2017 Special Session Concludes, Bills Await Action by the Governor

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2 Page 2 of Special Session Concludes, Bills Await Action by the Governor Several League-supported initiatives, as well as League-opposed preemption provisions, were included in the bills passed during the three-day special session. In the early morning hours of May 26, the Legislature completed work on a bonding bill, thus concluding a three-day special session that was filled with stops and starts as negotiations between the House, Senate, and governor s office occurred. The bonding bill was the last of seven major bills to be passed during the special session, including four major budget bills, a tax bill, and a pensions bill that included employment pre-emption provisions. City provisions in special session legislation A number of key city priorities and League-supported initiatives were included in the bills that were passed during the special session, including: Bonding resources for water infrastructure, transportation, and housing. (Read more about the bonding bill (Link to: Broadband funding ($20 million for the Border-to-Border Broadband Development Grant Program was included in the jobs omnibus bill). Workforce housing tools ($2 million in funding each year was included toward the grant program in the jobs omnibus bill; the tax bill includes new tax increment financing authority for workforce housing). Transportation funding ($7 million increase to the Municipal State Aid Streets Account each year and $8 million each year for the Small Cities Assistance Account). Funding for replacement of elections equipment ($7 million in the state government finance bill). Several provisions in the special session tax bill, including $15 million in permanent local government aid increase. (Read more about the tax bill (Link to: ). Wastewater infrastructure investment protection and stormwater reuse provisions (included in the omnibus environment bill). League-opposed pre-emption measures One notable League concern is the inclusion of employment pre-emption provisions that were packaged with the omnibus pension bill and sent to the governor as SS HF3. The bill also includes wage theft prevention provisions and ratification of state labor contracts.

3 Page 3 of 20 The League has opposed continued attacks on local decision-making authority throughout the session. League staff will report on the governor s decision regarding this bill, as well as the impact of other signed legislation that may be of concern to cities, in the following days and weeks. Next steps The bills passed during the special session will now go to the governor. Since the Legislature has adjourned sine die (in other words, done for this session), Gov. Dayton has up to 14 days to act upon bills passed during the special session. With the exception of the employment pre-emption bill, the governor has not stated his forthcoming action on the bills. Bills that were passed during the regular session allow for three days from presentment before the governor needs to act upon them. Many of the bills passed in the final days of the regular legislative session, which ended Monday, have not yet been presented to the governor because the Revisor s Office was overwhelmed with special session work. STATUS OF SPECIAL SESSION BILLS SS1: Taxes Omnibus Bill (HF 1 (Link to: b=house&f=hf0001&ssn=1&y=2017), Rep. Greg Davids, R-Preston) Passed House (102-31) Passed Senate, as amended to include 4 a.m. bar closing for Super Bowl (44-20) Repassed by House to include amendment (95-29) Awaits governor action (has until midnight on June 9 to act on bill) SS1: K-12 Education Omnibus Bill (HF 2 (Link to: b=house&f=hf0002&ssn=1&y=2017), Rep. Jenifer Loon, R-Eden Prairie) Passed House (79-54) Passed Senate, as amended (34-28) Repassed House to include amendment (76-55) Awaits governor action (has until midnight on June 9 to act on bill) SS1: Transportation Omnibus Bill (HF 3 (Link to: b=house&f=hf0003&ssn=1&y=2017), Rep. Paul Torkelson, R-Hanska) Passed House (74-54) Passed Senate (38-25) Awaits governor action (has until midnight on June 9 to act on bill)

4 Page 4 of 20 SS: Bonding Bill (HF 5 (Link to: Rep. Dean Urdahl, R-Grove City) Passed House (119-11) Passed Senate (60-2) Awaits governor action (has until midnight on June 9 to act on bill) SS1: State Government Finance Omnibus Bill, includes some liquor provisions (SF 1 (Link to: Sen. Mary Kiffmeyer, R-Big Lake) Passed House (99-32) Passed Senate (45-17) Awaits governor action (has until midnight on June 9 to act on bill) SS1: Health and Human Services Omnibus Bill (SF 2 (Link to: Sen. Michelle Benson, R-Ham Lake) Passed House (74-56) Passed Senate (35-27) Awaits governor action (has until midnight on June 9 to act on bill) SS1: Pre-emption Bill, includes the omnibus pension bill, wage theft prevention provisions and ratification of state labor contracts (SF 3 (Link to: Sen. Jeremy Miller, R-Winona) Passed House (75-48) Passed Senate (34-30) Awaits governor action (Gov. Dayton has said he will honor his commitment to veto this bill; he has until midnight on June 9 to act on bill) For more background information about the special session, read a previous Bulletin article (Link to: More information Weary lawmakers pass final budget bills, wrap 2017 special session (Session Daily) (Link to: Minnesota Legislature passes $46 billion budget, adjourns special session (Star Tribune) (Link to:

