Dramatic changes occurred at the state Capitol on November 2, 2010. Entering the 2010 election season, Democrats were in firm control of the House and Senate. Most political observers expected the DFL to lose seats, but hardly anyone anticipated the extent of the GOP’s gains as a red wave rolled over Minnesota, washing away massive DFL majorities in the Legislature and leaving Republicans in control of both chambers—a startling result, particularly in the Senate where shell-shocked Democrats ceded power for the first time in 38 years.
Republican candidates won by campaigning on a consistent theme of fiscal conservatism and opposition to tax increases, a message that clearly resonated with voters. But on the same day they flipped the legislative power switch from D to R, Minnesotans decided that the departing Republican governor, Tim Pawlenty, should keep his chair warm for Democrat Mark Dayton. In contrast to the “No new taxes” mantra that appealed to voters in legislative races, Dayton’s radically different “Tax the rich” message delivered the governor’s office to the DFL for the first time in two decades.
The 2010 elections shook the Capitol to its core, but when the dust settled a familiar scene was unveiled: divided government. The contrasting philosophies of the Executive and Legislative branches set the stage for a heated battle over the state budget, the issue that would define the 2011 session.
The November 2010 state economic forecast estimated an enormous budget deficit of $6.2 billion—nearly 20 percent of projected state spending. An improved economic picture emerged in the crystal ball in February, when an updated forecast showed a deficit of $5 billion. While this was welcome news, it was cold comfort to policymakers who still faced a seemingly insurmountable problem.
Sticking to his campaign theme, Gov. Dayton proposed to balance the budget with a heavy income tax increase on higher-earning Minnesotans. Conversely, the GOP’s “live within our means” philosophy produced a budget plan with no tax increases. Complex political equations created the competing proposals, but they yielded a simple sum, $3.6 billion, the amount of new revenue that separated the governor’s position from the legislative majority. Gov. Dayton subsequently halved his revenue demands to $1.8 billion, but he and legislative leaders could not reach a budget agreement before the clock ran out on the 2011 session at midnight on May 23rd. At the time this issue of Bench & Bar went to press, the lingering budget impasse threatened to shut down the state government July 1.
During the 2011 session lawmakers from both sides of the aisle suggested that a budget solution might be found in eliminating “tax expenditures” (referred to variously as exemptions, incentives, or loopholes), an idea that received ongoing discussion in the media. This suggestion put in play an expansion of the state sales tax to legal services. The MSBA took action before the session even started and remained engaged in the months that followed to inform policymakers that a sales tax on legal services would create a barrier to justice and would put Minnesota businesses and attorneys at a competitive disadvantage. No concrete proposals emerged that would expand the sales tax to legal services, but the issue remained in play as budget negotiations continued into the summer.
The other high priority issue for the MSBA during the 2011 session was funding for the three major components of the justice system: courts, public defenders, and civil legal services. Advocacy from the Bar and its justice system coalition partners was critical during a year in which interest groups at the Capitol scratched and clawed for vanishing dollars. Fortunately, Gov. Dayton made the justice system a priority, as did the Legislature, led by the House and Senate Judiciary Committee chairmen, lawyer-legislator Rep. Steve Smith (R-Mound) and Sen. Warren Limmer (R-Maple Grove). The governor’s budget proposal maintained funding levels for courts and civil legal services, and provided a 5 percent funding increase for public defenders. The House and Senate responded with SF958, a public safety and judiciary budget bill that maintained funding for courts and proposed a 1.2 percent funding increase for public defenders, but called for a 17 percent cut to civil legal services. Gov. Dayton promptly vetoed SF958, citing, among other concerns, the cut to civil legal services. In June, GOP leaders offered to match the governor’s public safety and judiciary funding targets, but the governor said he wanted to reach a global agreement on the entire state budget. At press time, justice system funding was still an unresolved issue.
