Tag Archives: Minnesota

It’s not news when the train doesn’t wreck

With the central element of the Affordable Care Act (ACA) — the health care exchanges — slated to go online in October, there’s been a lot of concern about how these exchanges will be implemented.  17 states (including Minnesota) have elected to build their own exchanges, 27 states are defaulting to the federal exchange, and seven states are doing a hybrid model based on the federal exchange.

Opponents of the law, naturally are going all gloom-and-doom on the implications (even going so far as to take a quote by Democratic Senator Max Baucus where he worried about a “train wreck” out of context to further their cause).

But what if it doesn’t turn out to be a train wreck after all?  There have been some interesting developments in recent weeks that lead one to believe that strong, proactive management of exchanges by states can lead to positive results.

In Maryland, the largest insurer in that state (Care First) proposed a shocking 25% increase in premiums for 2014, which was widely cited as a troubling statistic for the ACA.  But nearly every other insurer in the state has proposed premium increases below 10%.  Care First either stands to lose a significant amount of market share, or they’re going to have to lower their rates.

In California, meanwhile, proposed premiums on their health care exchange have come in significantly lower than predicted.  2009 Congressional Budget Office projections anticipated that a “silver” plan (one that covers 70% of expected health care costs) would have a yearly premium of $5,200, while an actuarial firm projected an annual premium of $5,400.  When the actual prices were released yesterday, the actual average yearly premium for a “silver” plan is going to be about $3,300, or 35% lower than the CBO projection.

Oregon’s health care exchange is seeing similar patterns to Maryland.  After releasing the costs for all of the plans that will be on its exchange earlier this month, two large insurers have asked to come back and lower their prices after discovering that some competitors were pricing the same coverage for less than half the cost.

Meanwhile, we’ve seen evidence that health care inflation has been slowing substantially.  Provisions of the ACA have contributed to this trend and further policies, such as increased use of competitive bidding for Medicare-paid medical equipment slated to roll out between now and 2016, should only continue it.

These sorts of things should provide us here in Minnesota with hope that our health exchange — named MNSure — will be able to deliver coverage to citizens at a reasonable cost.  Minnesota has always worked hard to give our citizens access to health care and that should only get better under the ACA.

From a political perspective, we too should also remember that what voters tend to value about these sorts of programs is the real-world impacts on their lives.  Opponents of Medicare thought that implementation problems (that did happen) would end up undermining the program and resulting in its repeal.  Opponents of Medicare Part D thought the same thing.  In both cases, what opponents of those programs discovered is that voters ultimately liked the fact that they were guaranteed health care as a senior citizen and that they liked programs that helped them pay less for their prescriptions.  Outright repeal of these programs today is essentially unthinkable.

Ultimately, I think we’ll find the fact that the ACA ensures that you’re always going to have access to our health care system in a reasonably affordable way is going to outweigh any implementation problems at the beginning of the program. In fact, if states that are actively managing their exchanges end up producing better results, it may become a political liability for states that have chosen to actively fight implementation of the law.  After all, if dysfunctional California can build a working exchange with lower-than-expected health insurance premiums, why can’t Texas?

[Image courtesy of the Alexandria Echo Press, is of a 1904 train wreck in Osakis.]

Stadium bill passes final hurdle in Senate; Ortman votes no

The Minnesota Senate approved the proposal to build a new stadium for the Minnesota Vikings today by a vote of 36-30.  Carver County’s State Senator, Julianne Ortman, voted no on the proposal.   This was the final legislative hurdle for the bill, and the final action taken by the Legislature this session.  Both houses have adjourned, and the 2012 campaign is underway.

Governor Mark Dayton may sign the bill as soon as this afternoon.  Various reports indicate that team owner Zygi Wilf is en route to the state.

Senate passes stadium bill; Ortman votes no

The Minnesota Senate approved a proposal to build a new stadium for the Minnesota Vikings last night by a vote of 38-28.  Carver County’s State Senator, Julianne Ortman, voted no on the proposal.  22 of the 38 yes votes came from the DFL minority, while only 16 of the 37 GOP Senators voted in favor of the bill.