5 Page 5 of 20 Watch the final hours of the session in the House (YouTube) (Link to: Read the current issue of the Cities Bulletin (Link to:

6 Page 6 of 20 Bonding Bill Passed in Final Hours of Special Session The bill authorizes $851 million in general obligation bonds for public infrastructure projects. (Published May 30, 2017) As usual, the bonding bill was among the final items the Legislature agreed to. Early on the morning of May 26, a deal was reached for SS HF 5 (Link to: which includes a combination of general obligation bonds, transportation fund money, user-financed bonds, renewable development account funds, appropriation bonds, and general funds totaling $1.123 billion, with $989 million in general obligation impact and $851 million in general obligation bonds authorized. There are large numbers of earmarks throughout the bill to finance specific projects. Cities watching for specific local projects should check the final bill and capital budget spreadsheet to see if they are mentioned. Keep in mind that many projects are funded through larger pots of money and are not individually earmarked. See the capital budget spreadsheet (pdf) (Link to: See the final legislative language (pdf) (Link to: See the final amendment included in the bill (pdf) (Link to: Spending recommendations Overall recommendations of interest to cities include: $136 million for wastewater, drinking water, and stormwater infrastructure needs, including: $17 million to leverage funds from the federal government for state revolving fund (SRF) low-interest loans for municipal water infrastructure projects. $55 million for wastewater infrastructure fund (WIF) grants to cities for high-cost water and wastewater projects. $33.7 million for grants to fund treatment plant upgrades and improvements in Point Source Implementation Grants (PSIG) program. $3.7 million for grants to metropolitan area cities related to solving inflow and infiltration issues. $71.1 million for rail safety projects.

7 Page 7 of 20 $11.6 million for identified flood hazard mitigation projects. $10 million for public housing rehabilitation. $15.4 million for state shares of dam removal and replacement projects. $5 million for the Local Road Wetland Replacement program. $12 million for public utility and transportation infrastructure needs of local economic development projects. $116.3 million for local roads and $49.2 million for local bridges. Policy provisions The bill also includes a number of policy provisions that change eligibility for water infrastructure projects. Drinking water projects are now able to receive grant funding through the WIF and PSIG programs where they qualify, with a slightly less restrictive financial threshold for WIF than required for wastewater projects. Maximum project grant size for any sort of qualified project in WIF would be increased from $4 million to $5 million or from $15,000 per existing connection to $20,000 per existing connection, whichever is lower. Grants for a qualified project under PSIG would be capped at $7 million per facility instead of the current cap of $3 million and that grant could cover up to 80 percent of the project costs instead of the current 50 percent maximum share. In governor's hands now The final bonding legislation was presented to Gov. Dayton on May 26, and he has until midnight on June 9 to decide whether to approve it. His signature is expected, but several factors still up in the air could complicate the picture. Read the current issue of the Cities Bulletin (Link to: Your LMC Resource Contact Craig Johnson IGR Representative (651) or (800) cjohnson@lmc.org (Link to: mailto:cjohnson@lmc.org) Contact Anne Finn Assistant IGR Director (651) or (800) afinn@lmc.org (Link to: mailto:afinn@lmc.org)

