Taking Uber to the Capitol

Normally, one would think the subject in the title was a delivery vehicle, but it this case it is the entirety of the idea. It is not just a ride in a black SUV from a part-time driver participating in a new industry, and delivering a person to a specific location. No rather, it is the fact; both the House and Senate have drafted legislation seeking to regulate this pioneering industry. They are following Minneapolis in their attempt to define the parameters of an emerging industry and the principal target is Uber.

If you are unfamiliar with what we are talking about, Uber is a service where instead of calling a cab, you have an app on your phone and you call a service which comes to pick you up. You have a credit card on record and the fees are collected directly without the passenger having you fish for their card. Uber as well as Lyft are ride sharing commercial ventures. The problem is in places like Minneapolis, which derives a significant revenue stream from traditional commercial modal transportation, taxis and limos, Uber, Lyft and others do not have the same levels of conformity, nor service. Many argue the non-traditional service is far better, but it has its own share of problems.

The main questions surround insurance liability coverage and this means who pays what and when. When a person is using their own vehicle for commercial purposes, the haters want more requirements, protections and assurances through insurance.

Since Uber is not a universal service in every market they are strategically tackling these regulatory issues in different communities and various state legislatures are also weighing in. In Minneapolis, newly elected Council member Jacob Frey (DFL) go ahead of the issue and hammered out an ordinance which lays our the Mill City response to this new transport system and traditional groups have watched their competitors have to meet lower coverage standards. Prior to Frey’s action Uber was banned from picking up riders in Minneapolis and only allowed to drop them off.

In the attempt to create a level playing field the strict compliance issues are questioned at many turns and show the complexity of the issue. Insurance companies are providing riders to insurance policies and in large part, but the “public protections” are where the officeholders weigh in.

A regular insurance policy is not enough coverage for a commercial venture. This is not your average soccer mom taking a group of kids to practice or is it?

Yesterday, we learned in the House Commerce Committee that Uber is a big deal, in fact it was the first issue on the agenda. They are defending against attempts to encroach on their business practices and surprisingly enough, Republicans are heaping on the language to regulate this industry and the DFL seems to be the group trying to save this entrepreneurial effort.

It’s strange how things evolve.

Now the two sides are discussing what the minimum insurance requirements are. Will it be a million dollar blanket policy or $100,000 per person covered? Uber seeks a homogenized approach, which is consistent with what they are facing in other states and wants Minnesota not to be an outlier. The crux is will the state follow Minneapolis’ lead or head of in its own direction.

There might be a simple answer, which Uber should take from other Minnesota companies. The example being General Mills, which self insures through an off shore company located in the Bahamas named Gold Medal Insurance. By setting up their own insurance company General Mills makes money on the transaction and the dividends paid back to the principal are taxed a a far lower rate.

If Uber set up their own insurance entity in the Bahamas they could insure the company and provide policies to their drivers and the entire operation will be profitable to all parties. The policies would meet the regulatory requirements and Uber drivers would then incorporate their premiums into the cost of doing business.

We will see what the ultimate resolution is. In the House Rep. Chris Swedzinski (R-16A-Ghent) is carrying HF1783 and in the Senate Sen. Kari Dziedzic (DFL-60, Minneapolis) has authored SF1679. Again, Swedzinski is carrying legislation with stronger ties to the insurance industry and Dziedzic has legislation more inline with the Minneapolis City Council ordinance.

Freshman Rep Applebaum Takes One on the Chin

In boxing, the determining factor in a fighter’s career is figuring out if he can take a punch, meaning after taking a shot to the head if he can get up and clear his shake off the cobwebs and perform and this is the situation for freshman Rep Jon Applebaum (DFL-44B, Minnetonka).

Yesterday, Applebaum experienced his first his first rude awakening and that is Republicans do not play nice and when pressed circle their wagons quickly. During a meeting of the House Higher Education Policy and Finance Committee Applebaum present two bills HF820 and HF 1716. The first called for a “Merit based grant program” and the later an “Income tax credit for student loan payments”. Both seems somewhat innocuous, but it is clear the second bill was not seen this way in Republican eyes.

