Although the 2014 legislative session was one of the shortest in memory, legislators made good use of the time. A recovering economy facilitated passage to a variety of bills to provide tax relief and Gov. Dayton’s “unsession” agenda led the way to removal of many outdated statutes from the books. Meanwhile, MSBA’s legislative agenda enjoyed notable success and many additional bills of interest to lawyers made their way into law.
This year the state Capitol came to life the last week in February, a later start than any in recent memory. The final gavel dropped after 106 days on May 16, three days prior to the constitutionally mandated date of adjournment, marking 2014 the shortest session since 1994. The session may be best characterized as one flush with cash but coupled with legislators making sharp political cost/benefit analyses while casting their eyes to the upcoming campaign season and November election. The abbreviated session, along with Governor Dayton’s call for an “unsession” agenda to purdge outdated statutes from the books, did little to temper the ambitious agenda of legislators. Big-ticket items from bonding to tax cuts, minimum wage to medical marijuana, were all up for discussion and eventual passage.
In a departure from the previous session, when the state faced a $627 million budget deficit, legislators received the most welcome and auspicious news of a $1.2 billion surplus in the February forecast. The copious surplus allowed legislators to finish repaying the school revenue shift while leaving plenty of room to repeal and lower taxes while simultaneously funding major DFL initiatives such as early education and a pay increase for home-care workers. Legislators quickly capitalized on the good news, passing a tax package early in the session in order to bring relief to Minnesotans prior to their filing 2013 tax returns. That $440 million relief package (Chapter 150 of session law) included repeals of three roundly unpopular business-to-business taxes as well as the state gift tax, all of which were enacted in 2013. The bill also provided $226 million in federal income tax conformity, such as elimination of the marriage penalty and increased working family tax credits, and phased-in a shift of the estate tax exemption cap from $1 million to $2 million over the next five years.
Several carryover issues from the 2013 session found resolution this year. The Safe and Supportive Schools Act, often referred to as “the bullying bill,” was revived and passed in spite of vocal Republican opposition (becoming Chapter 160 of session law). The bill requires school districts to track and investigate cases of bullying and better train staff and teachers on how to prevent it. In similar fashion, after much behind-the-scenes discussion the House and Senate agreed to phase-in a hike in the minimum wage, which will reach $9.50 for large employers and $7.75 for small employers by 2016. The minimum wage will be indexed to inflation beginning in 2018, but an “off ramp” provision gives the commissioner of the Department of Labor and Industry the power to freeze the wage in the event of an economic downturn (session law, Chapter 166).
A recurring question throughout the session was whether the legislature would take action to legalize marijuana for medicinal use. The original draft of the bill stalled due to law enforcement opposition; however advocates met with Gov. Dayton, convincing him to encourage the legislature to move forward with the measure. The end product was a significantly narrower version of the original bill, but will allow marijuana in pill, oil, or as whole plant extracts to be made available to about 5,000 Minnesotans with very specific debilitating conditions. The final bill had both bipartisan support and bipartisan opposition, with some legislators expressing concern that the bill is too narrow; the compromise language is thought to be the most restrictive marijuana legislation in the country. The well-orchestrated grassroots lobbying by impacted citizens was undeniably the catalyst for legislation that appeared to be dead on arrival but received final passage (session law, Chapter 311).
Bills with emotive names tend to grab headlines, and the Women’s Economic Security Act was front and center for much of the session. The bill (session law, Chapter 239) was a high priority for the DFL caucus and contained a variety of provisions related to women in the workplace, receiving significant media attention in spite of its modest $2 million price tag. Following significant compromise by the business community coupled with remediation of differences between the House and Senate versions, the bill passed with bipartisan support in both chambers. The bill provides protections in the workplace for pregnant women and nursing mothers, expands employment opportunities for women in high-wage/high-demand occupations, and reduces the gender pay gap through increased enforcement of equal pay laws. Further, the bill creates “safe leave” so that individuals who are victims of domestic abuse or stalking may quit their employment and not extinguish their eligibility to file for unemployment insurance.
The “Big 3” issues that largely consumed the final weeks of session were the supplemental budget, the second tax omnibus bill, and the bonding bill. With only a few days remaining DFL leadership and Gov. Dayton (with input from GOP leadership, especially concerning the bonding bill) eventually came to a bargain with all three bills passing in the final hours of the session.
