A full analysis from our policy team on how the actions of the 2014 Legislature will affect your bottom line, and an early preview of what issues are anticipated for the 2015 Legislature.

1. 2014SESSIONWRAP UP
May 20, 2014

2. 2014 SESSION WRAP UP
Your Business,
Our Priorities:
•Repeal B2B
•Minimum wage conformity
•Education and Workforce: better align K12 and higher education
•Improved permitting
•Maximize transportation funds through efficiencies

3. 2014SESSION WRAP UP
2013-2014 Biennium:
What do the results mean for business?
• Economic Competitiveness
• Growth
• Longer term outlook

4. 2014 SESSION WRAP UP
Minnesota’s current economic indicators:
GDP 2012: 3.5%
(June 2013, Bureau of Economic Analysis)
Real 2012 GDP: $253.0 billion
(June 2013, Bureau of Economic Analysis)
Unemployment rate: 4.7%
(April 2014, MN DEED)
Workforce participation rate: 71.2%
(3 million, seasonally adjusted, March 2014, DEED)
MN Manufacturer’s Report

5. 2014 SESSION: Fiscal Issues
Good news: improving fiscal conditions
• Increased cash/budget reserves by $150 million to
$1.161 billion (6% of general fund annual revenues)
• Repaid $2.8 billion K-12 Shift
• $1.636 billion repaid from 2012 surpluses
• $1.164 billion repaid from 2013 surpluses

6. 2014 SESSION: Fiscal
Bad News: troubling indicators
•More volatile revenue sources
•Greatly eroded $2.6 billion FY 16/17 surplus
•Less competitive tax system
•Revenues down from February
2014 forecast
•Job growth down
•MN Manufacturer’s Report

7. 2013 SESSION: Fiscal Issues
2013 Session: FY 14/15 budget biennium
2013 Feb. Budget Forecast
• $627 million deficit FY 14/15
• $782 million surplus FY16/17
Session result: $2.3 billion tax increase and
$1.6 billion spending increases

8. 2014 SESSION: Fiscal
February 2014 Forecast FY 14/15 FY 16/17
Budget Surplus $1.23 billion $2.6 billion
Tax Reduction $482 million $990 million
Spending Increase $570 million $1.06 billion
Budget Reserve $150 million
Remaining $30 million $598 million*
(Does not include inflationary spending of $1.06 billion, which if included would result in deficit of $470
million for FY 16/17.)

9. 2013/2014 SESSION: Fiscal
$2.17 billion new spending FY 14/15
($ in millions)

10. 0% 2% 4% 6% 8% 10% 12% 14%
2013 and 2014 SESSION: Fiscal Issues
Total Spending and Tax Growth
11.7%
9.4%
3%
2014-15
GDP
Tax
Increase/Growth
Spending
Increase/Growth

11. 2014 SESSION: Fiscal
2013 Tax Increases = $2.3 billion
• Income tax = $1.1 billion
• Corporate tax = $424 million
• Cigarette tax = $408 million
• Business sales taxes = $314 million
• New gift tax = $41 million
• Neglected federal conformity 2013 & beyond
Capital Equipment Upfront exemption

12. 2014 SESSION: Fiscal
Chamber’s priority: Repeal B2B
• Early Tax bill
• Repeal gift and estate tax
• Federal Conformity

13. 2014 SESSION: Taxes
2014 Session Tax Focus:
Unwound some of 2013 tax increases
•Tax Bill #1, Chap. 150
•Tax Decrease $443 million FY 14/15 & $956 million FY 16/17
•Repealed 3 New Business Sales Taxes
•Repealed New Gift Tax/Estate Tax Threshold to $2 million
•Federal Conformity
•Delayed upfront capital equipment sales tax

14. 2014 SESSION: Fiscal
Tax Bill #2, HF 3167
• Tax Decrease $53 million FY 14/15 and an additional
$39 million FY 16/17
• Spending increase $50 million FY 14/15 and another
$80 million 16/17
• June accelerated sales tax remittance
• One time homeowner property tax relief
• Cash payment to farmers
• Increase in local government aid in FY 16/17

15. 2013-14 SESSION: Impact on Competitiveness

16. 2013-14 SESSION: Impact Competitiveness
Income tax: 3.22%
Corporate: 4.53%
Sales: 6.55%
EstateTax: None
Income tax: None
Corporate: None
Sales: 5.83%
EstateTax: None
Income: 9.85%
4th highest rate/
2ndat some incomes
Corporate: 9.8%
3rd highest
Sales*: 7.19%
18th highest
(combined state/local)
Estate: $2 million
Source: Federation of Tax Administrators, Tax Foundation 2014 rates
Income: 7.65%
Corporate: 7.9%
Sales: 5.43%
EstateTax: None
Income tax: 8.98%
Corporate: 12%
Sales: 6.78%
EstateTax: None