After concise testimony from University of Minnesota-Twin Cities (MSA) President Joelle Stangler, a long winded ramble from Ashely Hall Vice-President of Graduate and Professional Student Assembly (GAPSA) at the U of MN and Minnesota College Student Association (MNCSA) President Kerri Maleski Applebaum fielded questions from his colleagues.

Initially, it was expected the bill would be heard a easily passed on to the Tax Committee, but this was not to be its fate.

During Applebaum’s testimony Rep. Drew Christensen (56B, Burnsville), he too a freshman, a twenty-one year old who stills lives in his parents home, asked if Applebaum’s bill was intended to taken from a person’s tax liability or could result in direct payments from the state to existing loans holders. He also asked if there was a Fiscal note to accompany the bill. We learn from staff this would not require a Fiscal note, but rather a Revenue note, which we occur in the Tax Committee.

Applebaum sought to defend the principle that all student debt was a burden, a detriment to a person’s economic future and sought to remedy this through state assistance. Applebaum appeared to defend the idea of more disposable income for a person would help reinvigorate the economy. Then Rep. Marion O’Neil (R-29B, Maple Lake) asked if Applebaum had considered a limit to the benefit, meaning she has a similar bill and her contained a 5-year limit. Applebaum, had a more freewheeling approach and sought not to limit the bill at this time and just try to foster a discuss in support of the concept.

O’Neil seemed to be telegraphing the punch and informing Applebaum her bill would be more palatable to her Republican colleagues.

Then when the matter came up for a vote Chairman Bud Nornes (R-08A, Fergus Falls) ruled the bill passed on a voice vote and O’Neil piped up and called for a division, effectively superseding the chair. It is worth noting O’Neil has a bit more weight than due her colleagues, because her older brother, Rep. Brian Daniels (R-24B,Fairbault) whom she recruited to run against Rep. Patti Fritz (DFL-Fairbault).

In a show of hands the bill failed on a partisan vote and even Chair Nornes voted against the bill on the prevailing side. This was a surprise since Nornes is a second line signer on the bill. Usually, if something like this were to occur the chair would give the author a heads up. Apparently, that didn’t happen and Nornes, who appeared somewhat befuddled, didn’t give Applebaum that courtesy, but maybe he didn’t expect things turn turn so quickly or dramatically. The Republicans do not seem interested in advancing any issue with an unclear price tag even when it is set to be determined in another committee.

Now the question is will Applebaum take this lying down or get back up and fight?

Divide and Conquer; or So He Thinks

Earlier in the legislative session Sen. David Hann (R-48, Eden Prairie), a man not known for his intellectual prowess, proposed an idea for breaking up the Minneapolis School Board into six different pieces. To reinforce this idea Hann referenced Rep. Carlos Mariani’s (DFL-65B, St Paul), past chair of the Education Policy and Innovation Committee, assertion that the Minneapolis can be a challenge due to its broad diversity and larger geographic region. But, clearly Mariani, was not providing fodder for Hann’s diluted perspective.

Monolithically, Minneapolis is a wasteland for Republicans. Republicans have not held office there in any capacity since the early 1980’s. Recent, history has shown the GOP has utilized lower level offices as breeding grounds for the rise of candidates into higher offices and Hann’s idea is based on the same concept. Granted, rhetorically, he argues this idea is based in an attempt to “help the children” because Minneapolis has a poor graduation rates for minority student and his proposal can help address this concern. Balderdash!

Granted, Minneapolis is the most segregated community in the United States, which comes at such a surprise, here in the liberal land of Minnesota, but this is where the opportunity lies in Hann’s idea.

If the Minneapolis School District were to be broken up into six parts it would be done so regionally and the Northside would be separated from the Southside and the Eastside from the west side and this would result in new six new school boards, which were in need of new school board members. Then South and Southwest Minneapolis, more affluent areas of the city could elect new school board members and from the Republican perspective, hopefully some Republicans in spite of the school boards being non-partisan offices. Then those Republicans could be prepared to run for legislative offices and then higher office.