The second tax bill (session law, Chapter 308) was a $103 million proposition that included property tax rebates and credits for owners, renters, and farmers and passed overwhelmingly out of both chambers. Conversely, the $283 million supplemental budget bill (session law, Chapter 312), passed on a nearly party-line vote. That bill contained the much discussed 5 percent pay increase for home-healthcare workers and education increases to the tune of $54 million. And last but certainly not least, the bonding bill (session law, Chapter 294), an $850 million proposition, was supplemented with another bill (session law, Chapter 295), including $200 million in additional cash spending. The most notable projects in the bonding bill are Capitol restoration funds, regional civic centers, and funding for higher education, both for the U of M and the MnSCU system.
Perhaps the most surprising outcome of the session in light of exhaustive paybacks and spending is that $600 million of the surplus remains on the state’s bottom line. The surplus will assist the state as it prepares for the next biennial budget. Net revenues have come in slightly below projections in the past couple of months, but assuming no drastic changes to Minnesota’s economic situation, the state will be in a better financial position than in previous budget years.
Finally, with all this talk of action and new law, this recap would be remiss to not mention that to the surprise of many Capitol veterans, Governor Dayton’s “unsession” agenda turned out to be much more than a “State of the State” talking point. Dozens of bills repealing outdated laws and unnecessary regulations moved through the legislature this year. At last count, nearly 1,200 unsession provisions have become law.
The Bar Agenda
Despite the short session, a hefty parcel of 169 bills made their way to the governor’s desk this year (in comparison, only 144 completed their journey in 2013). Three of these bills contained MSBA-led initiatives.
The first Bar bill to become law (Chapter 170) originated in our Business Law Section and was carried by veteran lawyer-legislator Sen. Scott Newman (R-Hutchinson) and second-term House member Rep. Paul Rosenthal (D-Edina). The bill provided a much needed update to Chapter 302A, the Minnesota Business Corporation Act. The bill formalized the practice of preclearance of filings with the Office of the Secretary of State; made clarifications to the definition, delegations of duties, and standard of conduct of officers; simplified short-form mergers and merger consideration; clarified the triggers and interest rate for dissenters’ rights; and permitted cross-border conversions, among a host of other minor changes.
The second MSBA proposal was authored and advanced by our Real Property Law Section, and contained a variety of technical tweaks and updates, including removing gendered language from statutes involving marital property, expanding and clarifying the transfer on death deeds (TODDs) statute, clarifying liability for a wrongfully executed mortgage satisfaction or release, and streamlining the time element of redemption periods that appear in statute. The bill was carried by two lawyer-legislators, Rep. Melissa Hortman (D-Brooklyn Center) and Sen. Scott Newman (R-Hutchinson). The bill sailed through both houses with unanimous votes and became session law, Chapter 266.
The MSBA’s remaining initiative originated as a dual proposal by the Tax Law Section and Minnesota CLE. The issue arose after the enactment of the 2013 tax bill, which put a sales tax on digital goods. Often referred to as the “Amazon Tax,” it was intended for digital downloads of various media. Following conflicting interpretations from the Department of Revenue it remained uncertain whether the sales tax extended to live-streaming events such as CLE webinars. To clarify the ambiguous interpretation, a bill was heard in each body clearly stating that such digital works are not to be taxed under Minnesota law. The original bill was carried by a heavy-hitter of all things tax, Sen. Ann Rest (D-New Hope), and a new face and rising star in the House, Rep. Yvonne Selcer (D-Minnetonka). The language of the bill was folded into what became known as “Tax Bill 2,” a $103 million tax cut bill that passed the legislature on the last day of the session (see above). As is tradition, that bill was authored by the two Tax Committee chairs, Rep. Ann Lenczewski (D-Bloomington) and Sen. Rod Skoe (D-Clearbrook).
A number of additional MSBA legislative priorities came to fruition this year with the support of Bar members and sections. Spearheaded by the Uniform Law Commissioners, the Revised Uniform Limited Liability Company Act will become law (Chapter 157). Additionally, due in large part to the dedicated work of a group of MSBA members, the Minnesota Public Benefit Corporation Act passed, creating the possibility of an entirely new business entity for entrepreneurs with a social purpose (Chapter 172). Finally, after many years of consideration, an
expungement reform bill has been signed into law, making it easier for past offenders to clear the slate (Chapter 246).