As with the House bill, dozens of amendments were debated.  Key differences between the House bill and Senate bill include:

  • The team contribution:  the House bill calls for a team contribution of $532 million, the Senate bill calls for a $452 million contribution.  Both of these amounts are higher than the $427 million the team has pledged, and the team has not indicated publicly a willingness to go beyond that amount.
  • Financing the state contribution:  The Senate bill includes some user fees in addition to electronic pulltabs used in the House bill.  These user fees are a 10% fee on sale or rental of suites in the new stadium, a 10% fee on parking within one-half mile of the stadium, and a 6.875% fee on the sale of officially licensed merchandise at the stadium.
  • Other provisions include a tax break for expansion of the Mall of America and $2.7 million in annual payments to the City of St. Paul to utilize on sports facilities (either retiring of debt on the Xcel Energy Center or construction of a new St. Paul Saints stadium are the most likely uses)

The bill now moves to a conference committee to hash out the difference between the two bills.  Chaska State Rep. Joe Hoppe is one of the members of the conference committee.  Once a final bill is agreed to by the conference committee, it goes back to the floor of each body, where they will take an up-or-down vote with no amendments allowed.

You can’t always get what you want

Legislative Republicans are mad.  Really mad.  Their top priority for this year’s session fell to Governor Mark Dayton’s veto pen yesterday — their package of business tax cuts.

In fact, here’s what State Senator Julianne Ortman had to say about this yesterday:

“He vetoed our highest priority,” said Ortman said, who also is deputy majority leader. “I think there will be consequences. I think that he has lost the trust of many of my colleagues in the Legislature.”

That may well be true, of course.  The real question is if such anger is justified.

Is it unusual for one side or the other to get shut out on their top priority for a session?  Hardly.  All you have to do is go all the way back to last year — when Gov. Dayton’s top priority was to close the state’s sizable deficit using a balanced package that consisted of about 75% spending cuts and 25% revenue increases.  Did he get that?  No way — the final deal instead borrowed from our schools and sold out future tobacco settlement revenues.

Yet, despite that, Dayton has worked with Republicans and agreed to compromise on some significant issues — including permitting and health and human services reforms.  Dayton has also indicated willingness to sign some elements of the Republicans’ tax bill into law.

That’s the nature of divided government.  Your top priority is probably going to be real low on the other side’s list.  But the job description isn’t to punt when the top priority is off-the-table.  Real leaders double down their efforts in those times and do the best they can for their party and their state.  Too many Republicans seem content at this point to walk away with nothing — no tax bill, no bonding bill, and no Vikings stadium.  Minnesotans should expect better.

Zellers tosses in the towel [UPDATED]

Well, that was faster than expected.  Today, legislative Republicans gave up on their last-minute, no-chance plan to fund a portion of a new Minnesota Vikings stadium and scheduled a vote on the existing stadium proposal in the Minnesota House on Monday.

But even more than the horribly flawed new GOP plan died today.  The curtain was pulled back all the way — finally — on the failed leadership of House Speaker Kurt Zellers.  Zellers revealed — finally — that he was opposed to the Vikings stadium and wouldn’t lift a finger to support the package.  After months of bland platitudes and evasion, Zellers finally has revealed his true intentions.   More than that, though, Zellers revealed his complete unwillingess to work within the parameters of his own job as the leader of the House majority.

“We have difference of opinions & priorities. Voters picked a DFL Governor and a GOP legislature. Voters got what they asked for.”  — Speaker of the House Kurt Zellers

Minnesota has had divided government since 1990.  No one party has controlled the governor’s mansion and both houses of the Legislature since Rudy Perpich was Governor.  Never has the level of dysfunction in St. Paul been so high.  Yes, both parties share blame for this situation, it is incumbent on the key leaders — Zellers, Republican Senate Majority Leader David Senjem, and Governor Mark Dayton to do what it takes to make the state government function on behalf of its citizens (and all of them at times have failed in that role).  By obfuscating, playing political games, and then tossing in the towel when the situation got too hot to handle, Zellers has proven himself to be uniquely overmatched for his job as Speaker.