Seems like a worthwhile plan from a Republican perspective and clearly not an idea conceived of by Senator Hann. Maybe it was thought of by that “mental giant” Bill Walsh Republican Director of Research, the wunderkind who back in the day left the Republican election playbook at a table in a restaurant close to the Capitol. Brilliant!

Raft of Roll Call Votes in the Hous

Historically, votes on bills in legislative committees were mostly procedural. In the past, bills for inclusion in the Omnibus bills from the respective committees were not thought of as major points of contention, nor given much issue of note, but such is not the case any longer. The Minnesota House of Representatives has taken on a complexion similar to that of the US House of Representatives. Every vote cast in committee appears to no longer be thought of a miniscule but rather a point of principle or a defining moment.

On both sides of the aisle, members are calling for roll call votes on, what longtime Capitol observers would consider, some of the most innocuous items. In each instance a member can request a roll call vote, but in previous years this was left for the passage of the final bill or on specific bills thought to be a major departure from the norm, or when a political opportunity arose. Now, this procedure is becoming more the rule than the exception, and it characterizes the hyper partisanship of the Minnesota House in 2015.

Granted, this point is largely inside baseball, but it is clearly evident to anyone with any level of experience and understanding of the legislative process. We had thought this was an a nominal procedure brought about by newly minted chairs of the respective legislative committees, as we had witnessed early on in the legislative session, when Environment and Natural Resources Policy and Finance Chair Rep. Denny McNamara (R-54B, Hastings), called for a roll call vote on the committees’ items for inclusion in the Capital Investment/Bonding Bill, What was seen as a random occurrence is now standard procedure.

Before, when different organization want to “score” votes, which they would later use for inclusion in their literature in the next campaign, members were informed of the pending scoring and they prepared to cast a vote they new would have longer term implications. Today, in the land of social media everything is on record, different persons sit in committee and monitor every action taken and nothing is simple or taken for granted.

Items which had been thought of as pet projects for a particular legislator and given little thought are now serious bones of contention. At times when a member was given wide latitude to propose an idea and the particular committee advanced the bill to another committee are long gone. In this current situation, any issue at any time is of partisan concern and can be utilized for partisan advantage.

This is the standard operating procedure in the most populous body in Minnesota politics.

Is Garofalo Pro-Private Employee Unions?

Rep. Pat Garofalo (R-58B, Farmington) likely surprised some of his fellow Republicans when he put out the following press release, which attempts to capitalize on WI’s pending passage of Right-to-Work legislation. WI Governor Scott Walker (R) a likely candidate for the Republican nomination for President has already said he will sign the bill. Garofalo might want to deploy our twitter hash tag #MNvsWI, which focuses on the similarities and the dramatic differences between the two states.

For the record Garofalo was a member of the majority when House Republicans sought to constitute our states own Right-to-Work legislation in 2011, but he is quick to differentiate between public sector and private sector unionization. Critics might see this as a ploy to court future union votes for Republican candidates.


RELEASE: Minnesota Jobs Committee chair working to bring businesses from Wisconsin to Minnesota

St PAUL, MN—In light of legislation passed by the Wisconsin State Senate and being debated in the Wisconsin State Assembly that would make Wisconsin a “Right To Work” state, Job Growth and Energy Affordability Committee Chairman Rep. Pat Garofalo, R-Farmington, has extended an invitation to two Wisconsin businesses offering assistance relocating their headquarters to Minnesota.

The letters were sent to the owners of Hoffman Construction and Rock Road Companies, Inc., two construction companies who primarily handle road construction projects in the Midwest. Both are union contractors who privately contract with the International Union of Operating Engineers.

“Wisconsin’s Right To Work legislation would negatively impact the private contracts between these companies and the unions they have voluntarily decided to partner with,” Garofalo said. “It’s heavy-handed and the wrong for Wisconsin to inject government into these private contractual relationships that has worked well for private companies for decades.”