Unfortunately, a few bills failed to gain traction or passage this year. Another attempt was made to advance legislation on judicial selection reform, but the bill (known as the Impartial Justice Act) failed to gain the necessary support to move it out of committee. And, after clearing committee hurdles, a family law bill regulating surrogacy and assisted reproduction was unable to garner enough support to receive floor votes in the House and Senate.
As in every legislative session, the Bar’s affirmative agenda is only a small part of the work that is done under the Capitol dome. Heartfelt gratitude goes out to section chairs, legislative liaisons, and individual members who stepped up time and again to lend their expertise, whether in drafting, analysis, testimony, or discussion of the issues of the day. The MSBA’s high standing and respect in St. Paul is due to this depth of member involvement and assistance. Thank you all so very much.
Notable New Laws
The following is a summary of new laws that will interest attorneys in a wide variety of practice areas. If you wish to read any of them in their entirety, a list of session laws is available at https://www.revisor.mn.gov/laws/current/
Chapter 150, the first omnibus tax bill, included changes to individual income, corporate franchise, property, sales and use, estate, mineral, local, and other taxes and tax-related provisions. The bill provides for federal conformity, modifies estate tax provisions including changing tax rates for estates, repeals the gift tax, modifies the definition of sale and purchase, and modifies sales tax exemptions. The bill repeals the three controversial business-to-business taxes that were passed in 2013.
Chapter 153 changes the service requirements for expert witness affidavits in malpractice cases to conform with recent changes to the Minnesota Rules of Civil Procedure. Affidavits must now be served on the defendant no later than 180 days after the commencement of discovery, instead of the commencement of the lawsuit.
Chapter 157 enacts the Minnesota Revised Uniform Limited Liability Company Act, regulating LLC organization and operations.
Chapter 171 aims to reduce the time people with serious mental illness stay in jail without access to mental health treatment by requiring that courts allow simultaneous competency and civil commitment examinations for defendants facing criminal charges, in certain circumstances.
Chapter 172, the Minnesota Public Benefit Corporation Act, provides rules for the organization and operation of general and specific public benefit corporations.
Chapter 173 changes the provisions of the Safe at Home program so participants can buy property in a manner that protects their identities. The Safe at Home program is designed to protect survivors of domestic violence, sexual assault, stalking, or others who fear for their safety.
Chapter 177 increases the time limit for warrantless arrests in misdemeanor and gross misdemeanor domestic abuse offenses from 24 hours to 72 hours. This bill also clarifies probable cause arrests for violations of protection, restraining, and no contact orders.
Chapter 180 restructures the criminal vehicular operation statute by creating separate sections relating to criminal vehicular homicide and criminal vehicular operation.
Chapter 186 requires a driver to stop and investigate possible personal injury or property damage following a collision.
Chapter 188 establishes remedies for victims of violence to terminate lease agreements.
Chapter 189 updates the Uniform Interstate Family Support Act.
Chapter 191 clarifies the statute of limitations for foreclosure claims and amends the definition of a small servicer.
Chapter 197 makes changes to custody and parenting time provisions.
Chapter 200 clarifies existing law related to partial payment or reimbursement of costs from a party proceeding in forma pauperis.
Chapter 201 modifies judicial forfeiture of property associated with controlled substance offenses and vehicles used in drive-by shootings.
Chapter 202 modifies the review process of district judges’ 90-day disposition requirements, allowing for notice and action to be taken.
Chapter 204 streamlines court processes for litigants and changes several laws to further enable the court to move toward electronic processing of court records.
Chapter 205 allows housing courts and housing calendars to use referees for the majority of landlord and tenant cases.
Chapter 212 amends and repeals outdated and redundant public safety statutes, and requires a report on the collection of data on victims of domestic abuse.
Chapter 213 prohibits individuals from possessing weapons if they are subject to domestic violence restraining orders, and requires individuals to surrender their firearms if they have been convicted of domestic violence offenses.