8 Page 8 of 20 Legislature Approves Tax Bill with Several Measures of Interest to Cities The special session tax bill includes permanent local government aid funding, workforce housing tax increment financing, and other items of note for cities. (Published May 30, 2017) The first bill approved by the Legislature during the 2017 first special session was the omnibus tax bill (SS HF 1 (Link to: b=house&f=hf0001&ssn=1&y=2017), Rep. Greg Davids (Link to: R-Preston), which includes several measures that are positive for cities. However, a few items cities were hoping to see are missing from the bill. The 379-page bill was approved by the House on a bipartisan vote of and by the Senate on a vote of on May 25. An omnibus tax bill has not been enacted since Compared to the vetoed regular session tax bill, this bill is a compromise of sorts with Gov. Dayton. Based on concerns raised by the governor, the overall size of the tax relief and tax-related spending for programs such as local government aid (LGA) was reduced from roughly $1.1 billion in the vetoed bill to $648 million in the special session bill. At this point, it is not clear whether the governor will sign the bill. The governor has up to 14 days to either sign or veto all bills passed during the special session. Provisions of interest to cities The special session tax bill includes the following: LGA appropriation increase. The bill includes a $15 million permanent increase in LGA funding beginning in calendar year 2018, bringing the total appropriation to $534.4 million per year. The League s policies call for the restoration of LGA to at least the 2002 level of $565 million. View estimates of each city s 2018 LGA under the bill. (Link to: One-time, partial early LGA distribution. The bill also includes a one-time distribution of roughly 29 percent of each city s July 2019 LGA that will be distributed in June of LGA formula error fix. Without an appropriation increase in 2017 LGA, an error in the formula was discovered that impacted 20 cities by reducing their

9 Page 9 of 20 LGA. The agreement fixes the drafting error, but does not include the retroactive increase in the 2017 LGA for the 20 impacted cities that had been included in the House bill. Workforce housing tax increment financing (TIF). The current tax bill includes a new TIF authorization that provides an additional tool to encourage development of housing in qualifying areas where housing deficiencies exist. Revised language included in the bill does require cities to receive approval from their school district and county as well. (Read more about workforce housing. (Link to: ) Adjusted income limits for existing affordable housing TIF districts that receive Minnesota Housing Finance Agency (MHFA) Challenge funds. In addition to the workforce housing TIF authorization, the current tax bill makes no changes to the existing income limits of MHFA s Challenge program; rather, it applies those higher income limits (80 percent of statewide median income, which is roughly $62,000) to affordable housing TIF districts that are also funded with Challenge funds. Current income limits for affordable housing TIFs require that 20 percent of units be at 50 percent statewide median income, or 40 percent of units be at 60 percent statewide median income. Proposed levy certification date change for special taxing districts. The bill changes the date by which townships and special taxing districts must certify their proposed levy to the county auditor from Sept. 15 to Sept. 30. Redefined agricultural containment exemption. The bill includes a full repeal of the current property tax exemption, having a position impact for a number of cities that are host to agricultural chemical containment facilities, which became exempt this year. City sales tax and TIF requests In addition to general law provisions, the bill includes a number of special law requests from cities. The local sales tax provisions include: Duluth food and beverage tax and local lodging tax Mankato sales tax extension Hermantown sales tax extension New Ulm sales tax use expansion Proctor sales tax rate increase Albert Lea sales tax extension Worthington sales tax modification North Mankato sales tax extension East Grand Forks sales tax authorization Fairmont sales tax authorization Fergus Falls sales tax authorization Moose Lake sales tax authorization

10 Page 10 of 20 New London sales tax authorization Spicer sales tax authorization Walker sales tax authorization Sleepy Eye special lodging tax authorization The adopted local TIF provisions include: Burnsville Seaway Port Authority Edina Maple Grove Anoka Coon Rapids Cottage Grove Moorhead Richfield (two districts) St. Louis Park St. Paul Wayzata South St. Paul (new addition) Construction sales tax exemption and other provisions not included The bill no longer includes a League-supported simplified tax exemption process for construction materials purchased for local government projects by contractors. A previous version of the bill would have allowed cities, other local units of government, and certain nonprofit entities using a contractor, subcontractor, or builder to secure the sales tax exemption on construction materials and supplies used in buildings and facilities used principally by the government entity. This sales tax exemption was estimated to reduce the cost of materials used in an array of public projects, including roads and projects funded in any approved bonding bill, by roughly $20 million per year. Two other provisions that are not included in the bill are: Prohibition on taxes or fees on merchant-provided bags. The bill does not include a prohibition on local taxes or fees on merchant-provided bags, a provision that was in the vetoed bill. Lease-purchase reverse referendum. The bill does not include a provision that would have allowed voters to petition for a reverse referendum on whether a non-first class city, county, or urban town may enter into a lease of three or more years for real property with a housing and redevelopment authority, port authority, or economic development authority if the authority issued bonds or