If the stadium vote fails Monday, Zellers will have rightfully earned his place as the primary goat in this fiasco.  More than that, he will have provided Exhibit A in the DFL case to retake the Legislature.

[UPDATE]:  Give Zellers credit for having the guts to go on KFAN with Dan Barreiro this afternoon.  Don’t give him credit for what he’s saying, though.  What a mess, including this gem:  “I want to see it pass. I won’t vote for it, but I want it to pass.”  More to come later.

[UPDATE #2]:  You can listen to the Barreiro-Zellers interview here.

The big takeaway, other than often frequent incoherence of what Zellers was saying as best demonstrated by the quote above, was the reality that the next phase of “kill the bill without looking like we’re killing it” strategy is to demand that Gov. Dayton sign the legislative tax bill in order garner the necessary Republican votes for the stadium.  Zellers did his best to hide this element of the strategy, but the gig was up at the end of the interview when Barreiro finally got him to admit that the one thing Dayton could do to earn GOP votes would be to sign the tax bill.  That’s why the vote on the stadium isn’t until Monday — to allow more time for negotiating and application of political pressure.

Shaky foundation for new Vikings stadium?

Friday afternoon, the text of the bill detailing the proposal for the new Minnesota Vikings stadium was released.  The bill fits the outlines of the deal announced by Governor Mark Dayton, Minneapolis Mayor R.T. Rybak and Vikings owner Zygi Wilf on March 1.

Construction costs of the new facility, which would be built just to the east of the Metrodome, total $975 million dollars.  The Vikings and other private sources would put up $427 million, the state would contribute $398 million, and the city of Minneapolis would chip in the remaining $150 million.

Minneapolis’s contribution would be paid for by redirecting the revenue from existing taxes in place to support the Minneapolis Convention Center (a 0.5% sales tax, downtown restaurant and liquor taxes, and a lodging tax).  The Vikings share would include stadium naming rights as well as expected assistance from the National Football League.

The state’s portion is where things get tricky.  Gov. Dayton has promised “no general fund dollars” will go to the stadium (more on this below).  The entire $398 million is projected to be paid for by appropriation bonds backed by revenues from electronic charitable gaming, primarily electronic pulltabs and bingo.  In order to support the $398 million principle and interest over the next 30 years, the state would need to make annual payments of about $40 million.

Last year, charitable gaming (which is 90% paper pulltabs, with the rest split among bingo, paddlewheels, tipboards and raffles) generated about $38 million in revenue for the state.  The state Revenue Department projects that the electronic gaming will generate about $62 million per year, leaving a $22 million cushion.  No problems, right?

Maybe not.  Critics have pointed out several potential problems that may need to be addressed.

Problem #1:  No state currently uses electronic pulltabs to the extent being proposed here in Minnesota, so there’s no history anywhere to pull from.  Idaho and Florida have limited use of such games, which limits the ability to extrapolate from their results.  Virginia is planning to rollout electronic pulltabs and bingo later this year, but that too will be on a more limited basis than what is proposed here.

Problem #2:  Existing forms of charitable gambling are in the midst of a serious decade-long drop in revenues.  In fact, gross revenues have dropped 31% over that time and tax revenue to the state has dropped 34%.

Source: Minnesota Gaming Control Board

Problem #3:  charitable gaming advocates say Revenue Department projections are widely out of line.  Because of the issue in Problem #1, some feel that the assumptions used by the Revenue Department are not accurate.  For instance, here’s an example cited by King Wilson, Executive Director of Allied Charities of Minnesota, in MinnPost:

Take Apple Valley American Legion Post 1776. It has only one site, its clubhouse, and previous legislative proposals have limited each site to a maximum of 12 pull-tab and bingo machines.  Revenue from pull-tabs has been estimated to produce $225 a day, bingo $90.

“If you multiply each of those by 12 machines and 365 days a year, you get $1.4 million,” says Wilson. The Department of Revenue, however, says that Apple Valley’s revenues will rise by nearly $6 million.

Not to mention that the estimates rely on increased availability of the electronic games.  Currently available in about 2,700 locations across the state, revenue estimates indicate that the electronic games may be available in up to 4,000 locations.  But some say that may not be the case because of the increased up-front cost of the machines.