Chapter 215 updates laws regulating liens on personal property in self-storage.
Chapter 219 updates the definition of a confidential employee under the Public Employment Labor Relations Act (PELRA).
Chapter 220 provides definitions for annexation and limits annexation of parcels by ordinance.
Chapter 232 allows certain persons who are not health care professionals to administer a medication that can counteract a drug overdose and provides some immunity from prosecution if an individual seeks emergency medical assistance in the case of a drug overdose.
Chapter 233 allows a person who has brought a civil court action in district court for a violation of the Minnesota Human Rights Act (related to discrimination in employment, housing, credit, education, and other areas) to have a jury trial.
Chapter 239, the Women’s Economic Security Act (WESA), increases enforcement of equal pay laws; modifies eligibility for unemployment benefits when the applicant is a victim of sexual assault or stalking; expands pregnancy and parenting leave, sick leave benefits, and pregnancy workplace accommodations; and prohibits employment discrimination on the basis of familial status.
Chapter 242 clarifies that failing to pay court-ordered support is a crime.
Chapter 245 modifies the requirements to file a petition for relief from conviction as well as the notice requirement for offenders who owe restitution.
Chapter 246 reforms the state’s expungement laws, amending laws governing disclosure of background study results by the commissioner of human services, expanding judicial expungement authority over juvenile expungements, requiring any business screening records to keep their criminal records current, allowing for eviction records to be expunged at the time of judgment, amending and expanding the scope of the factors for a court to consider in granting a statutory expungement, creating a path to expungement without petitioning the court, amending the law governing access to expunged records, and creating additional notice requirements for expungement orders.
Chapter 253 aims to enhance accountability and transparency in public construction projects by creating a definition of a responsible contractor.
Chapter 257 voids indemnification agreements in contracts with design professional servicers when the terms of the contract require the design professional servicer to indemnify the actions of others who are not the design professional servicer, their employees, or others for whom they are liable.
Chapter 259 clarifies predatory offender registration requirements and sentencing for criminal sexual conduct in the third degree.
Chapter 260 amends the definition of “crime of violence” in firearm law.
Chapter 263 authorizes counties to use GPS to monitor domestic abuse offenders.
Chapter 269 appropriates money to compensate wrongfully imprisoned individuals who have been exonerated.
Chapter 270 enhances the penalties for repeat criminal sexual conduct offenders.
Chapter 278 requires law enforcement to have a tracking warrant to receive electronic device location information.
Chapter 283 regulates filings, recordings, and registrations between business organizations and the Secretary of State’s Office.
Chapter 285 modifies laws governing misbranding drugs and adulterated drugs, and provides that when a person is convicted for selling a controlled substance under false pretense of being legal, they must pay mandatory restitution.
Chapter 293 makes clear that a private contractor performing a government function under a contract is subject to the Data Practices Act, regardless of whether those specific terms are included in the contract. The bill, known as “the Timberjay bill,” was in response to a 2013 Minnesota Supreme Court case. Provisions related to vehicle records and standards for transfer of driver’s license and motor vehicle registration data were also added. Note: Gov. Dayton vetoed a provision of the bill that appropriated funds to the legislative auditor for the oversight of data storage. At the time this article went to press, this was the only instance in which the governor exercised his line-item veto power this session.
Chapter 301 increases the maximum fee permitted to be charged by notaries public from one dollar to five dollars.
Chapter 302 provides enhanced penalties for causing the death of or assaulting a prosecuting attorney or judge.
Chapter 306 extends the felony crime of fraudulent or improper financing statements to include retaliation against a police officer, chief of police, official or employee of the Department of Corrections, or local correctional agency.
Chapter 308, the second omnibus tax bill, provides an additional $103 million in tax relief, including an increase in the agricultural homestead market value credit, increasing local government aid appropriations, and increasing homestead credit refunds and renter property tax refunds.
Chapter 311 legalizes the use of medical cannabis for specific individuals suffering from debilitating illnesses.
Emily McGann is MSBA’s government relations director. A 2012 graduate of the University of Minnesota Law School and the Humphrey School of Public Affairs, she works with MSBA’s contract lobbyist, staff, and members to promote the MSBA’s legislative initiatives and concerns at the Minnesota Legislature.