FINAL 2014 LEGISLATIVE UPDATE

Date: September 08, 2014

It was not a positive experience going back to one party all-liberal
government rule in Minnesota for the first time in twenty years, although no
effort was made to repeal several major accomplishments from the past.  Below is an update on most issues NFIB was
involved in in the 2014 legislative session.

Several
Big Tax Victories

A lot of these involved repealing bad tax law that should
not have been enacted in the first place, but it still was very important to
repeal these negative measures.  


New Gift Tax Repealed

HF1777 Sen. Rod Skoe (Clearbrook) Rep. Ann Lenczewski (Bloomington)

The momentum on this really shifted due to the opposition of
NFIB and other groups, and a backlash from the public. The majority party leadership responded
quickly and repealed the gift tax early in the 2014 session.  The repeal was also retroactive and no person
will pay the gift tax in Minnesota.

New B2B Sales Taxes Repealed  

NFIB pushed hard for the repeal of the new sales tax extensions
on the repair of business and farm equipment and they were also repealed in the
2014 session, effective April 1st
Legislators discussed trying to refund people, but it ended up being too
difficult to do.  They also repealed the
new sales tax on warehousing services, which had not taken effect yet. 
 

Estate Tax Exemption Increased $1
million! 
 

A net positive victory occurred when they included a $1
million increase in the general estate tax exemption.  This increased exemption will be phased in
incrementally and take total effect in 2018. 
By simply setting up a bypass trust, married couples will be able to
double their exemption to $4 million.  

Big Increase in State Spending  

There was a large increase in state general fund spending
for fiscal years 2014 and 2015 and you wonder if this will contribute to next
large budget deficit.  General fund
spending was increased 11.7% for FY 2014-2015 and long-term estimates are 17%
if you take it out into the next two-year biennial budget.  Don’t be surprised if the state can’t sustain
this level of spending and you start reading headlines about another large
budget deficit.  

One Other Victory, Large Unemployment
Insurance Tax Cut (2013) 
 

The legislation providing a large unemployment insurance tax
cut is just getting noticed by many business owners.  NFIB was one of the few groups that pushed
for this legislation.  The tax cuts took
effect in late 2013.  The Department of
Employment and Economic Development, which administers the unemployment
insurance program estimates that minimum rate payers will see a projected $134
per employee reduction and those at the maximum, such as contractors,
landscapers, and other more seasonal businesses, will see a significant $474
per employee tax cut.  

Big Disappointment on Minimum Wage

Senate
Majority Party Folds and Accepts Huge Increase

HF2091 Original Authors Rep. Ryan Winkler (Golden Valley)

Sen. Chris Eaton (Brooklyn Center)  

One of the biggest disappointments of the 2014 session was
when the Senate majority members caved and accepted the worst parts of the
House minimum wage increase.  Due to
their agreement with the House, Minnesota will now have a $9.50 minimum wage
effective August 1, 2016, and worse yet they put an escalator on it that takes
effect on January 1, 2018, that will increase the wage every year with increases
in inflation.  They did preserve a lower
minimum wage for smaller businesses (companies with annual revenue of $500,000);
their wage will be raised to $7.75 per hour beginning on August 1, 2016.   NFIB
strongly opposed this measure and testified against it several times. 
 

Senate majority members had put forward and passed a very
moderate increase in the minimum wage and while no one expected them to totally
get their way it was very disappointing that they totally conceded to the House
on the two biggest items: the $9.50 per hour wage that most employers pay and
the escalator provision.  

New Rights to Sue Employers Enacted in
Women’s Economic Security Act (WESA)

HF2536 Rep. Carly Melin (Hibbing) Sen. Sandy Pappas (St. Paul)  

The other big disappointment of the session was that the
controversial WESA legislation contained three new rights for workers to sue
employers.  Two pertained to very
isolated situations regarding wage disclosure and accommodations for nursing
mothers, but by far the worst one was a
dramatic expansion of the Human Rights Act when they placed familial status
under the Act.
  NFIB strongly opposed
this measure and even testified against it in the conference committee.   
 