17. 2014 SESSION: Labor Management
2013 Labor law changes:
• Labor Lockout Bill
• Ban the Box
• Worker’s Compensation
Agreement
BANTHE
BOX

18. 2014 SESSION: Labor Issues
2014 Labor Law Changes:
Minimum Wage
Women’s Economic Security Act (“WESA”)
REGISTER NOW!
For our Employers Guide
to 2014 Employment Law
Changes featuring attorney
Jody Ward-Rannow

19. 2014 SESSION: Labor Management
Chamber’s priority:
Minimum Wage - A raise to federal conformity
All surrounding states are at federal conformity ($7.25)

20. 2014 SESSION: Labor Management
LABOR MANAGEMENT
• 34 states considered minimum wage increases
during their 2014 session.
• 19 states are at federal conformity and 3 are below.
• 13 states index to inflation, the highest being Oregon
at ($9.10).
• Current highest state in law is Connecticut at $10.10
effective 1/17/2017.
• Minimum wage chart

21. 2014 SESSION: Labor Management
Minnesota Minimum Wage 8/1/2014 8/1/2015 8/1/2016
Large Employers $8.00 $9.00 $9.50
Small Employers $6.50 $7.25 $7.75
Youth Wage $6.50 $7.25 $7.75
Training Wage $6.50 $7.25 $7.75
J nonimmigrant visa $7.25 $7.50 $7.75

22. 2014 SESSION: Labor Management
Minimum Wage Agreement also includes:
• Youth Wage
• Training Wage
• Summer Work Travel
Employee Exemption

23. 2014 SESSION: Labor Issues
“WESA” law:
•Pregnancy Accommodations – provide up to 12 weeks
of unpaid time off after the birth or adoption of a child.
May be used up to one year from the qualifying event.
•Pregnancy and Parenting Leave – accommodate
employees for conditions related to pregnancy or
childbirth unless it presents an undue hardship.

24. 2014 SESSION: Labor Issues
“WESA” law:
•Wage Disclosure Protections – employers may not require
nondisclosure by an employee of their wages or take
adverse employment action against an employee for
disclosing wages.
•Nursing Mothers Protections –reasonable unpaid break
time for nursing mothers and make reasonable
accommodations.

25. 2014 SESSION: Labor Issues
“WESA” law:
•Familial Status New Protected Class – Minnesota
Human Rights Act now prohibits discrimination based on
familial status (i.e. parental status).
•Sick Leave Benefits and Care of Relatives – Added
mother-in-law, father-in-law, and/or grandchildren to the
list of people employers must allow employees to use
existing sick leave to care for. Also allows safety leave.

26. 2014 SESSION: Labor Issues
“WESA” law:
•Equal Pay Certificate of Compliance – Requires
employers with 40 or more employees and contracts with
the state over $500,000 to obtain an equal pay certificate
from the Minnesota Commissioner of Human Rights.
•Definition of Employee – change from individual who
works 12 consecutive months for an employer to 12
months.

27. 2014 SESSION: Education and Workforce
2013 Recap: More Money…
•K-12 - $485 million
•Higher education - $250 million
But Previous Reforms
Unwound
•Graduation tests repealed
•Teacher basic skills test waived
•Teacher evaluations weakened

28. 2014 SESSION: Education and Workforce
Chamber’s 2014 Education Priorities:
• Staffing flexibility: Not Adopted
• Providing parents with better
information about student
progress: Passed
• Improve career and technical
education: Passed
• Training standards for
apprenticeship programs: Passed

29. Earning College Credit in High
School – Post Secondary
Enrollment Options (PSEO)
• Improves the information school
districts must share with students
about dual credit options
• Enables post-secondary institutions to share information
with certain students about the financial benefits of
taking college classes in high school
• Cannot provide information to high schools with less
than 700 students
2014 SESSION: Education andWorkforce

30. 2014 SESSION: Education and Workforce
Halted further rollback of reforms:
•Teacher basic skills test -
weakened but not repealed
•Halted attempt to delay implementation
of statewide teacher evaluation
•Performance pay and teacher development (Q Comp) will be
combined with teacher evaluation system
•Graduation test repealed but no further weakening of
graduation standards

31. 2014 SESSION: Environment
2013 Laws:
• Product Stewardship - passed
• Formaldehyde - passed
• BPA - passed
• Container Deposit/
Bottle Bill - defeated