11 Page 11 of 20 other debt instruments to finance the property. (Read more about that issue. (Link to: ) More details to come If SS HF 1 is signed into law, more details on the bill will be provided in the League s 2017 Law Summaries publication, which will be available in June. Read the current issue of the Cities Bulletin (Link to: Your LMC Resource Contact Gary Carlson IGR Director (651) or (800) gcarlson@lmc.org (Link to: mailto:gcarlson@lmc.org) Contact Heather Corcoran IGR Member Relations Coordinator (651) or (800) hcorcoran@lmc.org (Link to: mailto:hcorcoran@lmc.org)

12 Page 12 of 20 Omnibus Public Safety Bill Funds Additional Peace Officer Training The bill includes a measure that requires and provides funding for peace officer training in crisis response, conflict management, and cultural diversity. (Published May 30, 2017) One of the final bills passed before the Legislature went into overtime was the omnibus public safety conference committee report, HF 470 (Link to: number=hf470&version=b&session=ls90&session_year=2017&session_number=0&type=ccr). Authored by Rep. Tony Cornish (Link to: (R-Vernon Center) and Sen. Warren Limmer (Link to: (R- Maple Grove), the measure was passed by the House and Senate on May 22 with votes of and 46-21, respectively. The bill is expected to be presented to Gov. Dayton as soon as the Revisor s Office has prepared it. While most of the provisions in the bill have broad support, there is at least one controversial measure. It would essentially stop any undocumented immigrant from obtaining a driver s license. It is unclear whether the governor will object to this provision and veto the bill. Funding increase for peace officer training included The conference committee report includes one of the League s 2017 legislative priorities, a measure that requires and provides additional funding for training for peace officers in crisis response, conflict management, and cultural diversity. As it stands, the bill provides $6 million of new funding in each of the next four years to support and strengthen law enforcement training and implement best practices. This is on top of the base of $2.86 million per year in training reimbursements to local governments for peace officer training costs. It also provides $400,000 each year for reimbursement grants to local units of government that operate so-called Pathway to Policing programs intended to bring persons with nontraditional backgrounds into law enforcement, and another $100,000 per year for crisis de-escalation training. View a spreadsheet of the budget proposed by the bill (pdf) (Link to:

13 Page 13 of 20 More details coming soon Further details about the provisions contained in the omnibus public safety bill, if it is signed by Gov. Dayton, will be available in the 2017 Law Summaries publication, which is scheduled to be published in June. For background information about the omnibus public safety bill, read a previous Bulletin article. (Link to: Read the current issue of the Cities Bulletin (Link to: Your LMC Resource Contact Anne Finn Assistant IGR Director (651) or (800) afinn@lmc.org (Link to: mailto:afinn@lmc.org)

14 Page 14 of 20 Elections Bill Gets Green Light from Legislature The bill, passed with bipartisan support, now heads to the governor. (Published May 30, 2017) The elections policy bill, SF 514 (Link to: f=sf514&y=2017&ssn=0&b=senate) (Rep. Kelly Fenton (Link to: leg_id=15434), R-Woodbury, and Sen. Mary Kiffmeyer (Link to: R-Big Lake), was amended and approved by the House and the Senate on May 21, just before the regular session ended. The bill received overwhelming bipartisan support, as well as support from the League of Minnesota Cities, Association of Minnesota Counties, Minnesota Association of Townships, and Minnesota School Boards Association. Several city-supported provisions were included. The bill: Includes a timeline clarification for when a city must pass an ordinance if switching from odd- to even-year elections, or vice versa. Allows cities to canvass primary results on the second or third day after the primary. Permits the use of an electronic polling place roster system that allows the voter to sign in to vote electronically, rather than by signing a piece of paper. In an amendment adopted to this section, the record of the signature must be printed. Allows political parties to provide a list of election judges who are willing to travel to a precinct outside of their home jurisdiction. The language was adopted to help precincts that may have difficulty in meeting party balance within the confines of having elections judges only from their home jurisdictions. The bill also includes the following provisions of note: Uniform special election dates. While the League does not have a formal position, staff worked with the Senate author this year on her proposal to establish five uniform special election dates. Language was included to require local units of government to hold special elections on one of the following dates: the second Tuesday in February; the second Tuesday in April; the second Tuesday in May; the second Tuesday in August; or the first Tuesday after the first Monday in November. Exceptions can be made if the election is held in response to an emergency or disaster.