Charities currently pay about 1.2 cents per paper pulltab in expenses, but they would be on the hook for leasing costs of $100-125 per month per machine with the electronic systems (the equivalent of about 10,000 paper pulltabs).  Increased costs for charities may translate into lower payouts for gamblers.  Lower payouts for gamblers translates into fewer gamblers, which lowers revenues — starting a vicious cycle that makes gaming unprofitable for the charity and reduces tax revenues available to the state to pay for the new stadium.

So where does all of this leave us?

The whole process has been distasteful, to say the least.  And, owners of professional sports franchises are not the most sympathetic group of characters in the world.  Certainly, one can fairly argue that as a state, we shouldn’t even be in the business of building stadiums and we should thank the Vikings for the memories and let them move along to their next destination.

Personally, I don’t fall into that camp.  I believe that professional sports are part of the fabric of life in a metropolitan area like the Twin Cities and that these facilities are part of the infrastructure of an area with over 3 million people.  It’s important to structure the deal in a way that protects the public investment and doesn’t unduly subsidize wealthy team owners.  We’ve done this before with Xcel Energy Center and Target Field.  We can do it again here.

Let’s take a step back for a moment to Gov. Dayton’s claim that the stadium isn’t paid for by general fund dollars.  Well, that’s just not true.  Today, all charitable gaming revenue flows into the state’s general fund, and nothing changes under this bill.  The appropriation bonds issued by the state are different than general obligation bonds, in that appropriation bonds are not mandated to be paid out of the general fund should gaming revenue not be sufficient.  The state can elect whether or not to appropriate money to pay the bondholders every year.  However, the consequences of default for the state (even on an appropriation bond) are so severe that it effectively means that the state’s portion of the stadium is being backed by general fund dollars.

Well, if that’s the case then I think the Legislature has some work to do here to firm up the revenue source that backs the state’s investment in such a facility.  At the very least, the bill should contain a fallback measure that is triggered if gaming revenue falls short of the level required to cover the state’s contribution — my thought would be a ticket tax levied on events in the new stadium until the shortfall is recovered.  Perhaps even better would be a broader expansion of gambling to racinos at Canterbury Park and Running Aces or a Block E casino.

This state can’t afford to have critical investments in education, health care, public safety and transportation jeopardized by uncertainty about electronic pulltab revenues.  The Legislature needs to provide additional certainty around how the state portion of the stadium’s construction tab will be paid before voting to approve it.

Let’s hope that our legislative delegation steps up to the plate and makes constructive changes to the bill.  Rep. Joe Hoppe is the chair of the Commerce Committee in the House, which will almost certainly hold hearings on the bill.  Hoppe has also spent time as part of the legislative working group on this issue, so he should be well-positioned to steer this bill in the right direction.

Keeping the state on track

I wrote this column, which appeared in the February 9 editions of the Chanhassen Villager and the Chaska Herald.

Many observers hoped that this year’s legislative session would be quick and non-controversial. After all, the state has a projected budget surplus, meaning that there will be no repeat of last year’s lengthy budget standoff that resulted in a state government shutdown. Those observers felt that legislators – who are waiting anxiously for the new redistricting maps to be released later this month – would prefer to keep their head down, get some work done, and then focus on their re-election campaigns. 

Not only that, but they pointed to the election of Republican State Sen. David Senjem as the new majority leader as a sign that things would be less acrimonious. Senjem is a Senate veteran who was widely hailed as a conciliatory voice during his previous tenure as minority leader for Republicans. 

It took less than a day for those hopes to be shattered. Senjem and his leadership team (including Chanhassen State Sen. Julianne Ortman) delivered what was perceived by DFLers as a sharp partisan blow – forcing a cut in DFL staff budgets of over $400, 000 while not reducing Republican staff dollars at all in an effort to close a $2.5 million budget gap for the State Senate. This prompted a stinging, sharply worded rebuke from DFL minority leader Tom Bakk over both the cuts themselves and the process that led to them in the first place.

