Snapshots
Jan 27, 2009 News
WEEK ENDING -January 16, 2009
The Snapshot is a new, weekly edition to the blog. It is intended to provide constituents with a glimpse of major pieces of legislation or legislative activity that was discussed in committee(s) during the previous week. For those of you that would like more in-depth coverage of information you can refer to the House website.
Agriculture, Rural Economies and VA Affairs
The committee has heard Legislative Auditor presentations on the financial and internal controls at the Department of Agriculture and the Minneapolis Veterans Home.
Commerce/Labor/Workforce Development
Four House Committees heard and passed a bill this week that would extend unemployment benefits for many Minnesota workers. HF 4 (Mahoney) seeks to help Minnesota workers by making two changes. First, it modifies the definition of “base period” in Minnesota law, which will permit more workers to qualify for the federal extension. Second, it creates an emergency program to provide an extension of unemployment benefits for those who still do not qualify for the federal extension (even with the change in “base period”). The bill was referred to Finance.
Education
Among other issues, the K-12 Education Policy & Oversight Committee discussed concerns about the GRAD test (Graduation-Required Assessment for Diploma). As required under state law, in order to graduate, public high school students in the class of 2010 must score as proficient on the MCA II assessments or they must pass the GRAD exams (a subset of questions on the MCA II assessments in reading and math). There is concern that many high school students may not pass the math test and will not receive their diplomas.
Environment
The Environment and Natural Resources Finance Division held two informational hearings this week.
• The committee’s fiscal analyst and the Department of Natural Resources explained performance and zero based budgeting – budgeting for results.
• A graduate student and U of M professor described a technology that produces clean fuels through solar gasification of biomass and a small business entrepreneur representing FreEner-g described MN first solar leasing program and emphasized that it can become an engine for local economic development – only with strong legislative support.
• A research associate for the U.S. Geological Survey summarized the agency’s research on endocrine disrupters in Minnesota, which began in 1994. The investigation found these chemicals concentrated downstream of wastewater treatment plants but also found smaller amounts upstream of any plant. The research is focusing on how these chemicals affect fish, and should be useful for water quality assessments.
Health and Human Services
A bill (HF 42 -Thissen) that would allow unemployed Minnesotans to receive up to six months of MinnesotaCare benefits received its first hearing in the Health and Human Services Policy and Oversight Committee. Legislators heard testimony that the current system of Unemployment Compensation makes health insurance unaffordable for unemployed persons, whose only health insurance option is COBRA.
Outdoor and Cultural Resources
The committee has met and heard presentations from multiple interest groups about the arts, natural resources and the cultural heritage of Minnesota.
Taxes
The Tax Committee heard a presentation this week from the Budget Trends Study Commission. The Commission, which was created by legislation passed in 2007, studied a variety of issues including: the impact of Minnesota’s changing demographics on the budget; revenue volatility; trend growth rates; current spending pressures; long-term revenue forecasts; and projected expenditure obligations.
Key findings from the Commission include: establishing a long-range planning function in state government; minimizing tax exemptions, deductions and credits – they specifically state that pension income should be taxed; increasing the budget reserve to $2.1 billion; and incorporating inflation in the budget forecast.
The Commission also outlined 14 key findings on which their recommendations were based. Several of the findings highlight the significant impact that the aging of Minnesota’s population will have on state expenditures, revenues, economic growth and budget priorities. The findings also address revenue volatility. The Commission found that reducing volatility would require a “dramatic re-weighting of tax revenue sources and a radical change in tax rates.”
SMIF Offering “Picture It Painted” Grants
Jan 26, 2009 News
Southern Minnesota Initiative Foundation (SMIF), in partnership with Valspar Corporation, is looking for groups or communities who want to spruce up their community, neighborhood, or nonprofit center. Once again, free paint products are available to communities and organizations through the annual Picture It Painted Program (PIP).
This year SMIF will give priority consideration to collaborative efforts that strengthen the workforce or the local economy, heighten the identity of local communities, further early childhood education, or engage elders, youth or new immigrants in a project. Applications need to be submitted to SMIF by March 2, 2009.
