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Legislative Recap

By Buck Humphrey, Pharmacy Advocacy Task Force Lobbyist

At the end of the 2017 session of the Minnesota Legislature, Gov. Mark Dayton once again demonstrated the political shrewdness of his legislative operation along with his disdain for legislative leaders. Facing both a constitutional and self-imposed deadline to sign or veto the budget bills passed in both the Regular and Special Session, the governor held a press conference on Tuesday, May 30, to announce his decision on the budget bills and an outstanding policy issue. Several issues of concern to pharmacy were affected by the Legislature’s and the governor’s actions.

The governor decided he would sign the budget bills totaling more than $46 billion for the next biennium. Many of his progressive allies were urging him to veto the entire budget and start over again in negotiations with the GOP Legislature. The governor wisely realized the deal he had in hand was likely better than anything he could possibly accomplish in yet another Special Session. The governor also recalled the 20-day government shutdown in 2011, when he was unable to reach a budget agreement with the GOP-controlled legislature. In 2011, the governor ended the stalemate by caving to GOP demands to not raise taxes to address a $5 billion deficit. This year should have been much easier for compromise with a $1.6 billion surplus.

The governor also announced he would allow the GOP Omnibus Tax Bill to become law without his signature; however, after consulting with Minnesota’s attorney general, he signed the tax bill. The tax bill provides nearly $650 million in tax cuts. The bill provides tax cuts to seniors and students — and among other reforms, eliminates the automatic escalator on tobacco and commercial industrial property taxes. The governor wanted to veto the legislation. However, legislative leaders (who felt burned by the governor’s veto of the tax bill in 2016) inserted a provision in the Omnibus State Government Finance bill voiding funding for the Department of Revenue if the tax bill failed to become law.

While the governor is provided the option of allowing a bill to become law without his signature during the first year of a two-year session, bills passed in a Special Session that adjourns “Sine Die” do not come with the same options. The governor’s legal team originally suggested because the bill passed within three days of adjournment of the Regular Session, the Special Session rules did not apply.

In response to the legislative “poison-pill” included in the tax bill, the governor line-item vetoed the budget for the Minnesota Legislature. In his nearly three-page Governor’s Letter to Leaders, read at his press event, Dayton suggested he would call the legislature back for another Special Session to restore their funding. However, he would only do so once they agreed to remove items, according to legislative leaders, agreed to during the final budget negotiations. Those demands included the removal of the repeal of the automatic inflators on tobacco and property taxes, reforms to the Estate Tax and the adjustment of the tax on premium cigars. The governor also demanded changes to language he had agreed to regarding teacher licensing and limiting access to driver’s licenses for illegal immigrants.

Republican legislative leaders have stated they have no intention to re-start any budget negotiations with the Dayton Administration. They sued the governor over his decision to line-item their budget for the next two years. A Ramsey County District Court judge ruled in favor of the Legislature on July 19, but Gov. Dayton has appealed the ruling to the Minnesota Supreme Court.

Health Care and Pharmacy Provisions

The HHS Omnibus bill signed by the governor includes the opioid bottle warning label mandate language. The bill contains the revised language that is acceptable to the Minnesota pharmacy community. The original vetoed HHS omnibus bill (SF800) language contained provisions that included the CMS compliance/pharmacists reimbursement (increase) language; however, in final negotiations the legislature had to come up with an additional $400+ million in additional HHS budget savings. While much of the needed savings was taken from the Medical Insurance Action funding that funds MinnesotaCare, the legislature needed additional savings from its originally passed/vetoed HHS budget bill. One casualty was the CMS reimbursement provisions that had been scored at a $7 million expense for the biennium. We will work hard next year to see that these provisions are adopted and funding appropriated.

Provisions that survived the negotiation process and were signed into law included the reimbursement of injectables through PBM language, a scaled-down opioid abuse reduction grants provision and the 4-day maximum opiate prescription mandate. Additionally, the legislature adopted and the governor signed the Biosimilars bill, SF1184 and HF712. The statute puts Minnesota in compliance with similar laws across the U.S.

Pre-emption

While much recent news from the governor dealt with the budget, the Gov. Dayton also announced his decision to veto the Uniform State Labor Standards Act, also known as pre-emption. The legislation was a GOP and business community legislative priority. Supporters of the legislation hoped the decision to combine the proposal with several Dayton Administration legislative priorities would convince the governor to sign the bill. The legislative package included the governor’s proposals for paid parental leave for state employees, the ratification of an outstanding contract, a version of the governor’s wage theft proposal and much-needed reforms to Minnesota’s public employee pension system. The governor’s veto of the legislation demonstrates the influence Minnesota’s labor unions have over the Dayton Administration.

The veto also means the Minneapolis and St. Paul Paid Sick Leave Ordinances went into effect on July 1, 2017. Those ordinances will create numerous challenges to Minnesota employers. The fact that the two cities were unable to pass identical ordinances means employers with employees in both cities will need to create and manage separate benefit programs.

If other Minnesota cities move ahead with their own ordinances, Minnesota will become a patchwork of local labor laws. Minnesota employers continue to hold out hope the courts will throw out the Minneapolis ordinance. Legal arguments in the Minneapolis case are scheduled for later this summer. In the meantime, the Minneapolis City Council directed their staff to prepare an ordinance to create a $15/hour minimum wage for businesses with employees working in the city.

Adding more fuel to constitutional questions regarding the governor’s actions, the Dayton Administration is also arguing the legislature approved the contract and benefit provisions included with the pre-emption proposal. The administration is suggesting the mere fact they were included in legislation adopted by both the House and Senate is enough, regardless of whether the governor signed or vetoed the bill with the provisions. This decision by the governor will also likely face a constitutional challenge in the courts. The decision could create a situation where future labor agreements could be passed by the legislature when opposed by an administration. The decision could eliminate the role the administration plays in negotiating future labor agreements. While the decision by the Dayton Administration clearly benefits labor this time, future contracts could be at risk if they were dealt with in a comparable manner.

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