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Legislative Audit Commission

Minutes

February 8, 2008

Members Present:

Representative Sondra Erickson    Senator David Hann
Representative Rick Hansen Senator Claire Robling
Representative Connie Ruth

Members Absent:

Representative Michael Beard Senator Don Betzold
Representative Aaron Peterson    Senator James Metzen
Representative Steve Simon Senator Ann Rest

Other Legislators Present:

Representative Jeremy Kalin

The Legislative Audit Commission meeting was called to order by Representative Rick Hansen, Chair, at 10:00 a.m.  The purpose of the meeting was to release two program evaluation reports:  1) “Green Acres” and AgriculturalLand Preservation Programs and 2) JOBZ Program.

Representative Hansen introduced Mr. Nobles.  Mr. Nobles said that although the two evaluations being released do not have much to do with each other, they both obtain their objectives through tax incentives.  He gave a brief overview of farmland programs and then introduced Jody Hauer, project manager for the “Green Acres” and AgriculturalLand Preservation Programs evaluation.  Ms. Hauer said that the state farmland protection programs do reduce taxes but have some problems.  Some problems of the Green Acres Program are that it does not help all eligible farmland owners; it is unclear who should benefit from the program; certain eligibility criteria are difficult to implement and create inequities; and the implementation of the program has been inconsistent.  The evaluation recommends that the Legislature 1) clarify who and what types of land should benefit from the Green Acres Program and 2) eliminate the income criterion if it also adds specificity to statutes on agricultural property.  Also recommended is that the Department of Revenue pursue statewide consistency but make some changes in its methods for valuing nontillable land.

Ms. Hauer went on to discuss the other two farmland preservation programs, which are in the Twin Cities metropolitan area and Greater Minnesota.  She noted that the major problem with these two programs is that they are inadequate for long-term preservation of agricultural land.  The evaluation recommends that the Legislature 1) consider other strategies if the state wishes to preserve land for long-term agricultural uses; 2) specify who has authority to enforce existing programs; and 3) determine whether the spending of mortgage and deed fee revenues is unacceptable. 

Representative Hansen called Bob Patton, Environmental Review and Land Use Coordinator with the Department of Agriculture, to speak to the commission.  Mr. Patton thanked the LAC for directing the OLA to do the evaluation because of the impact the issues have on farmers.  He said that the department agrees with the findings and recommendations in the evaluation.  He also said the department plans to work with agricultural groups to develop ways to implement improvements for the programs. 

Representative Hansen then called Ward Einess, Commissioner of the Department of Revenue, to address the commission.  Mr. Einess reiterated what the evaluation says about the ambiguity of “what is agricultural land?”  He said that the OLA made some good suggestions on ways to improve the Green Acres Bulletin produced by the department, which establishes criteria and administrative guidelines for the program.  He also said that the department is looking forward to working with the legislature, county commissioners, and assessors in addressing the recommendations of the report.

The meeting then turned to the JOBZ Program evaluation.  Mr. Nobles gave a brief overview of the Job Opportunity Building Zones (JOBZ) program and introduced John Yunker, the project manager.  Mr. Yunker explained that the purpose of the JOBZ Program is to increase economic activity in Greater Minnesota and to revitalize economically distressed rural areas.  He added that although the program has worked in some cases, it has also provided unnecessary or ineffective subsidies in other cases, and it is not being targeted to distressed areas of the state as it was intended.  Mr. Yunker said the report has over 30 recommendations; however, he would not be going through all of them, only highlighting a few.  He said the report calls for the following recommendations for the Legislature:  1) require prior approval of agreements by the Department of Employment and Economic Development (DEED); 2) place a cap on annual program activity; 3) require DEED to develop and implement criteria for participation in the program; 4) consider targeting the program to economically distressed areas; and 5) make various changes to the JOBZ laws.  The following recommendations are made to DEED:  1) review and modify JOBZ agreements; 2) develop criteria for program participation and procedures for analyzing potential deals; 3) streamline the compliance monitoring process; 4) revise the JOBZ progress reporting form; 5) use unemployment insurance data to assist in checking compliance; and 6) better communication with the Department of Revenue and local officials.  Some recommendations made to the Department of Revenue are 1) make technical changes to tax forms; 2) consider possible changes in the jobs credit; and 3) increase outreach to county property tax officials. 

Representative Hansen called Dan McElroy, Commissioner of the Department of Employment and Economic Development, to address the recommendations made to DEED in the evaluation.  Commissioner McElroy asked Ward Einess, Commissioner of the Department of Revenue, to come to the table with him, as issues for DEED are a lot of times related to issues for Revenue, and they could answer questions together.  Commissioner McElroy stated that he believes the Legislature originally set up the JOBZ Program to be administered at the local level, with the decisions made by local governments; however, the department agrees with the recommendations to have stronger state oversight.  He said that DEED plans to seek legislative help to work on improving the program.  Commissioner Einess stated that Revenue agrees with the recommendations of the evaluation and that they are committed to working with DEED and the counties in addressing these issues. 

Mr. Nobles reminded the commission members that the OLA evaluation, Financial Management of Health Care Programs, was to be released to the House Health Care and Human Services Finance Division on Monday, February 11th at 2:00 p.m.  He also said the next LAC meeting was scheduled for Tuesday, February 19th at noon to release the State Highways and Bridges evaluation.

With no further business, Representative Hansen adjourned the meeting at 12:17 p.m.

 

_______________________________________
Representative Rick Hansen, Chair

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Shelly Watterud, Recording Secretary

 

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