Currently the vast majority of protected classes under the
Act deal with an inherent or permanent characteristic of the person, such as
their race, religion, ethnic group, or disability; and most recently, sexual
orientation.  Through this irresponsible
action they have now added about 30% of the households in the state who have a
child or a teenager under age 18.  

Discrimination cases under the Human Rights Act can be very
costly and threatening for small business and now any worker with a child or a
teenager under age 18 can attempt to bring a claim against their employer for
justifiable discharges, demotions, reprimands or possibly feeling they were
overlooked for promotion, and cite they are a new protected class and that they
are being negatively treated due to their family obligations.  These cases will still have to be decided on
the facts, but elevating a huge number of current workers to a protected class
and potentially giving them the support and backing of the state’s Department
of Human Rights in these matters is very concerning.    

The new law also contains a confusing and challenging pay
equity provision where businesses that have contracts greater than $500,000 per
year with the state will be exposed to an analysis of their payroll by the
state in order to sell goods or services to the state.  The original bill was worse, and completely
unworkable, and would have imposed a comparable worth pay system on these
companies and really raised the question would anyone do business with the
State of Minnesota?  That absolutely
unworkable provision was scuttled and replaced with a pay equity analysis of
state contractors.   

 

Other
Bad Bills Defeated 
 

State-Sponsored Retirement Plans
Defeated

Sen. Sandy Pappas (St. Paul) Rep. Patty Fritz (Faribault)  

An effort to put the State of Minnesota into the retirement
business despite the large abundance of financial planning and financial
service firms that are located in or operate in Minnesota ran out of gas in the
2014 session.  The bill was defeated and
substituted with a study and placed in the WESA bill.  

Mandated Sick Leave Defeated

HF2461 Rep. John Lesch (St. Paul) SF2105 Sen. Pappas  

A new mandate to impose compulsory paid sick leave even on
the smallest firms was defeated in the 2014 session.  The smallest firms would have to provide five
days of sick leave.  NFIB strongly
opposed this measure.  

Negative Rulemaking Legislation Defeated

HF2724 Rep. Mike Nelson/Sen. Pappas  

A bill that made negative changes to the rulemaking process,
opposed by NFIB, was also defeated in the 2014 session.  It was proposed by Governor Dayton as part of
his un-session agenda but what it really did was make it easier and faster to
grow government through rulemaking and made it more difficult for the public or
other affected parties to respond.  Fortunately
it encountered strong bipartisan opposition and did not make it.    

A positive development occurred on the House floor when an
amendment was brought up by Rep. Cindy Pugh (Chanhassen) to keep the current
threshold at 25 objections by individuals to force a hearing on a new proposed
rule. The legislation raised that bar to
50 and Governor Dayton unbelievably proposed 100! 

 

Other
Lawsuit Related Legislation

Consumer Fraud Legislation Blocked

SF1223 Sen. Scott Dibble (Minneapolis) HF642 Rep. John Lesch  

Sweeping legislation that would designate any dispute
between one consumer and one business under consumer fraud laws to be in the
public interest and grant attorney’s fees and additional damages to that party
(private attorney general right) if they prevail stalled in the Senate again
last session.  If enacted this would have
been a dramatic change for the worse in our consumer fraud law and NFIB
strongly opposed it.  

Actions Surviving the Death of a
Plaintiff Blocked Again

SF693 Sen. Kari Dziedzic (Minneapolis) Rep. Joe Atkins (Inver Grove
Heights) 
 

A bill that would allow family members of a deceased
plaintiff to still be able to file a claim for pain and suffering damages they
suffered prior to their death stalled again in the 2014 session.  This time the bill went to conference
committee and never made it out due to increasing opposition.  Many states do allow a claim for pain and
suffering to continue after the plaintiff’s death but they limit it and put
caps on damages.  The language the
Minnesota plaintiff attorneys were pushing had no caps.  NFIB joined with others in the Minnesotans
for Lawsuit Reform Coalition and opposed the bill.

 

 

 

 

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