SMIF and Valspar Foundation will select 8-10 projects to receive coatings based on their visual impact, public benefit, volunteer participation and support, intended use and benefit to the needy. Projects that may qualify for a grant include historic buildings, senior citizen centers, community centers, public buildings, murals, or other visual impact projects. Projects that do not qualify include churches, city maintenance and privately owned facilities. Daycare centers and schools will only be considered for mural projects.
Over the past ten years local Picture It Painted projects have used more than 4,500 gallons of free paint and involved hundreds of local volunteers working together to brighten up their communities. “As always we look forward to supporting Picture-It-Painted projects as they represent an opportunity for community collaboration and reward creativity,” said Tim Penny, Southern Minnesota Initiative Foundation President & CEO.
For more information or to apply visit our website and click on “Events and RFPs” or contact Jennifer Heien at jenniferh@smifoundation.org; 507.455.3215
2009 Legislative Session Begins
Jan 20, 2009 News
Dear Friends,
The 2009 Legislative Session officially kicked off on January 6th and while it has been busy, I have enjoyed getting back to the State Capitol to work towards the solutions our District and State need in these trying times.
We are at a pivotal time in the history of our state. Minnesota workers, families and businesses are feeling the squeeze from a national economic recession. As State Leaders, we have to make job creation and protection our top agenda item so we can help Minnesotans recover.
Another byproduct of the recession has been a steep decline in state revenue and a subsequent $5 billion state budget deficit. It will be important to consider the reasons our state is in this tough situation when we consider what action to take to close the deficit. Minnesota needs a balanced, fair solution that doesn’t push the bulk of the burden onto middle class Minnesotans as has happened with past deficits.
Throughout the session, I will keep you up to date as we move forward with efforts to help Minnesota’s economy recover and work towards a responsibly balanced budget.
Sincerely,
Rep. David Bly
State of the State
Jan 17, 2009 Environment, News
The Governor let us know his blue print for the historic budget shortfall. His plan is, “Cut taxes and increase spending.” Sound familiar? I don’t know anybody who seriously believes that we can solve this problem without taxes going up at some level of government. We can’t cut spending deeply enough and make things come out all right.
Here are some thoughts the governor should consider:
Do tax cuts work?
Larry Bienhart last November blogged about the realities of tax cuts:
“The brute facts are these,” Bienhart said:
Large income tax cuts are followed by a bubble and then a crash.
High income taxes correlate with economic growth.
Income tax increases are followed by economic growth.
Moderate income tax cuts are followed by a flat economy.
All of this is especially true as applied to the top tax rates, the amount paid on income that exceeds the highest bracket.
If you want to read more and the historical background for these facts hit this link: Tax cut myths.
Are spending cuts better than tax increases? Minnesota 2020 Fellow, Jeff Van Wychen had this to say,
Challenging Conservative Conventional Wisdom
During a budget crisis, raising taxes does less harm than slashing budgets.
With a $5.5 billion state budget deficit projected for the 2010-11 budget cycle, state leaders are scrambling to deal with the crisis.
Spending reductions, including large cuts in county and city aid, have lready happened. With the budget deficit’s bulk still looming before state policymakers during the 2009 session, it is clear that Governor Pawlenty and other anti-investment politicians have bought into the right-wing conventional wisdom regarding budget balancing: avoid tax increases at all costs.
However, Nobel Prize winning economist Joseph Stiglitz and Brookings Institute Senior Tax and Fiscal Policy Fellow Peter Orszag have offered a systematic and thoughtful rebuttal to this conventional wisdom. They put forth a forceful case that in the short run, prudently designed tax increases are less harmful than spending cuts.
Budget Cuts vs. Tax Increases at the State Level: Is One More Counter-Productive than the Other During a Recession?
by Peter Orszag and Joseph Stiglitz
States are suffering substantial fiscal stress as a result of the recent economic slowdown. — and have used their executive authority to reduce spending. Many more states are expected to initiate budget cuts when state legislatures reconvene this winter and confront budgets that have fallen out of balance as a result of the downturn.