Bill Kennedy, owner of Rock Road Companies, Inc. testified in front of a Senate panel late last month in opposition to the Right to Work proposal, and was quoted in the Wisconsin State Journalas saying “This bill will hurt the way I and many of my counterparts do business. We work in partnership with our local unions. […] This process has worked for many decades.” The Milwaukee Journal Sentinel also detailed opposition from James Hoffman, the owner of Hoffman Construction.

“Minnesota’s construction industry is among the most efficient and productive in the nation, and I welcome the opportunity to bring these headquarters to Minnesota,” Garofalo concluded.

Because of the strong similarity between our two states regionally, culturally, and economically, it sets the stage for a worthy comparison. This has been a focus on our line of questions with our state’s political leadership. Additionally, the tenet of Garofalo’s pitch to WI business owners only accentuates an already existing reality. WI is the principal provider of our state’s newest residents. Annually, our state sees about 120,000 new residents migrating from other states. Historically, Minnesota has remained a magnet for in migration from other states in the region mainly due to its persistent economic growth.

The most recent figures gathered through the 2013 American Community Survey shows WI accounts for 13.18% of our states in migration or 17,600.  Normally, is the largest resource of people, but it was surpassed slightly in 2013 by ND with 13.24%, IA accounts for 6.95% and SD 4.50%. Regionally, Illinois provided 6.75% of the state’s newer residents.

(Taken from the Migration/Geographic Mobility website https://www.census.gov/hhes/migration/data/acs/state-to-state.html)

These figures can have far lasting effects when considering populations shifts recorded during the US Census and resulting in Congressional Reapportionment. WI lost a Congressional District seat in 2002 and our two states are growing closer together every year. If the trend continues MN could be only 100,000 less than WI in the 2020 Census. This is significant because

The size of a Congressional District in 2000 was an average 646,952 people. This rose to 710,767 in 2010. During those same periods the WI Population in 2000 was 5,374,000, while MN’s was 4,934,000. Both climbed in 2010 with WI at 5,691,000 and MN 5,311,000.

The current WI population estimate is 5,758,000 (An annual average growth increase of .9883) MN’s population estimate 5,457,000 (An annual average growth increase of .9732), or a difference 301,000. The national population estimate is 318,900,000 (An annual average growth increase of .9698). Both of our state’s populations are increasing at a rate slightly better than average.

This means Garofalo’s encouragement coupled with job losses in ND due to lower oil prices and work stoppage of Bakken Oil Shale drilling could provide additional in migration and hence population increases. In the 1950’s people usually resided in the same place for five years currently people reside in the same location less than half that figure.

Does the MN Republican Party Need a Cosigner with Deep Pockets?

The ability to borrow is always based on one’s ability to repay and when one buys something in advance of payment they are expected to make good on the obligation. It seems that the MN Republican Party is not credit worthy. It appears they bought on spec, but failed to meet the call when it was called.

During the last election they contract for services with two mailing houses Salt Lake City-based Arena Communications and the Kansas-based Singularis Group and both still have not been made whole from the 2014 election, to the tune of $300,000.

The reports of the financial troubles of the MN Republican Party have been widely known, but one would think a partial success in the recapture of the MN House would offer up opportunities for additional fundraising.

The credit worthiness of the MN GOP may show why so much money was invested in Independent Expenditure campaigns rather than through traditional party resources.

The Political Responses to the 2015 February Revenue Forecast

We attended press conference of Governor Mark Dayton (DFL), followed by one with the DFL leadership with Senate Deputy Leader Jeff Hayden (DFL-62, Minneapolis), Senate Finance Committee Chair Senator Dick Cohen (DFL-64, St Paul), House Minority Leader Paul Thissen (DFL-61B, Minneapolis), Deputy Minority Leader Erin Murphy (DFL-64A, St Paul) and past Ways and Means Chair Rep Lyndon Carlson (DFL-45A, Crystal) and finally the Republican response from House Speaker Kurt Daudt (R-31A, Crown), Majority Leader Joyce Peppin (R-34, Rogers) Senate Minority Leader David Hann (R-48, Eden Prairie) and Assistant Majority Leader Senator Michelle Benson (R-31, Ham Lake).

