HF 1694

1st Engrossment - 89th Legislature (2015 - 2016) Posted on 03/26/2015 04:00pm

A bill for an act
relating to state government; requiring the legislative auditor to evaluate
economic development incentive programs; requiring reports by the
commissioner of management and budget; appropriating money; amending
Minnesota Statutes 2014, sections 3.979, subdivision 3; 16A.11, by adding
subdivisions; proposing coding for new law in Minnesota Statutes, chapter 3.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [3.9735] EVALUATION OF ECONOMIC DEVELOPMENT
INCENTIVE PROGRAMS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin For purposes of this section, the terms defined in this
section have the meanings given them.
new text end

new text begin (a) "General incentive" means a state program, statutory provision, or tax
expenditure, including tax credits, tax exemptions, tax deductions, grants, or loans, that
is intended to encourage businesses to locate, expand, invest, or remain in Minnesota or
to hire or retain employees in Minnesota. To be a general incentive, a state program,
statutory provision, or tax expenditure must be available to multiple entities, projects, or
associated projects or include eligibility criteria with the intent that it will be available to
multiple entities, projects, or associated projects.
new text end

new text begin (b) "Exclusive incentive" means a state program, statutory provision, tax
expenditure, or section of a general incentive, including tax credits, tax exemptions, tax
deductions, grants, or loans, that is intended to encourage a single specific entity, project,
or associated projects to locate, expand, invest, or remain in Minnesota or to hire or retain
employees in Minnesota.
new text end

new text begin Subd. 2. new text end

new text begin Selection of general incentives for review; schedule for evaluation;
report. new text end

new text begin Annually, the legislative auditor shall submit to the Legislative Audit Commission
a list of three to five general incentives proposed for review. In selecting general
incentives to include on this list, the legislative auditor may consider what the incentive
will cost state and local governments in actual spending and foregone revenue currently or
projected into the future, the legislature's need for information about a general incentive
that has an upcoming expiration date, and the legislature's need for regular information on
the results of all major general incentives. Annually, the Legislative Audit Commission
will select at least one general incentive for the legislative auditor's evaluation. The
legislative auditor will evaluate the selected general incentive or incentives, prepared
according to the evaluation plan established under subdivision 4, and submit a written
report to the Legislative Audit Commission.
new text end

new text begin Subd. 3. new text end

new text begin Exclusive incentive schedule. new text end

new text begin The legislative auditor's schedule shall
ensure that at least once every four years the legislative auditor will complete an analysis
of best practices for exclusive incentives.
new text end

new text begin Subd. 4. new text end

new text begin Evaluation plans. new text end

new text begin By February 1, 2016, the Legislative Audit Commission
shall establish evaluation plans that identify elements that the legislative auditor must
include in evaluations of a general incentive and an exclusive incentive. The Legislative
Audit Commission may modify the evaluation plans as needed.
new text end

Sec. 2.

Minnesota Statutes 2014, section 3.979, subdivision 3, is amended to read:

Subd. 3.

Audit data.

(a) "Audit" as used in this subdivision means a financial audit,
review, program evaluation, best practices review, new text begin evaluation of an incentive program or
exclusive incentive program under section 3.9735, new text end or investigation. Data relating to an
audit are not public or with respect to data on individuals are confidential until the final
report of the audit has been released by the legislative auditor or the audit is no longer
being actively pursued. Upon release of a final audit report by the legislative auditor, data
relating to an audit are public except data otherwise classified as not public.

(b) Data related to an audit but not published in the audit report and that the
legislative auditor reasonably believes will be used in litigation are not public and with
respect to data on individuals are confidential until the litigation has been completed or is
no longer being actively pursued.

(c) Data on individuals that could reasonably be used to determine the identity of an
individual supplying data for an audit are private if the data supplied by the individual were
needed for an audit and the individual would not have provided the data to the legislative
auditor without an assurance that the individual's identity would remain private, or the
legislative auditor reasonably believes that the subject would not have provided the data.

(d) The definitions of terms provided in section 13.02 apply for purposes of this
subdivision.

Sec. 3.

Minnesota Statutes 2014, section 16A.11, is amended by adding a subdivision
to read:

new text begin Subd. 3d. new text end

new text begin Consideration of general incentives. new text end

new text begin In supplement to, and under the
same deadline as, the governor's budget submission under subdivision 3, the commissioner
shall submit a report identifying each general incentive for which an evaluation was
completed under section 3.9735 in accordance with this section since the governor's
previous budget submission. For each evaluated incentive, the commissioner's report shall
include a recommendation for whether the incentive should be continued or modified,
or whether the state would be better served by using other incentives or strategies to
achieve the incentive's goals. The commissioner's report must include the rationale for
each recommendation.
new text end

Sec. 4.

Minnesota Statutes 2014, section 16A.11, is amended by adding a subdivision
to read:

new text begin Subd. 3e. new text end

new text begin Consideration of best practices for exclusive incentives. new text end

new text begin If a new
analysis of best practices for exclusive incentives under section 3.9735 has been
completed since the governor's previous budget submission, the commissioner's report
under subdivision 3d shall include recommendations for when and how Minnesota should
offer and manage exclusive incentives in the future and how they should be structured.
The commissioner's report must include the rationale for each recommendation.
new text end

Sec. 5. new text begin APPROPRIATION.
new text end

new text begin $....... in fiscal year 2016 and $....... in fiscal year 2017 are appropriated from the
general fund to the Office of the Legislative Auditor for purposes of section 1.
new text end