Ortman was also in the middle of the second major partisan controversy of the session – the party-line vote by Republican senators to remove former State Sen. Ellen Anderson as the chair of the Public Utilities Commission (PUC).

Anderson was a well-known environmental advocate when she was nominated by Gov. Mark Dayton last spring. However, her nearly oneyear long tenure on the PUC was not controversial. In 221 votes that Anderson participated in, the fivemember board (consisting of two DFLers and 3 Republicans), returned unanimous decisions 205 times. Of the remaining 16 votes, Anderson found herself in the minority only six times. 

Republicans, meanwhile, pointed to Anderson’s Senate record for evidence supporting their vote, noting her authorship of a bill that gave the state a target of reducing greenhouse gas emissions by 80 percent by 2050. They failed to note, however, that the bill passed on a bipartisan basis and was signed by Republican Gov. Tim Pawlenty. 

Dayton’s response to the Anderson “firing” was intense and personal. In his fiery response, Dayton targeted Ortman (who was just one of two Republican Senators to speak on the floor of the Senate in favor removing Anderson) with pointed rhetoric and some incorrect facts. 

There seemed to be little doubt in many minds – even though it went unsaid by those involved – that the Anderson decision was in part payback for DFL rejections of two Pawlenty appointees. 

So are we doomed to two more months of this nonsense? Let’s hope not – and we can do much as citizens to make sure that we get a session that is productive despite the partisan divisions that paralyze St. Paul far too often. 

First, we should insist that legislators get together quickly on the main deliverable of this year’s session:a bonding bill. Gov. Dayton has released a $775 million proposal that is a mix of infrastructure and support for local projects. Legislative Republicans have yet to release their planned bonding bill, only saying that do not plan on spending more than $500 million and they favor a higher infrastructure component than Dayton. 

Both parties have valid points here. Dayton has the size of the bill correct, as it equals the average bonding investment over the last decade. With interest rates low and the construction industry looking for a boost, this is exactly the right time to invest in our state’s longterm priorities. 

Meanwhile, Republicans are correct that there should be a stronger infrastructure component to the bill. We have crumbling roads and bridges around this state that should be addressed in a more significant fashion. Some local projects specified by Dayton, such as improvements to Nicollet Mall or building a new St. Paul Saints stadium, should wait. 

Second, we can demand that legislators seriously tackle governmental reform that has been left outstanding for too long. 

Included as part of this agenda would be developing a statute that would defuse much of the harm of failure to reach a budget agreement by the end of the fiscal year, freeing local governments and school districts from certain state mandates, consolidating backoffice functions and purchasing across state agencies to maximize efficiencies, and eliminating loopholes in transparency laws that allow legislators to shield some of their income from disclosure. 

Finally, we should expect that politicians on both sides of the aisle to grow up and stop the ridiculous tit-for-tat that passes for discourse in St. Paul. It doesn’t matter who did it first, who did it last, or who did it worst.

We should have higher standards for those who represent us. The decisions they make have real impacts on real people. If a politician is more interested in partisan games than doing the people’s business, it’s up to us to send them home in November.

GOP Legislature is not popular; Dayton at 50% approval

KSTP-TV and SurveyUSA released results of their latest survey tracking approval of Governor Mark Dayton and the GOP-controlled State Legislature last night.

Dayton fares significantly better than his legislative counterparts.  Dayton’s overall approval rating is at 50% (73% among DFLers, 42% among Independents, and 26% from Republicans).

The GOP-controlled State Legislature is at 17% for an overall approval rating (30% from Republicans, 16% from Democrats, and 11% from Independents).   Of particular concern to Republicans should be that last number — the legislature is faring worse among Independents than Democrats, which may mean that Republicans are in for a tough fight to retain their legislative majorities.

WCCO: Koch Allegedly Had Inappropriate Relationship With Staffer, Plus Other GOP Bad News [UPDATED]

WCCO’s Pat Kessler is reporting that Minnesota Senate Majority Leader Amy Koch resigned her post Thursday after she was confronted by GOP Senate leaders about allegations of an inappropriate relationship with a Senate staffer, according to high level State Capitol sources.