Stay current with the MSBA’s Legislative Committee at: www.mnbar.org/committees/legislative
The MSBA was also involved in a third issue of profession-wide importance: judicial selection reform. As part of the Coalition for Impartial Justice, the MSBA supports reforms that include amending the state constitution to require retention elections for judges. A bill in support of these reforms, HF1666/SF1465, was introduced late in the session and received an informational hearing in the House Government Operations and Elections Committee. The Coalition for Impartial Justice plans to make a strong push for the bill during the 2012 session.
New Laws of Interest
In addition to issues of profession-wide importance, a large number of proposals were introduced from various sections of the Bar. Nine MSBA proposals were signed into law by Gov. Dayton, a significant number during a year in which the governor’s signature was affixed to only 93 bills out of more than 3,000 that were introduced. Four other MSBA proposals passed the House and just need Senate passage in 2012. The Bar also opposed numerous bills, and provided drafting assistance and technical feedback on many others. Much of that activity is detailed below in the summary of new laws of interest to attorneys from the 2011 session. (Note: Chapters of the 2011 Session Laws are available at www.revisor.mn.gov/laws)
Chapter 31 provides modest revisions to Article 9 of the Uniform Commercial Code (Minn. Ch. 336). The Uniform Laws Commissioners, with the support of the MSBA’s Business Law Section, brought forth Chapter 31 to address some issues that have arisen since Article 9 underwent substantial revisions in Minnesota in 2001. Most importantly, in response to a considerable amount of litigation, Chapter 31 provides greater guidance regarding the names of debtors to be provided on financing statements.
Chapter 106 contains several business law clarifications and modifications from the Office of the Secretary of State. It also contains a suggestion from the Business Law Section to correct a drafting error in Minn. Stat. §317A.255 subd. 1(b)(3) (regarding nonprofit directors’ conflicts of interest).
Chapter 9 modifies Minn. Stat. §609.596 so that causing great bodily harm to a public safety dog is a two-year felony; causing demonstrable bodily harm is a gross misdemeanor; and assault where the dog does not suffer demonstrable bodily harm is a misdemeanor.
Chapter 28 makes assault of a vulnerable adult a 4th degree assault crime, and requires anyone convicted of criminal abuse of a vulnerable adult to register as a predatory offender.
Chapter 32 extends the reach of Minn. Stat. §609.487 subd. 4 (fleeing a peace officer) to situations where a suspect flees in a vehicle but abandons the vehicle and continues to flee, resulting in death or bodily injury.
Chapter 53 makes a handful of changes to drug possession laws, including creating a gross misdemeanor for unlawfully selling synthetic marijuana, and a misdemeanor for unlawfully possessing it. In addition, Chapter 53 adds to Minn. Stat. §152.01 a definition of “analog” based on federal law. Chapter 53 also provides that the weight of fluid in a water pipe cannot be used to determine the level of a possession offense as long as the fluid is less than four ounces. This change was supported by the Criminal Law Section.
Chapter 72 allows courts to bar juveniles age 15 and over who are adjudicated delinquent of 1st-5th degree criminal sexual conduct from residing within 1,000 feet or three blocks of the victim, although there is an exception if the offender and the victim live in the same home. Chapter 72 also allows children certified as adults to be detained in juvenile facilities pending the outcome of their criminal proceedings.
Chapter 79 clarifies that a violation of a domestic abuse no-contact order is a targeted misdemeanor requiring police fingerprinting.
Chapter 81 modifies Minn. Stat. §609.902 subd. 4 (racketeering) by adding felony theft to the definition of “criminal act.”
Chapter 85 adds reserve officers’ horses to Minn. Stat. §609.597, which criminalizes assaulting police horses. Chapter 85 also creates a gross misdemeanor for assaulting a reserve police officer, or an employee or contractor of a utility or the United States Postal Service, while they are performing official duties.
Chapter 91 allows e-charging for juvenile adjudications and petty misdemeanors, as well as administrative license revocation.
Chapter 116 provides that if a participant in the address confidentiality Safe at Home program is a party or witness in a legal proceeding, the court may issue a protective order to prevent disclosure of participant’s location.