In all states except Vermont, some form of balanced budget rule forces such counter-productive fiscal policies: When the state enters a recession, revenue naturally falls and expenditures rise. The balanced budget rules then force the state to reduce spending, raise taxes, or some combination thereof, which is counter-productive since it exacerbates the economic slowdown.
Some state policy-makers apparently believe that from a macroeconomic perspective, reducing spending is preferable to raising taxes. . .
Despite these claims, economic analysis suggests that tax increases would not in general be more harmful to the economy than spending reductions. Indeed, in the short run (which is the period of concern during a downturn), the adverse impact of a tax increase on the economy may, if anything, be smaller than the adverse impact of a spending reduction, because some of the tax increase would result in reduced saving rather than reduced consumption. For example, if taxes increase by $1, consumption may fall by 90 cents and saving may fall by 10 cents. Since a tax increase does not reduce consumption on a dollar-for-dollar basis, its negative impact on the economy is attenuated in the short run. Some types of spending reductions, however, would reduce demand in the economy on a dollar-for-dollar basis and therefore would be more harmful to the economy than a tax increase.
(You can read more by clicking on the highlighted titles or check out more on this topic on the Minnesota Budget Bites Blog)
As painful as it may be we must be proactive in relation to the problems we face, rather than pretending we can ignore them and propose the same old failed solutions.
State economist, Tom Stinson and state demographer, Tom Gillaspy are quite clear about the 
challenges we face and they have been equally clear about the lack of state revenue in recent years to face them. If we want to face these problems there is no way around the tough choice of raising the revenue to make it happen. I believe we have asked the middle class tax payers to do more than their fair share and it’s time to ask those who have benefited the most to contribute. In light of the numerous arguments I have read about the poor performance of giving the wealthy tax cuts to create jobs I think it is time for a different strategy. It is most unfortunate the Governor simply wants to take us down this failed and well-worn path.
I believe we can look at other ways of studying our tax structure and make sure that small businesses are not put more at risk. But to lump all business and corporate ventures and say that cutting all business taxes is the answer will not work. I believe our economic history in this state shows that investments in public goods is what has given us an advantage in attracting and retaining jobs. We will put ourselves at greater risk if we put more people out of work. Government needs to be focused on what it can do to promote job creation and retention.
After the governor spoke several legislators were asked what they thought. I especially liked this comment quoted in the Bemidji paper:
Newly elected Rep. John Persell, of Bemidji, thought of a Merle Haggard song. “When the governor goes through the statehouse doors; And does what he says he’ll do; We’ll all be drinking that free Bubble Up; And eat that rainbow stew.”
While Haggard’s 1980 version of “Rainbow Stew” spoke of the president and the White House, Persell said he had little trouble adapting it to Pawlenty’s speech.
“I harkened back to the sage advice of that bipartisan politician Merle Haggard. … I just felt like we’ve got a lot of smoke going around here, but we don’t have much substance. Maybe when we see the budget, we’ll be able to say what he’s talking about.”
Session start and legislative meetings
Jan 17, 2009 News
Tuesday, January 6th I was sworn in for my second term as your state representative. I was fortunate to have my son with me who enjoyed the ceremony and posed for a picture with me after the swearing in. He was curious about why President Lincoln’s portrait decorates the front of the House chamber. I told him he might want to research but mentioned 
it might have something to do with Lincoln’s popularity and the fact that shortly after Minnesota became a state Lincoln became President.
The rest of the day and most of the week was taken up with meetings with constituents and various representatives from groups who are concerned about the outcome of our session. Friday I attended the conference organized by John Farrell of the Institute for Local Self-Reliance (read more below).
The goal of the conference was to promote a discussion of Renewable Energy Payments policy, sometimes called a “Feed in Tariff.” I introduced a bill to promote this policy last year and intend to introduce this session. The goals of Renewable Energy Payments (REPs) are to promote renewable energy, encourage local economic development, create jobs, and promote a clean environment.
This week I have been visiting with various groups and attending committee meetings. My visitors included Sandi Gerdes and Bob Bonner, who reminded me of the important work the Laura Baker School performs and how much cuts would hurt their ability to do their work.
I also had very interesting visit and tour of the Telamco Membrane Switch Company arranged by Enterprise Minnesota. I will write more about that later.
