCCMR) environment and natural resources bill. HF2624/CH362

Bridge projects ongoing prioritization authorized. HF2915/CH205

Complete streets policy implemented. HF2801/CH388

Transportation department management, priorities, research and planning provisions modified; fixed guideway transit and rail line capital projects requests and legislative reporting requirements established. SF1060/CH350

Metropolitan Council best value contracts and procurement for transit vehicles authorized. HF3286/CH273

Commerce department continuing education provisions modifications; insurance company rehabilitation and liquidation, group life insurance, the non-forfeiture law for individual deferred annuities, mortality tables use, life and health insurance guaranty association and mutual insurance companies provisions modified; fraternal benefit societies regulated. SF2825/CH275

Commerce and insurance provisions modified; securities regulated; real estate broker, salespersons and closing agents, real estate appraiser advisory board modifications; workers compensation self-insurers provisions modified. SF2839/CH384

Psychologist licensure requirements modified. SF2596/CH199

Certified public accountants licensing requirements clarified. HF2706/CH191

Minnesota Entrepreneur Resource Virtual Network (MERVN) authorized. SF2758/CH283

Definition changed to conform to International Registration Plan for commercial motor vehicles. HF3460/CH253

Beverage production in basements authorized. HF2918/CH209

Lead acid battery purchase, return and collection provisions modified. SF2152/CH258

Mercury testing requirements for new incinerator units amended. HF3027/CH213

Specifying that advertising of deceptive local telephone numbers for businesses is a deceptive trade practice. HF3277/CH235

Live check solicitation (deceptive sales practice) prohibited. SF2439/CH192

Sale of motor vehicles with illegally tinted windows prohibited. SF2370/CH304

State goals set for deployment and speed of high-speed broadband. HF2907/CH277

Community-based energy development (C-BED) program modified. SF3081/CH358

Electric generating plant emission reduction programs modified. SF3080/CH325

Large solar electric generation demonstration conservation improvement project provided. SF3046/CH372

Mortgagor redemption period extended. SF2559/CH237

Minnesota Common Interest Ownership Act amended. HF3393/CH267

Public service corporation eminent domain authority clarified. HF1182/CH288

Construction codes and licensing provisions modified. HF3048/CH280

Construction codes and licensing modified. HF927/CH183

State building code municipal enforcement provisions modified. SF2759/308

Minnesota Data Practices Act provision added on computer data, state agency use of temporary session cookies on government Web sites clarified. HF2988/CH222

Administrative remedy provided for certain data practice law violations. HF2899/CH297

Higher education private data disclosure provision modified. SF2425/CH230

Enhanced drivers license and identification card created. SF345/CH316

Fire departments access to criminal history data on current employees authorized. SF2363/CH259

Powers for health care agents, guardians, and others to make health care decisions for wards and protected persons clarified. HF3128/CH254

GAMC program revised. SF460/CH200

Medical assistance (MA) eligibility, individualized education plans (IEP), state health access program, children's health insurance reauthorization act (CHIPRA), long-term care partnerships, community clinics, drug formulary, and general assistance medical care (GAMC) modified. SF3027/CH310

Minnesota comprehensive health association (MCHA) provisions modified. SF2879/CH363

Health care clearinghouse. SF2852/CH243

Home health care services regulations modified. SF2923/CH246

Viewing, transportation, and removal of a dead human body provisions modified. HF3151/CH262

Tax credit for Haitian charitable contributions. SF2352/CH187

Tobacco Modernization and Compliance Act of 2010. SF3055/CH305

City employees serving as mayor or on city council prohibited. HF3350/CH206

Probationary period for newly hired peace officers lengthened. SF2309/CH186

Absentee ballot processing procedures modified. HF3111/CH194

Elections provisions modified. HF3108/CH201

Affidavits of candidacy required to disclose residence address and telephone number. HF655/CH314

Bicyclists allowed to stop and proceed through red light under limited circumstances. HF2616/CH232

Implied consent, DWI, and ignition interlock provisions modified. HF3106/CH366

Felony offenders DNA collection requirements expanded. SF3116/CH256

Child support enforcement provisions modified. SF2562/CH238