15 Page 15 of 20 Furthermore, cities must establish polling places for the following year by ordinance or resolution by Dec. 31. Previously, the law was silent regarding a deadline. There is an exception that allows the city to change a polling place if the designated polling place becomes unavailable. This provision would not take effect until Jan. 1, Election judge data. A provision regarding access to election judge party affiliation was also included. It allows the major political party affiliation of an election judge or a statement that the judge does not affiliate with a political party to be shared with other election judges assigned to the same precinct at the same election. The League was neutral on this provision. Election equipment grant funding. SF 1 (Link to: f=sf1&b=senate&y=2017&ssn=1) (Kiffmeyer), the omnibus state government and veterans bill, passed on May 25. It included a $7 million appropriation to the newly established election equipment grant program to replace aging election equipment or to purchase electronic pollbooks. Provisions not included Other major proposals included in House or Senate versions of the bill that were not included in the final bill would have: Moved the state primary from the second Tuesday in August to the first Tuesday after the third Monday in June Implemented a provisional balloting system. Extended the time period from seven days to the full absentee voting period for a voter to directly insert their absentee ballot into the tabulator when voting in-person absentee. Read the current issue of the Cities Bulletin (Link to: Your LMC Resource Contact Laura Ziegler IGR Liaison (651) or (800) lziegler@lmc.org (Link to: mailto:lziegler@lmc.org)

16 Page 16 of 20 Focus on New Laws: Proposed Ordinance Notification Cities are now required to provide 10-day notice for almost all city ordinances. (Published May 30, 2017) Under a new law (Chapter 77 (Link to: year=2017&type=0&doctype=chapter&id=77) ), cities must provide a 10-day notice of most proposed ordinances. The measure was signed into law by Gov. Dayton on May 23, and will be effective on Aug. 1. The law applies to new proposed ordinances and proposed amendments to existing ordinances contemplated by a city. Interim ordinances are exempt. Notification requirements At least 10 days before a city council schedules a final vote on a proposed ordinance or proposed amendment to an ordinance, it needs to: Provide notification of proposed ordinances if the city has an electronic notification system that distributes general city information or notices via . Post notice of a proposed ordinance in the same location as other public notices if a city does not have an electronic notification system. Update the city website with proposed ordinance language if the city posts ordinances on its website. If ordinances are not on the city s website, the city does not have to post proposed ordinances on its website. If a city has an electronic notification system, the city also must inform those who apply for a new business license or license renewal of these notification procedures at the time of the application. notification The new law requires cities with electronic notification systems to allow individuals to sign up to receive proposed ordinance notifications via . If cities do not have electronic notification systems, there is no requirement to create such systems; instead, the city must post notice of proposed ordinances in the same place as other public notices. Consequences of not complying Failure to provide this notice does not invalidate an adopted or amended ordinance. Legislative background This bill was introduced in 2015 and 2016, originally requiring a 15-day notice

17 Page 17 of 20 mailed to businesses. The mailed notice was for any ordinance that would have affected the location or availability of products or services provided by a business. This initial version of the bill also included counties. In 2017, counties were removed from the bill. The city notice requirement was lessened to a 10-day notice to be consistent with a similar requirement for county ordinances. League opposed the bill The League expressed opposition to this bill, explaining that the 10-day notice would delay the ability of cities to adopt ordinances, particularly cutting in half the time of cities with limited staff to study an issue, get legal guidance, and draft or amend ordinances. The League also explained that cities who meet on a biweekly basis were almost guaranteed to have to postpone adoption of an ordinance with a 10-day notice, since these cities have very little time to draft an ordinance if a city council requests it for the next meeting. More details on this and other new laws will be available in the League s 2017 Law Summaries publication, which is scheduled to be published in June. Read the current issue of the Cities Bulletin (Link to: Your LMC Resource Contact Irene Kao IGR Counsel (651) or (800) ikao@lmc.org (Link to: mailto:ikao@lmc.org) Pam Whitmore Staff Attorney (651) or (800) pwhitmore (Link to: mailto: pwhitmore@lmc.org)

