Legislature Ramps Up as First Committee Deadline Passes
Friday, March 25, 2022, marked the first of three legislative committee deadlines. The first committee deadline is the day by which policy bills need to be heard in all policy committees in at least one legislative body. Floor sessions were kept short to provide more time for extended committee hearings. The next two weeks will be some of the busiest days at the capitol this session. Both majority caucuses will scramble to push bills through the requisite committees before all deadlines are complete. Normally, legislative business is concluded on Thursdays, but some committees, such as the Senate Judiciary Committee, will meet on Fridays to accommodate the high volume of legislation.
State Office Building Open for Business
On Monday, March 21, 2022, the Minnesota State Office Building (“SOB”) re-opened to the public after two years of being shut down in response to COVID-19. Staff and legislators will be in-person on a hybrid schedule three days a week; Monday, Wednesday, and Thursday, with public access to the office areas on an appointment basis only. All wings of the SOB will be locked, and appointees will need to be escorted to and from their respective meetings. Speaker of the House Melissa Hortman (DFL- Brooklyn Park) said this new hybrid approach will be the first phase in the process of completely re-opening the SOB.
Republican Legislators Take Aim at Private Alternative to Paid Family & Medical Leave
On Monday March 21, 2022, Sen. Julia Coleman (R- Waseca) and Rep. Jordan Rasmussen (R- Alexandria), along with several other Republican legislators, announced a proposal to authorize a private alternative to the paid family and medical leave proposal promoted by Democrats in recent years. The proposal would allow private insurers to work with businesses with less than 50 employees to create individualized buy-in plans to fit employee needs. It also includes a $3,000 per-employee tax credit (totaling roughly $50 million) to help incentivize smaller employers who may have trouble affording these plans. Sen. Coleman stated that insurance plans wouldn’t be limited to just parental leave and that employees and employers could work with insurance providers to create plans that would provide coverage for workers caring for sick children or elderly parents.
The House Passes Reinsurance
On Thursday, March 24, 2022, the Minnesota House of Representatives passed S.F. 4271/H.F. 3717 which reauthorized the state’s reinsurance program. Authored by Rep. Zach Stephenson (DFL- Coon Rapids), the bill appropriates approximately $42 million to buy down the cost of health insurance premiums in the individual and small group insurance markets. It also includes several insurance-related provisions (including restrictions on cost-sharing) that drew the opposition of many House Republicans who argued it would drive up costs. Republicans generally called on the House to pass a “clean” reinsurance bill similar to the one previously passed by the Senate. The bill passed on a vote of 70-58 and was returned to the Senate. A conference committee will be appointed to negotiate the differences between the House and Senate versions of the bill. The conference committee is scheduled to meet this evening. The Legislature has until mid-week to reach an agreement.
Federal Update
Biden budget release to jump-start fiscal 2023 appropriations
President Joe Biden's second budget request was released Monday morning. It will jump-start negotiations with Congress on appropriations for the fiscal year beginning October 1. Congressional leaders hope to reach a quicker spending agreement this year after finalizing the fiscal 2022 omnibus package earlier this month — more than five months after the current fiscal year started.
Senate Appropriations Chairman Patrick J. Leahy (D-Vt.) said last week that he wants to get the "302(b)" allocations (toplines for the 12 annual spending bills that are distributed after an agreement on the overall spending level is reached) completed as fast as possible.
The ink was barely dry on the $1.5 trillion omnibus spending package for fiscal 2022 before White House budget officials and agency program managers had to put their new proposals to bed. Here are some initial observations to help understand what Biden is pitching to lawmakers:
- Discretionary spending: The White House is asking for about $1.67 trillion in appropriated funds for fiscal 2023, a more than 10 percent increase over the $1.51 trillion enacted for the current year, over five months late. Including various budgetary add-ons to the "base" budget request, including disaster relief money and changes to mandatory programs that free up discretionary funds, domestic and foreign aid agencies and programs would receive roughly $829 billion in fiscal 2023, a nearly 14 percent increase from the comparable levels enacted this year. Defense programs, largely at the Pentagon, would get $813 billion, a roughly 4 percent boost.
- Deficits: This year's budget shortfall would drop to about $1.42 trillion, from $2.78 trillion in fiscal 2021, falling further to around $1.2 trillion for the next two years before starting to rise again. Still, the administration estimates a little north of $1 trillion in deficit reduction over the next decade if its policies are enacted.
- Debt: Federal debt held by the public, excluding government trust funds, would keep rising — by about $14.7 trillion from the end of this fiscal year to fiscal 2032. Debt subject to the statutory borrowing cap, which includes intragovernmental debt, would surpass the current $31.4 trillion ceiling before the end of the year, though the Treasury Department could deploy "extraordinary measures" to avoid breaching the limit.
- Overall spending: Counting all of the mandatory programs and federal benefits that flow automatically, largely independent of the appropriations process, the Biden budget envisions spending $5.8 trillion next year, or a hair less than the current year. Spending would rise by about $1.4 trillion overall during the next decade under Biden's budget, compared with baseline spending policies; that doesn't include what might constitute a revived "Build Back Better" legislative package which was a fixture of last year's Biden budget but stalled in the Senate.
- Tax increases: Federal revenue, even without any proposed tax increases, is estimated to surge by more than 9 percent this year, to over $4.4 trillion, before growth slows down next year and in the coming years. Tax revenue would rise by $2.5 trillion over the next decade, including recycled proposals like a corporate tax increase and new ones like a "billionaire minimum income tax." As with new spending initiatives, tax increases outlined in the budget would be on top of any agreements to resuscitate the Build Back Better climate and safety net package.
- Economic projections: The White House's economic forecasts were finalized in November, so they might be taken with a grain of salt. But the administration's view of the landscape back then showed inflation moderating substantially next year, to a 2.3 percent rise in the Consumer Price Index, down from an average 4.7 percent this year. Interest rates may also end up a little north of where the White House expects, with a 2.1 percent average rate on 10-year Treasury notes this year, rising to 2.5 percent next year; meanwhile, 10-year Treasury yields were bouncing between 2.4 and 2.5 percent during Monday morning trading. Inflation-adjusted economic growth, forecast at 3.8 percent measured from the fourth quarter of last year, declines to 2.5 percent next year, but the unemployment rate continues to drop, from 3.9 percent this year to 3.6 percent in 2023.
Judge Brown Jackson Nomination Vote Unifies Democrats (so far)
Democrats have remained united on Judge Ketanji Brown Jackson's Supreme Court nomination. On Friday, Sen. Joe Manchin III (D-W. Va.) announced his intent to vote for Jackson, calling her record and career “exemplary.” No Republican votes are needed for confirmation. Vice President Kamala Harris would serve as the tie-breaking vote if there is a 50-50 split.
As of today, The Senate Judiciary Committee has a markup of the federal appeals court judge's nomination. But committee rules allow for members to “hold over” a nomination for the next meeting — meaning a final committee vote for Jackson’s would fall on April 4, with a Senate floor vote likely later that week.
Please reach out to any of the Larkin Hoffman Government Relations team members with any questions.
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