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Minnesota legislators begin work with propane aid, tax talk cut

ST . PAUL — Providing financial aid to Minnesotans struggling to pay heating bills in this polar vortex of a winter came first as the state Legislature launched its 2014 session Tuesday, with work also beginning on an effort to cut $600 million in taxes.

The session’s opening day brought hundreds to rally in favor of a Democratic plan to raise the state minimum wage to $9.50 an hour. The House and Senate acted Tuesday to restart negotiations on raising the wage from the current $6.15 after their efforts failed last year.

Less than an hour into the 2014 session, the House voted 133-0 to provide a $20 million heating aid boost. Rural lawmakers stood one after another saying their constituents are hurting as temperatures have remained bitterly cold for most of the year.

The Rep. Joe Radinovich, D-Crosby, bill adds funds to an existing state-federal program that gives low-income people help paying for heat.

“Without this legislation, this critical program will run out of funding in early March,” Radinovich said. “As another round of extreme cold hits the state, we need to make sure that every Minnesotan can heat their home and can get assistance if they need it.”

In a rare move, the House suspended its rules so the heating aid could be approved on the first day.

“Minnesotans have been put in a difficult position because of the spike in propane prices,” Radinovich said.

The fuel price that last fall was $1.60 a gallon spiked at $6.67, Commerce Commissioner Mike Rothman said in a Tuesday committee hearing. Prices now are about $3.89.

“The supply issue has eased and stabilized,” he said, even with higher-than-normal prices.

The propane crisis, as state officials call it, comes because extra propane was needed to dry wet crops last fall, followed by bitterly cold weather caused by a polar vortex weather pattern. Also, a pipeline bringing propane to the state was down for a time.

Today’s action would do nothing to keep prices down next year, Rothman said in response to a question by Rep. Bud Nornes, R-Fergus Falls. However, there is talk about lawmakers finding ways to encourage more propane storage in Minnesota.

Agreement was unanimous on the emergency funding (Rep. Mary Franson, R-Alexandria, was absent), and many agreed that the real issue will be making sure a propane crisis does not happen again.

Rep. Pat Garofalo, R-Farmington, said his concern is that weather during the legislative session will warm up, prices will fall and legislators will forget the long-term needs to deal with propane.

Garofalo said that legislators need to find a way to provide incentives to increase propane storage in Minnesota and encourage people to move away from propane and to natural gas.

He compared the propane prices to a motorist forced to pay $14 a gallon for gasoline.

A House energy committee will look into further actions next week, centering on ways to get more propane storage in Minnesota instead bringing it in by rail or highways from places like Kansas and Texas during cold months.

A pipeline that has supplied 40 percent of Minnesota’s propane will stop transporting the fuel in April.

The Senate probably will take action on Radinovich’s bill early next week.

Also on the first day of session, the House Taxes Committee discussed two-dozen bills, mostly dealing with eliminating some taxes placed on businesses last year.

Rep. Tim Kelly, R-Red Wing, said that no one liked one of those provisions, adding a tax to warehouse storage, when the Democrat-controlled Legislature passed it last year.

“I think it is very unfortunate that we did not do something about this back in May,” Kelly said, adding that the state has missed out on businesses and taxes they pay for nine months because of the threat that this tax will begin in another month.

Opponents of the tax said it is making Iowa, Wisconsin and other nearby states more attractive places for businesses to store goods.

Warehouse owners told the committee that they are facing problems because of the tax.

Gov. Mark Dayton, speaking from home via telephone after hip surgery, said he favors overturning the warehouse and two other taxes enacted last year. That would cut taxes $250 million, he said.

Removing the taxes would help rural Minnesota recover from the recession, Rep. Jay McNamar, D-Elbow Lake, said.

Dayton put a March 14 deadline on wrapping up the tax reversals, to give Minnesotans a chance to know about law changes before tax day on April 15.

The warehouse tax is to begin on April 1. Taxes on farm implement and other repairs already are in force, as are new taxes on some technology sales.

In addition to eliminating some taxes, Dayton and many legislators are behind efforts to make Minnesota’s tax law conform to federal law. The governor said that would bring total tax savings to the state’s residents to $600 million.

Federal conformity would, among other things, eliminate the extra money married Minnesota couples pay in taxes than if they had remained single.

As the tax panel was going through its agenda, hundreds rallied in the Capitol to hear Democrats praise the minimum wage increase proposal.

Legislative leaders say they would like it to pass during the first two weeks of session.

The session must end by May 19.

Most propane users are in rural areas, and their lawmakers from both parties made it clear that helping those who cannot afford the fuel is a top priority.

Rep. Debra Kiel, R-Crookston, said this year’s problems came after farmers needed less than normal amounts of propane the last few years. This year’s crop, however, was wetter than usual and more propane was used to dry grain.

Kiel said propane storage facilities are needed in northwestern Minnesota, near where much of the propane is used.

Rep. Tim Faust, D-Hinckley, said his east-central Minnesota farmers have not used as much propane as usual, but he looked ahead: “We absolutely have to do something to increase capacity.”

Rep. John Ward, D-Baxter, praised the propane aid bill.

“This is a good bill that will help a lot of people in Minnesota,” Ward said.

Rep. Paul Anderson, R-Starbuck, echoed what others said: “What a good way to start the session.”

He agreed that propane talk should not stop after the heating assistance issue is resolved.

“We need to keep working on the issue,” Anderson said. “This is a start to a solution.”

Rep. John Persell, D-Bemidji, said the economy is not doing well, so heating aid is vital. “Food shelves are busier than ever.”

“Propane suppliers in rural northern Minnesota are literally going 24-7 to provide their customer with enough ... to last a week when it is 25 below zero,” Rep. Tom Anzelc, D-Balsam Township, said.

Don Davis
Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.