Capitol Update 12 2015

As we approach the Legislative Recess, committee time is where most efforts are spent with members having to get
their policy bills heard before second deadline kicks in. This deadline marks the transition for the Legislature to
change the focus from Policy to Finance. When we come back from break, Finance bills will dominate the
conversation and the budget will be the focus. We were given a preview this week when both the House and the
Senate released their budget targets approximately how much money each body intends to invest in particular
areas of the budget. The Senate numbers were not known when I recorded the video so this is newly released.
As stated in this weeks video, I believe in a balanced approach. In my ideal world, we would put 1/3 away in the
reserves (our savings), make targeted tax reductions (relief for "Pass Through" entities and the commercial property
tax) and make strategic investments in other areas of the budget, with a focus on Education initiatives. This is a onetime surplus and we cannot count on it moving forward. You can find a comparison of the targets here.

Governor Recommendations:
Before we get into the targets released by the House and Senate, its important to take a look at where the Governor
stands. Following the February Forecast, Governor Dayton released a supplemental budget. In it, he outlined his
thoughts for how to use the surplus. Highlights include additional spending of nearly $700 million in E-12 investments,
$288 million in Higher Education increases and $137 million for the Tax Committee. Governor Dayton also proposed
$341 million for Health and Human Services and $82.8 million for Environment and Energy. The Governor approached
the surplus as an opportunity to invest in priorities yet my preference is to set aside some as both savings and tax
relief.
House Targets:
On Tuesday, the House leadership released a spreadsheet that outlined their targets. They decided to place the
greatest emphasis on tax reductions - over $2 billion. This comes at the expense of greater investments in Education,
both E-12 and Higher Education, to which they dedicate $150 million and $50 million, respectively. While not
insignificant figures, they fall far short of the Governors recommendations and may not make the kind of impact our
children deserve. To give you an idea of the scope, in the E-12 budget a $173 million investment equates to a 1%
increase in the basic formula not even enough to pay for school districts inflationary increases, let alone make any
investments in early childhood scholarships. In addition, the House chooses to reduce spending in several budget
areas, including Environment and Natural Resources, Economic Job Growth, State Government and Veterans Affairs,
Capital Investment and Health and Human Services (which received a reduction of over $1 billion). I appreciate the
importance of tax reductions, but believe that the approach outlined in this budget does not maximize the
opportunity to stabilize our economic future and change the course in areas of great concern; i.e. achievement gap
and higher ed affordability.

Senate Targets:

The Senate leadership released our targets and we find ourselves positioned somewhere in between the House and
the Governor. We too propose to provide tax relief. While the figure isnt as high as the Houses proposed $2 billion,
this proposal dedicates nearly $500 million to this effort. We make significant investments in E-12 and Higher
Education, but do not go nearly as high as the Governor. I appreciate this approach and believe that it allows us to
invest in critical areas where change is needed. One other point of emphasis for the Senate is to put a large amount
of the surplus money into the reserves. As we learned the hard way over the last seven years, we cannot count on
year after year of strong economic growth; we will have tough years ahead. When we do, its important that we have
money to fall back on.
Overall, I am most comfortable with the Senates approach. I believe it balances much needed relief for businesses
and families, while not neglecting the fact that we do have a surplus and can afford strategic investments. The
conversation is just beginning and we are still two months away from a final product. Let me know what you think
about the proposals.

Easter/Passover Recess:
As mentioned above, the Legislature is going on recess for a
week. For those of you that observe Easter or Passover, I hope
you are able to celebrate with your friends and family and wish
you the very best.

Senator Bonoff and Senator Latz hear from the National Council on Jewish Women