fedgazette

Much ado, and much more to do

Minnesota State Roundup

Published July 1, 2005  |  July 2005 issue

Minnesota lawmakers and Gov. Tim Pawlenty were busy enough this legislative session to raise a significant number of hoorays and heckling from different constituencies.

In May, Pawlenty signed a bill mandating that the percentage of ethanol in a gallon of gasoline be doubled, from 10 percent to 20 percent, by the year 2013. The measured was cheered heartily by corn farmers (who grow the main ingredient for ethanol production) and rural areas in general, where all of the state's 13 active plants are located. Two more plants are also under construction. Back in 1997, Minnesota was the first state to mandate ethanol blending.

Education saw healthy increases across the board. K-12 spending is expecting an increase of around $800 million, with higher education getting a bump of over $200 million, split almost equally between the state's two higher education systems.

A law was also approved that raises the state's minimum wage to $6.15 an hour. Exceptions were made for small businesses that earn less than $625,000 in annual revenue, who will now have to pay workers at least $5.25 an hour—a 35 cent increase over previous rates. The law also applies to restaurant workers like wait staff, who typically depend on tips for a significant portion of their wages.

One notable measure that died—after passing the Senate—was a proposal to create a temporary fourth income bracket set at 10.7 percent, a rate almost three percentage points higher than the highest existing income tax bracket. Had it been passed, it would have been among the highest state rate in the country, affecting about 43,000 filers, and generating some $800 million to help offset the state's budget deficit. Pawlenty also vetoed a transportation bill that would have tacked on 10 cents per gallon to the state's gas tax. A proposal by Democrats to raise the cigarette tax hit the legislative wastebasket, but was resurrected by Pawlenty as a 75-cent "health care impact fee."

Despite all the activity, there was enough unfinished business to need a special legislative session to finalize major spending bills and consider other items like the cigarette impact fee. The special session also gave new life to proposals for a "racino" (adding a casino to an existing horse track in the Twin Cities) and a new stadium for the Minnesota Twins.

Ronald A. Wirtz

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