32. 2014 SESSION: Environment
Chamber’s Priority:
Environmental Permitting
•Expedited permitting
•Two Tiered permitting system
HF 2543
• 90 day goal (tier 1)
• 150 day goal (tier 2)

33. 2014 SESSION: Environment
Minnesota’s Chemical Regulations
• Triclosan ban - passed
• Toxic Free Kids Act - did not pass

34. 2014 SESSION: Transportation
2013 Laws:
•“Lights on Bill”
•County Wheelage Taxes for Local Roads
•County Local Option Sales Taxes for Local
Roads
•$300 million Corridors of Commerce

35. 2014 SESSION: Transportation
Chamber’s Priority:
Real, Measurable Progress on Efficiencies BEFORE new taxes
Efficiency goal included in Supplemental Omnibus
Budget Bill – passed
5% one-time efficiency measure for MnDOT in FY15:
• First step towards meeting the 15% efficiency measure
identified by Transportation Finance Advisory Committee
• Adds $50 million to construction budget

36. 2014 SESSION: Transportation
Transportation Advocates’ Proposal
(HF2395 / SF2107) - Did not pass
• $700 million a year in new funding split about
evenly between roads and bridges and transit
• 5% Gross Receipts Tax on Fuel
• Increase in metro area sales tax to full 1% from
current .25%

37. 2014 SESSION: Transportation
Additional Funding ForTransportation:
$241 Million
• Bonding (HF2490) / Cash (HF1068)
Capital Investment: $109 Million
• Omnibus Supplemental (HF3172):
$132 Million

38. 2014 SESSION: Health Care
2013 Laws:
• Established MNsure
• Expanded Medicaid
and established state
Basic Health Plan
• Phase out of MCHA

39. 2014 SESSION: Health Care
MNsure
• Virtually No Legislative Activity
• Timely posting of 2015 rates BEFORE November
15 open enrollment
• Premium tax increased to 3.5% 2015

40. 2014 SESSION: Health Care
Percent of 2015 Health Insurance
Premiums Employers Will Pay inTaxes

41. 2014 SESSION: Health Care
Supplemental budget:
• Additional $95 million in FY15 and an
additional $631 million in FY16/ 17 for various
health care programs
• $400 million in expenses transferred from the
Health Care Access Fund (HCAF) to the
General Fund in FY16/17
• HCAF deficit of $93.7 million in FY16 and
$239.4 million in FY17
$
$
$

42. 2014 SESSION: Health Care
Omnibus Health/Human
Services Policy Bill (HF2402):
• Costly new regulations
on prescription drug
insurance - did not pass
• New Regulations on
E-cigarettes
• Medical Marijuana

43. 2014 SESSION: Elections
June Primary
• 2013 – No full House or Senate vote
• 2014 – Full House vote
• 2015 – Goal: increase support
“Disclosure” Bill
• Proposed change - what is
considered election speech
• Disclosure of membership
information

44. 2014 SESSION WRAP UP
SUMMARY
• Back-to-back challenging sessions for
businesses in Minnesota
• Some progress on priority issues
• Far too many mandates, cost increases and
burdens imposed on Minnesota employers
• Policies likely have serious consequences for
longer term economic success and
competitiveness

45. 2014 SESSION WRAP UP
Questions?
?
?

46. CONTACT OUR POLICY STAFF
Laura Bordelon
SeniorVice President, Advocacy
651.292.4681
lbordelon@mnchamber.com
Jennifer Byers
Vice President, Grassroots and Chamber Relations
651.292.4673
jbyers@mnchamber.com
Ben Gerber
Manager, Energy & Labor/Management Policy
651.292.4663
bgerber@mnchamber.com
Bentley Graves
Director, Health Care andTransportation
651.292.4682
bgraves @mnchamber.com
Beth Strinden Kadoun
Director,Tax and Fiscal Policy
651.292.4678
bkadoun@mnchamber.com
Tony Kwilas
Director, Environmental Policy
651.292.4668
tkwilas@mnchamber.com
Sarah Radosevich
Policy Research Analyst
651.292.4660
sradosevich@mnchamber.com
Amy Walstien
Director, Education andWorkforce
Development, Elections
651.292.4661
awalstien@mnchamber.com

47. 2014 SESSIONWRAP UP
LEARNmore
1. Contact us about how these decisions impact
your business
2. Attend a Statewide PolicyTour meeting
3. Participate on a policy committee
4. Visit our website at www.mnchamber.com
5. Read our new BusinessViews E-magazine