Voter turnout soared across Minnesota during the 2018 midterm elections in what many considered to be the most competitive and significant midterms in recent years. By the end of the evening, Democrat Tim Walz was elected as Minnesota’s 41st governor, defeating Republican opponent Jeff Johnson.

In what might be the biggest news, after flipping 18 house districts, Democrats recaptured the House for the first time since the 2013-2014 biennium. However, Republicans kept their one-seat majority in the Senate by winning the special election in Senate District 13, which was vacated by Michelle Fischbach when she elevated to Lt. Governor. Heading into 2019, Minnesota will be the only state in the nation with a divided legislature. The last time there was a single state with a divided legislature was over 100 years ago in 1914, according to National Conference of State Legislatures. What does divided government mean for NAIOP members?

Here is our key takeaway:

It was a big night for Democrats. In addition to taking control of the federal and state Houses of Representatives, Democrats also held on to all Minnesota constitutional offices, both federal senate seats and the same number of federal house seats (though they claimed two suburban districts from Republicans and lost two Greater Minnesota districts).

At the legislature, healthcare and transportation will be top priorities going into the new biennium. As a former educator and union negotiator, Governor-elect Walz is expected to make education policies and funding reforms a top priority as well.

Given that 2019 is a budget session, there will be more than one dollar in demand for every dollar there will be available for next budget. These needs will intensify pressure to find new revenue sources. Especially in a DFL-controlled House, discussions of new or increased revenue sources often mean discussions about taxes.

So, how does this impact NAIOP members? The most critical item to watch will be the statewide business property tax, specifically talk of an automatic inflator. Repealed in 2017, there was discussion of re-implementing the automatic inflator during negotiations last session. While this didn’t happen, it is likely to be floated as an option for increasing revenue. Governor-elect Walz has not yet taken an official stance on the statewide business property tax or the automatic inflator.

Often divided government provides ample opportunities to play defense, but can make it more difficult to play offense. The new makeup of the legislature will not deter our advocacy on business property taxes, local government transparency, fiscal disparities and the importance of commercial real estate in Minnesota. In fact, this legislature provides us with a unique opportunity. With well over half of the House serving less than six years, there are plenty of new members to engage in constructive policy discussions and educate on the critical role that MnCRE plays in the daily lives of Minnesotans.

In the coming months, NAIOP will be closely following the election of caucus leadership, legislative committee chair appointments and committee assignments. The NAIOP legislative team will return to the capitol on January 8 when new members are sworn in and the new legislative session begins.