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2014 session wrap up webinar 05.20.14
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2014 session wrap up webinar 05.20.14

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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.

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.

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  • Thank you for your membership <br /> Work on your behalf <br /> Issues you asked us to work on this session – how we fared <br />
  • What decisions mean to your business and employees, to the state’s economic climate and competitiveness. <br /> One session does not make or break the state’s economy <br /> Two consecutive years of policy changes that have been a sharp change in direction for the state – higher taxes, higher spending – that will have implications further down the road.
  • GDP - 5th highest tied w/ CA <br /> Real GDP – 17th largest <br /> Unemployment rate: <br /> Workforce participation rate: <br /> Median income: <br /> New biz starts:
  • State relies more heavily on more volatile revenue streams: corporate, individual and cigarette tax increases <br /> <br /> $2.6 billion surplus - $ was spent this session - $ remains <br /> <br /> Our system less competitive compared with other states both regionally and nationally <br /> <br /> The state’s April economic update showed that 2014 tax collections are $78 million below estimates. Income tax, sales tax and corporate taxes were off a combined $12 million. Individual income tax withholding in April was off the most, down $19 million. These numbers may change over time, but this is a four month trend. <br />

2014 session wrap up webinar 05.20.14 2014 session wrap up webinar 05.20.14 Presentation Transcript

  • 2014SESSIONWRAP UP May 20, 2014
  • 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
  • 2014SESSION WRAP UP 2013-2014 Biennium: What do the results mean for business? • Economic Competitiveness • Growth • Longer term outlook
  • 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
  • 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
  • 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
  • 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
  • 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.)
  • 2013/2014 SESSION: Fiscal $2.17 billion new spending FY 14/15 ($ in millions)
  • 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
  • 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
  • 2014 SESSION: Fiscal Chamber’s priority: Repeal B2B • Early Tax bill • Repeal gift and estate tax • Federal Conformity
  • 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
  • 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
  • 2013-14 SESSION: Impact on Competitiveness
  • 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
  • 2014 SESSION: Labor Management 2013 Labor law changes: • Labor Lockout Bill • Ban the Box • Worker’s Compensation Agreement BANTHE BOX
  • 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
  • 2014 SESSION: Labor Management Chamber’s priority: Minimum Wage - A raise to federal conformity All surrounding states are at federal conformity ($7.25)
  • 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
  • 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
  • 2014 SESSION: Labor Management Minimum Wage Agreement also includes: • Youth Wage • Training Wage • Summer Work Travel Employee Exemption
  • 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.
  • 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.
  • 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.
  • 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.
  • 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
  • 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
  • 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
  • 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
  • 2014 SESSION: Environment 2013 Laws: • Product Stewardship - passed • Formaldehyde - passed • BPA - passed • Container Deposit/ Bottle Bill - defeated
  • 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)
  • 2014 SESSION: Environment Minnesota’s Chemical Regulations • Triclosan ban - passed • Toxic Free Kids Act - did not pass
  • 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
  • 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
  • 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%
  • 2014 SESSION: Transportation Additional Funding ForTransportation: $241 Million • Bonding (HF2490) / Cash (HF1068) Capital Investment: $109 Million • Omnibus Supplemental (HF3172): $132 Million
  • 2014 SESSION: Health Care 2013 Laws: • Established MNsure • Expanded Medicaid and established state Basic Health Plan • Phase out of MCHA
  • 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
  • 2014 SESSION: Health Care Percent of 2015 Health Insurance Premiums Employers Will Pay inTaxes
  • 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 $ $ $
  • 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
  • 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
  • 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
  • 2014 SESSION WRAP UP Questions? ? ?
  • 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
  • 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