Probate & Trust Law
Chapter 66 clarifies that for wills and trusts of Minnesotans who died in 2010, references to terms defined in the federal estate tax code are deemed to refer to the provisions that were effective on December 31, 2009, unless a contrary intent is manifest. This clarification, which was drafted and supported by the Probate & Trust Law Section, is in response to the optional and retroactive nature of the new federal estate tax scheme that was enacted in December 2010.
Chapter 112 provides that Minnesota estate tax returns are not due before September 19, 2011 for decedents who died between Jan. 1, 2010 and Dec. 16, 2010. Chapter 112 also provides a qualified terminable interest trust (QTIP) election for estates of 2010 decedents that opt out of the federal estate tax. The election may not reduce the estate below $3.5 million.
Chapter 116 allows courts to destroy original probate documents and archive them digitally or electronically.
Chapter 4 provides that environmental review decisions are subject to review by the Minnesota Court of Appeals rather than the district court.
Chapter 10 requires associations to provide common interest community unit owners with copies of association records. Chapter 10 was amended in committee with language suggested by the Real Property Section to protect information that was the basis for closing a board meeting.
Chapter 14, the omnibus agriculture bill, contains a provision that allows burial of concrete and rebar on farmland as long as it is recorded. This provision was amended in committee with language suggested by the Real Property Section to ensure that correct terms of art were used.
Chapter 19 is a response to Krummenacher v. City of Minnetonka, 783 N.W.2d 721 (2010) (interpreting “undue hardship” for municipal variances). Chapter 19 permits variances if they are in harmony with the ordinance and there are “practical difficulties,” meaning: the owner wants to use the property in reasonable manner; the plight of the owner is not created by the owner; and the variance would not alter the essential character of the area. Chapter 19 also provides that conditions imposed in granting a variance must be directly related and bear rough proportionality to the impact of the variance.
Chapter 58 clarifies the application of foreclosure provisions in Minn. Stat. §504B.285 for residential tenants. This chapter was amended in committee with technical language suggestions from the Real Property Section.
Chapter 66 contains five technical proposals that were drafted and supported by the Real Property Section, including:
- Simplifying corrections of title defects caused by scrivener’s errors, and removing unnecessary requirements on county attorneys.
- Eliminating the list of entities in Minn. Stat. §358.50 for which an acknowledgment is prima facie evidence of corporate authority, and incorporating by reference the list in §358.41, so there is only one uniform list of entities in Minn. Ch. 358.
- Clarifying methods of service of process and who may be served in a Cancellation of Residential Purchase Agreement, and allowing service on the attorney representing the initial canceller with a Responsive Notice of Cancellation in a counter-cancellation situation.
- Specifying a 12-month redemption period for reverse mortgage foreclosures.
- Delaying the effective date of Laws 2010, Chapter 238, Section 7 (20-year enforceability of child support judgments) until Jan. 1, 2013.
Chapter 116 contains amendments to Minn. Ch. 515B (the Minnesota Common Interest Ownership Act) that were drafted and supported by the Real Property Section. Chapter 116 recodifies portions of Ch. 515B that were prospectively repealed by 2010 legislation but still apply to common-interest communities created before August 1, 2010. Chapter 116 also contains a handful of minor technical changes suggested by practitioners and industry groups.
Chapter 8 contains income tax and corporate tax changes to conform to federal changes for tax year 2010.
Chapter 112 contains numerous technical and policy tax provisions. Notably, it amends Minn. Stat. §278.05 subd. 6 (“the 60-Day Rule”) to clarify the information that must be provided to county assessors when challenging the valuation of income-producing properties. These changes, which are effective for petitions contesting the 2010 assessments, were drafted and supported by the Tax Law Section, the Minnesota County Attorneys Association, and the Minnesota Association of Assessing Officers.
Chapter 57 provides immunity from claims of loss or injury for school districts that make their facilities available for public recreational use.
Chapter 75 provides tort immunity for municipalities that donate public safety equipment for use by other municipalities.