Last month we detailed how the recent state and national elections reshape the environmental debate at the Minnesota Legislature. We got another hint earlier this week, when the state released its annual budget forecast.
With elections in the books and a revised state budget forecast, it’s time for us to look ahead to the 2021 legislative session in Minnesota.
Lay of the land
Here’s a very brief sketch of the dynamics at play as the 2021 session begins.
- Split Legislature
Minnesota again boasts the only mixed state Legislature in the nation. Whether and how the two parties are able to agree on legislation will greatly influence the session outcome.
- Budget year
Minnesota is in the first year of its biennial cycle, during which the Legislature must pass a two-year budget.
- A looming deficit
As lawmakers hash out what makes it into that budget, they'll have to contend with a projected deficit of more than $1 billion. More on that below.
Whether, how and when we are able to effectively address the pandemic will influence nearly every legislative discussion this session.
Environmental policy outlook and FMR's 2021 legislative priorities
With recent elections leaving Minnesota with split partisan control, several policy and funding items with implications for the Mississippi River will remain on the front burner for us this session, while more ambitious ideas are likely off the table.
Here are our top four priorities for the 2021 legislative session.
1) Fully fund Forever Green
Our flagship issue this year, we are asking for full funding ($10 million) for the University of Minnesota's Forever Green Initiative and Forever Green Partnership, a program that is developing economically viable conservation crops (perennial crops and winter cover crops) that are good for wildlife, water and farmers.
2) Safeguard the Environment and Natural Resources Trust Fund
Minnesota voters approved a constitutional amendment to dedicate a portion of lottery proceeds to the Environment and Natural Resources Trust Fund specifically "for the public purpose of protection, conservation, preservation, and enhancement of the state's air, water, land, fish, wildlife, and other natural resources." Since its inception, we've invested over $700 million in trust fund dollars in more than 1,700 research and restoration projects statewide.
We will be advocating for the passage of an appropriation package that includes both the 2021 fund allocation and the 2020 bill that was never passed into law. Further, we will defend the fund against the kinds of raids attempted in 2018 and 2019.
3) Policy defense
We will remain vigilant in defending against rollbacks to existing environmental protections, similar to those advanced in the Minnesota Senate in 2019.
4) Sustainable Soil and Water Conservation Districts
Minnesota is home to 88 Soil and Water Conservation Districts (SWCDs) staffed by frontline conservation professionals. Unfortunately, state funding for SWCDs is inconsistent at best. It’s time for Minnesota to find stable, reliable and fair funding for our state's premier frontline conservation professionals that does not rely on short-term raids of constitutionally protected Clean Water Fund dollars.
Other policy items to watch
FMR will also be keeping a close eye on a handful of issues with significant implications for the health of the Mississippi River. We’ll provide updates and opportunities for advocacy if/when these issues advance, including:
- Bonding bill for supplemental water infrastructure
- Reinstating the MPCA Citizens' Board
- Preventing out-of-state commercial water transfers (The Water Train Issue)
- Prohibitions on lead shot and tackle
- Full bond funding for the Conservation Reserve Enhancement Program
- Statewide lead service line replacement plan
The 2021 state budget outlook looks ... better than we thought
The Minnesota Management and Budget (MMB) November budget forecast looked at future spending and anticipated revenues for the remainder of this budget biennium (through June 30th) as well as the next biennium. The forecast has some important implications for the upcoming legislative session.
- The good news: a current surplus. The MMB estimates the state will have a modest surplus of $641 million for the remainder of this fiscal year (FY) that ends on June 30. That is much lower than previous estimates. While the Legislature is not obligated to spend any of it (and could simply allow it to roll over to the following biennium), they are likely to pursue some immediate short-term investments to stabilize our economy, address the COVID-19 pandemic, and possibly invest in environmental initiatives.
- The bad news: a looming deficit. While the remainder of the current biennial budget looks good, the MMB forecasts a deficit of $1.273 billion for the FY22-23 biennium, which begins July 1, 2021. This is a much better outlook than the May MMB forecast that projected a $4.53 billion deficit for FY22-23. But … it’s still a billion-dollar budget hole.
As the Legislature is legally required to pass a two-year budget during the 2021 legislative session, this is a financial issue that lawmakers will be forced to grapple with during the upcoming session.
What this means for the 2021 legislative session
Short answer: It’s too soon to say for several reasons:
- The budget forecast will get an update in February 2021, greatly influencing spending decisions.
- Federal economic relief packages may provide enough to close the budget gap.
- A successful (or unsuccessful) national vaccine delivery program could change our economic outlook dramatically.
- It is still 2020; if we’ve learned anything, it’s that a lot can change in a short period of time.
However, we have a much better sense of the dynamics that will drive the budget conversation next year. Here’s a summary of the "big three" environmental funding sources and what we can expect in the next biennium:
- State general fund: Minnesota’s general fund spending on the environment is just 0.7% of the state’s budget, making it a difficult place to look for the kind of budget cuts the state will be forced to consider. Still, any major new environmental funding initiatives in the next biennium are unlikely. We expect the House to either hold steady or make modest cuts to environmental programs, while the Senate will likely propose massive cuts similar to those they offered in 2019.
- The Environment and Natural Resources Trust Fund: This fund (made from lottery money for the environment) utilizes investment returns from the state’s existing Environmental Trust Fund, which is expected to produce more than $60 million for the environment in each of the next two years. Because the fund is the product of investment revenues (and is replenished through lottery money), this current budget dilemma has little impact. That said, the Legislature’s inability to actually pass an environment trust fund appropriations bill was a major disappointment last year.
- Legacy Amendment Funds: Legacy funds are derived from a 2008 statewide referendum that dedicated sales tax revenue to the environmental and arts through 2034. Overall, this is a bright spot as sales have bounced back stronger than other areas of the economy. The MMB actually estimates that sales tax revenue for this biennium will come in at $808 million higher than the May estimate, $1.079 billion higher for FY22-23. As a result, we are now hopeful that Legacy Funds will avoid major declines and remain close to stable.
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Keep up to date
We write regular updates about key environment and water quality issues on our Water and Legislative Updates blog, shared on social (Facebook and Twitter) and our twice-monthly e-newsletter, Mississippi Messages.