This would be a sad ending to the story, if true.  Although I can’t say I agreed with Senator Koch on many issues, she was a capable leader of the Senate Caucus and seemingly had built a strong relationship with Governor Mark Dayton.

[UPDATE, 2:55 Friday]:  Headline updated to reflect the fact that the relationship is alleged at this point.

An interesting note from the WCCO story is that four Senators apparently confronted Koch on Wednesday.  One has to wonder if Chanhassen’s Julianne Ortman was one of them.  Ortman, as chair of the Tax Committee was an important leader in the caucus.

[UPDATE #2, 3:10 p.m.]:  At a Capitol press conference, it is reported that the four Senators in the meeting with Koch were Sen. Geoff Michel, Sen. David Hann, Sen. David Senjem, and Sen. Chris Gerlach.  Gerlach says Koch did not admit or deny the relationship.

[UPDATE #3, 3:30 p.m.]:  Michel reports that the staffer allegedly involved is a direct report.

Also, it’s interesting to note the very real divergence between what was said yesterday and what was being said today.  Even though Sen. Hann was in the meeting with Koch on Wednesday, he said yesterday that the resignation was a “total surprise”, even though the four Senators in the meeting all reported today that Koch brought the topic up.

Koch, as well, chose to provide a spinned account of events as well, saying that there was no hidden agenda behind her decision.  But, I guess that’s not really a surprise — that’s the pattern for politicians of all stripes who get caught in this sort of thing.

[UPDATE #4, 4:00 p.m.]:  The rough day for the GOP gets rougher.  Party Chair candidate Brandon Sawalich was arrested yesterday for having a vehicle with expired tabs.  Today, he withdrew from the race after it was revealed the AP was pursuing allegations of a sexual harrassment claim that Sawalich settled in 2003.

Meanwhile, U.S. Senate candidate Joe Arwood revealed he was convicted in 2005 of attempting to go through airport security with a loaded handgun.

And, State Senator Mike Parry is planning a press conference later this hour.  Parry is running for the U.S House in District 1 and his campaign manager is Michael Brodkorb, who also works as the Executive Assistant to the Senate GOP Majority Caucus.

[UPDATE #5, 6:20 p.m.]:  Sen. Parry canceled his press conference.

[UPDATE #6, 9:15 p.m.]:  MPR is reporting that Michael Brodkorb is no longer employed by the GOP Senate Caucus.

[UPDATE #7, Saturday 3:40 p.m.]:  Brodkorb has left the Parry campaign, per the Pioneer Press.

Taking the health care exchange for a test drive

One of the primary elements of the federal health care reform passed in 2010 was the establishment of health care exchanges — marketplaces designed to facilitate the purchase of health insurance for individuals and small businesses.  In real terms, individuals will interface with the exchange through a website.  People who are eligible for subsidies or credits through existing law or provisions of the health care reform bill will have those subsidies or credits built into their profiles and will have those automatically included in their premium calculations.

Under the terms of the health care reform bill, states are supposed to have their exchanges up and running by January 1, 2013 with policies purchases on the exchange effective beginning January 1, 2014.  The state of Minnesota received federal grant money this year to begin planning and development of its exchange.

The first fruits of that grant money are now available for viewing on the Commerce Department’s website.  The state is working with five private partners to design and build the exchange, and those partners have presented exchange prototypes that you can go out, view, and interact with.  There’s no personal data on the website, but it’s interesting to go in and try out different options.

For instance, here’s a shot from the Deloitte Individual Enrollment module, showing some 33 health insurance options for the data I entered:

The idea, obviously, is to try and take a complex subject like health insurance and simplify the process so that it’s easy for everyone to evaluate and purchase the right policy for them and their family.  After looking through the different modules, citizens are encouraged to give their feedback via an online survey.

Whether you supported the health care reform bill or not, it’s important that the pieces of it that are implemented are done well.  Creating our own state exchange, too, keeps Minnesotans out of a federal exchange system and enables us to address health concerns in a state-specific way.  And even if the entire bill were to be found unconstitutional, one could argue that the creation of such an exchange might be worthwhile anyway.  Utah, perhaps the reddest of the “red” states, has been enrolling citizens in health insurance via an exchange since 2009.

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