Economic development bill that revamps state grants clears House

No one claimed it was earthshattering legislation, but it may make state grantmaking work better, said Rep. Dave Pinto (DFL–St. Paul).

He was referencing the omnibus workforce, labor, and economic development policy and finance bill, HF3732, that aims to shift the state away from named legislative grants and toward more transparent, competitive grant programs.

Passed 98-35 by the House Monday night, the package now heads to the Senate.

Rep. Dave Baker (R-Willmar) said the bill provides an improved platform for future legislatures with better oversight and better controls.

An Office of Community Investment would be created to oversee Department of Employment and Economic Development grant programs. The office would be charged with transparency of grantmaking, maintaining best practices and tracking outcomes while fulfilling legislative goals.

The bill would take other steps aiming to improve the grantmaking process by establishing a health care workforce grant program.

And it would create a subcommittee to recommend how up to $10 million from the Workforce Development Fund should be allocated, with the idea that regional workforce boards are well-positioned to see gaps between available jobs and people ready to fill them.

The bill’s impact on the General Fund is $399,000 in Fiscal Year 2027 with an appropriation to set up the new office.

[MORE: View the spreadsheet]

The bill does a lot of good things, said Rep. Patricia Mueller (R-Austin), but there were things the House could have done, should have done, and didn’t do. As examples, she mentioned bills that would modify the Paid Family and Medical Leave program to address specific issues of S-Corps, small businesses and seasonal employees.

Rep. David Gottfried (DFL-Shoreview) suggested the House could have also provided protections for workers in danger of losing their job to artificial intelligence.

Other provisions

Some provisions, generally at the behest of the Department of Employment and Economic Development, and the Department of Labor and Industry would:

• allow clinicians and students from around the United States to participate in Minnesota’s Rural Cancer Institute;
• eliminate the Class A installer license from electrical codes. No new licenses have been granted for nearly 20 years;
• makes changes to Explore Minnesota Councils, including limiting membership to a single four-year term; and
• repeal some programs that have served their purpose, been incorporated into other programs or been unfunded for more than 15 years.

“This budget bill makes modest but important investments to strengthen our state’s workforce by improving transparency and accountability around grants. I’m also proud that yet again, we’ve successfully blocked Republican attempts to target Paid Leave, Earned Sick & Safe Time, and other key wins DFLers have delivered for workers,” Pinto said in a statement. “I am disappointed however that Republicans refuse to acknowledge the real harm this winter’s ICE surge had on our communities, including on our economy. When there is a natural disaster, we step up to help communities recover. In this case, businesses and workers impacted through no fault of their own shouldn’t be forced to navigate the difficult journey on their own.”

Amendments

Significant debate focused on how much relief, if any, should be directed toward businesses impacted by Operation Metro Surge. Some businesses reported a 90% drop in revenue during enhanced federal immigration enforcement this winter.

Pinto likened its impact to a Main Street fire or flood. 

Rep. Cedrick Frazier (DFL-New Hope) unsuccessfully offered an amendment based on legislation heard in committee that would use $100 million from the Minnesota Forward Fund to provide grants between $5,000 and $25,000 for small businesses in danger of closing.

Without help, the state will lose those businesses, lose jobs, lose a favorite spot to eat, lose community members, Frazier said. “I’m asking we give those businesses an opportunity to survive.”

Baker said any talk about relief would require talking about long-term business relief, such as exempting small businesses from Minnesota’s Paid Family Leave program.

“We have to start getting serious about businesses in Minnesota that want to get through the tough days, the tough weeks,” Baker said. “We are hurting our businesses rather than helping by just giving them money and walking away.”

Rep. Natalie Zeleznikar (R-Fredenberg Township) unsuccessfully offered an amendment that would exempt some employees, such as those working in group homes or senior home care from a mandatory, unencumbered 30-minute unpaid meal break.