I introduced three bills, one to increase the reimbursement level for Three Links and the Northfield Retirement Center. A bill to allow school districts to partner in ownership of a wind turbine; and a bill that would introduce the Minnesota Health Plan. You can read about the plan in this article: Ambitious health care bill to cover all Minnesotans introduced in Legislature. (MnPost):
I even had a chance to chair the Higher Ed. Work Force Development committee as we heard testimony from former Speaker Sviggum who is now the commissioner of Labor.
SMIF Announces $100,000 in Available Grants
Jan 13, 2009 News
As part of its effort to invest in economic growth within the region, Southern Minnesota Initiative Foundation (SMIF) is offering $100,000 in incentive grants. Grants up to $20,000 are available to support collaborative projects or programs in emerging business and workforce areas. Pre-applications for this round of grants are due March 2, 2009 with awards announced May 29, 2009.
Tim Penny, President/CEO notes: “This year, we plan to support more community-based collaboration in the areas of workforce readiness and economic development.”
SMIF is looking for grant applications that encourage new asset-based approaches within our areas of interest (noted below). This approach focuses on existing strengths and assets including people, associations, and institutions, and recognizes the diversity of the region while building on the unique characteristics of each community. We are especially interested in funding new initiatives.
1: Engaged Elders
Community-based projects that provide opportunities for older citizens to engage in paid employment or volunteerism related to SMIF’s other business and workforce interest areas (noted below).
2: New Immigrants
Community-based projects that capitalize on the asset of new immigrants in the workplace.
3: Experiential Career Education
Community-based projects that provide opportunities for non-college bound students to succeed in the workplace.
4: Entrepreneurship
Community-based projects that support the creation of entrepreneur-friendly communities.
5: Biobusiness
Community-based projects that grow emerging bio medical and bio agricultural businesses including renewable energy.
To learn more about SMIF’s incentive grant program, please register for an informational meeting on Wednesday, January 28, 10 a.m. to noon. Call Jennifer Heien to register at 507-455-3215. Visit www.smifoundation.org and click on “Events & RFPs” for more details, or contact Suzy Meneguzzo, Grants Director, suzym@smifoundation.org
Update on the ILSR Conference
Jan 12, 2009 Environment, News
“It is possible to fight over oil but not over wind and sun!”
These were the words of Wilfried (Willi) Voigt, Germany’s former Secretary of Energy, as he presented environmentally friendly energy producing ideas and methods at a conference held at St. Olaf on January 9, 2009. Sponsoring the conference was John Farrell of the Institute for Local Self-Reliance (ILSR), an organization that supports environmentally sound and particularly local community development.
For Minnesota the information ILSR has developed on the Feed-In-Tariff (FIT) program is of particular interest.
The FIT is a simple yet powerful strategy to expand renewable energy and benefit local economies. It works as a mandated, long-term premium price for renewable energy paid by the local electric utility to energy producers. For example, Xcel, our local energy producer, would be required over a period of time (say 20 years), to pay for each KWH (kilowatt hour) produced, from a wind turbine or solar panel, that feeds into the existing power grid. This negotiated price and length of contract may be adjusted for inflation and the tariff rates will be set to allow for reasonable profits and no more.
Other speakers at the conference were Paul Gipe from Wind-Works, whose presentation on the Renewable Energy
Payment (REP) background, its design and comparison to Renewable Portfolio Standards, was very interesting. For more information visit his website . Also present was Betsy Engelking (Xcel Energy), Glenn Skarbakka (Great River Energy) and Frank Fredrickson (MN Power). They presented the industry view of REPs.
Wilson Rickerson of Rickerson Energy Strategies, a Boston based consulting group, also presented new clean energy ideas and technology trends that are rapidly reshaping our world.
As Willi Voigt said “Ecology is long term stabilized economy.” In this day and age, stabilizing the economy is of utmost importance. I believe the REP program would work very well in Minnesota. In the future look for more information on the Renewable-energy-paymnet program I am working on in the state legislature. I will keep you updated on further progress.
ILSR has posted the presentations on their website you can find them by clicking on this link: presentations.
Videos of the presentations should follow soon.