You can see the entirety of each here: http://www.senate.mn/media/media_video_popup.php?type=clips&id=1139

During the course of the Governor’s press conference we asked the following:

C&B: Governor would you characterize your viewpoint as a more of a long-term approach than a short-term approach? (Minute 9:45)

Governor:  “That’s a good way to put it. Thank you. I’ll use that, thank you.”

He answered the next question and put the idea in to practice when he said in answer to the next question by WCCO reporter Pat Kessler, “How about a one-time check instead of permanent tax cuts?” (Minute 9:54)

Governor: “I think we’re better off; to make investments for the future, take a long-term approach rather than a short-term approach.”

Later we asked another question of Governor Dayton.

C&B: Governor, tradition dictates that Republicans are resistant to any spending increases and with them holding the majority in the House, and somewhat to your controversy with Senator Bakk, what will you do to move the Republicans your way? And do you feel that this situation in light of the fact that our neighboring state of Wisconsin, is applying previous tax policies that we have seen here and they’re experience a deficit compared to our surplus, is there anything you can say about that?

Governor:  “Well, I think our economic success speaks for itself. You know, we are not competing with Wisconsin or any other individual state. I want Wisconsin to do well; I want Minnesota to do better. I think we are doing better, and I am pleased with that. Again, I will go back to the fundamentals of our economic success, for decades, and what we have applied here is investment in people. Well educated, hardworking, productive workforce.

(Long pause)

And the, ah, the, we have a difference of philosophies, the Republican majority in the House gave them by the voters of Minnesota, the authority to press for their priorities and I was reelected so I have the authority to press for mine and the senate is still here. So, you know, we have that balance, that balance and we’re going to have to work out an agreement by the end of session that I expect will incorporate different points of view.  And I have always said, compromise means you agree to something you don’t agree with, and I expect to have to compromise.  I expect the legislators will have to compromise if we’re going to reach a solution. So, that is still out there to be formulated. I am hopeful we’ll do that successfully.

I have had a good, good relationship with Speak Daudt, and I appreciate his candor.  I appreciate his constructive involvement in resolving the deficiency bill.  I have had a good relationship with Senator Bakk for decades, and we’re both grown-ups, and we both are used to moving beyond a temporary blip, and we have, and we will continue to work together.  And only are we all are accountable for serving the people of the state of Minnesota; we might have different views on what best entails, but ultimately we’re here for the same reason, to make this a better state. I see that the Speaker is here with his arms folded so he can elaborate on that as I leave shortly.”

It was interesting to listen to the Republican responses to the Revenue Forecast. Early on Speaker Kurt Daudt (R-31A, Crown) referenced DFL expenditures for the Senate office building and the proposed salary increases for State Commissioners and he repeated the same idea six different times during his comments.

During his comments the Speaker sought a strange correlation between the budget surplus and the victory of the House Republican Majority. This being strange because Republican only actually gained control in January.

C&B: “It was clear Democrats took credit for the surplus; are you taking credit from December on then, Mr Speaker? (Minute 101:58)

Speaker: “No, I’m not. Minnesotan’s deserve the credit. Read the forecast documents, where did it come from? It came from lower oil prices and rising dollar affect economic growth. It’s not, you know, you look at job growth and wage growth in Minnesota it still lag, lags behind the national average right now, that’s a problem. You look at where income and revenue comes from it comes from for the state; it comes from Minnesotan’s we have to show them we respect that. And let’s let them invest in their lives for once instead letting Democrats invest in office buildings and Commissioner’s pay raises in St Paul. Let’s invest in Minnesotans. We believe in Minnesotans and now is the opportunity for everybody’s actions to match their words. And that is what you will out of the Republicans.