18 Page 18 of 20 Sign Up Now for LMC's 2017 Legislative Policy Committees Both elected officials and city staff are encouraged to join these groups that meet three times during the summer to develop the League s legislative platform. (Published Apr 10, 2017) The 2017 LMC policy committee meetings are right around the corner. Sign up now to join your city colleagues this summer for great discussion about municipal legislative issues. Last year, over 150 city officials from all around the state participated in the four committees that set the legislative policies for the League s lobbying efforts. Sign up by June 1! (Link to: IMPORTANT NOTE FOR MEMBERS WHO SERVED LAST YEAR: Please sign up to confirm your participation again this year if you intend on serving. We are in the first year of a two-year term for our chairs and committee members, so we ask that you sign up each year to ensure accuracy of your contact information, city titles, etc. Thank you! Here are answers to some common questions for those considering participating in policy committees: Who can be on a policy committee? Current city officials and staff are eligible. City councilmembers, mayors, city administrators, assistant city administrators, clerks, human resource staff, municipal elections officials, public safety staff, engineers, finance directors, economic development staff, and others have been members of the committees. Committee members can be new to their city position, have many years of experience, or be somewhere in between. What typically happens during each of the three committee meetings? At the first meeting in July, members hear a briefing of the previous legislative session from LMC staff, network with one another by sharing issues of interest that are related to the committee, and begin to look at policies to edit, delete, or add. At the second meeting in August, members usually hear from guest speakers from state agencies, interest groups, legislators, and other local officials to learn more about a specific issue of interest to the group. During the third meeting in September, members continue their work discussing edits to existing or new policies and vote to approve their policies. What happens after the third policy committee meeting?

19 Page 19 of 20 The League s Board of Directors hears about the work of each policy committee during a fall meeting, typically in October. Then, the draft policies are open for comment by all League members. Member comments are compiled in early November, and then the LMC Board makes the final adoption of the policies. During the 2018 legislative session, the League s IGR staff use the policies to guide the League s legislative efforts at the Capitol. When and where are the meetings? Improving Service Delivery Committee (Link to: Mondays: July 24, Aug. 21, Sept. 25, 9:30 a.m.-12 p.m. Chair: Andrea Lauer, Mayor, Royalton Vice Chair: Luke Fischer, Administrative Services Director, Plymouth Improving Local Economies Committee (Link to: Tuesdays: July 25, Aug. 22, Sept. 26, 9:30 a.m.-12 p.m. Chair: Melanie Mesko Lee, City Administrator, Hastings Vice Chair: Kelcey Klemm, City Manager, Detroit Lakes Human Resources & Data Practices Committee (Link to: Tuesdays: July 25, Aug. 22, Sept. 26, 1:30-4 p.m. Please note this committee will now be meeting on Tuesday afternoons (not Wednesday afternoons, as it did previously). Chair: Deborah Dahl, HR Director, Fridley Vice Chair: Mike Rietz, City Administrator, Barnesville Improving Fiscal Futures Committee (Link to: Wednesdays: July 26, Aug. 23, Sept. 27, 9:30 a.m.-12 p.m. Chair: Lisa Herbert, Finance Director, Rogers Vice Chair: Josh Malchow, Administrator-Clerk, Slayton All meetings will occur in the St. Croix Room, which is located on the first floor of

20 Page 20 of 20 the League building in St. Paul. What if I can t attend each meeting in person? We offer GoTo Meeting, which is an online option for all meetings. Many members use this option to remain involved in committee discussions, regardless of their ability to come to the League s office in St. Paul. What topics does each committee address? The topics include, but are not limited to, the following subtopics: Improving Service Delivery: unfunded mandates, environmental mandates, elections, charter law, data privacy, government innovation and cooperation, and public safety. Improving Local Economies: growth management, land use, boundary adjustments, housing, transportation, economic development, and telecommunications. Improving Fiscal Futures: municipal financial management, property and other taxes, state aid programs, and financial reporting requirements. Human Resources & Data Practices: employment law, labor relations, data practices, Open Meeting Law, personnel, and pensions. Read the current issue of the Cities Bulletin (Link to: Your LMC Resource Contact Heather Corcoran IGR Member Outreach Coordinator (651) or (800) hcorcoran@lmc.org (Link to: mailto:hcorcoran@lmc.org)