ST. PAUL, Minnesota — A deeply divided Minnesota legislature returns from its Easter-Passover break Tuesday with just five weeks to decide what to do with the state’s $9.25 billion budget surplus plus $1.2 billion of unspent federal pandemic aid.
There has been little convergence of views between the House Democratic and Senate Republican majorities since they met in January. They have yet to translate their handful of bipartisan successes into bigger deals on taxes, spending and policy. Much of what they put forward will please traditional party constituencies, but will not become law.
There is no constitutional requirement for the legislature to pass anything this session, given that it approved the current two-year budget last year. Any untouched surplus will remain in the bank for the next year. Democratic Governor Tim Walz, however, would decide how to use unspent federal aid if lawmakers cannot agree.
A public works loan program known as the bond bill is usually the centerpiece of sessions in even years like this. That hasn’t been rolled out yet, but Walz used the break to talk about his own $2.7 billion wishlist for “local jobs and projects,” as well as his proposals for taxation and public safety.
Here’s a look at the status of some of the main issues in the home stretch:
THE BIG FIGURES
The House and Senate majorities have not provided official cost totals for their budget plans, which are still taking shape. But Minnesota’s budget proposal calculates that the House Democratic plan currently contains a net increase of $4.9 billion in additional funding for public services, compared to $1.4 billion for the Senate Republican plan, while the Senate plan would cut revenue by $3.4 billion from $1.6 billion. for the House. In total, according to the group, House spending and tax changes would cost the state’s general fund $7 billion, compared to $5.9 billion for the Senate.
The biggest stalemate remains the related issues of reversing an unemployment insurance tax hike and premiums for frontline workers who took risks during the pandemic. House Democrats forced a tax cut on Senate Republicans by agreeing to $1 billion for frontline workers instead of the $250 million target set last year. Senate Republicans refused.
Both chambers rushed to $1 million in emergency funds in a single day this month to bolster the fight against bird flu in the nation’s largest turkey-producing state. It is the worst outbreak of the disease since 2015 and has cost producers in Minnesota more than 1.8 million birds.
The House and Senate also agreed to a $700 million expansion of the state’s reinsurance program, which maintains premiums for residents who purchase health insurance in the individual market.
Walz led an emotional signing ceremony for a $25 million bill to fund ALS research drafted by Senator David Tomassoni of Chisholm, who has the neurological disease.
The state government will divest from Russia in solidarity with Ukraine. Minnesota had about $53 million in Russian investments before the invasion.
In keeping with the GOP’s vow to return the surplus to taxpayers, the Senate passed a permanent income tax cut that would lower the first-tier rate for all filers from 5.35% to 2.8% and eliminate completely social security income taxes. It would provide $8.4 billion in relief over three years, taking $3.4 billion from the current surplus. So that doesn’t leave much room for hiking.
Critics say most of the benefits of the GOP plan would go to affluent Minnesotans. The $1.6 billion House Democratic plan forgoes a across-the-board cut in favor of targeted relief through expanded property tax and childcare tax credits and refunds. It would also eliminate Social Security taxes for those with annual incomes below $75,000.
Walz is still pushing for one-time income tax refunds of $500 for single filers and $1,000 for joint filers. He nicknamed them “waltz checks”. His plan did not appear in the House tax bill, and the Senate rejected it. But it is conceivable that a version could emerge as a compromise.
The House and Senate have also taken very different positions on tackling crime. The $100 million Senate Republican plan includes longer sentences for several offenses as well as measures to discourage judges and prosecutors from being lenient with offenders.
House Democratic’s proposal includes $150 million in grants to help cities and counties with the worst crime rates develop “innovative solutions.” The governor’s plan has similarities, but it would split $300 million among cities, counties and tribes over three years in a more direct approach to funding police.
A proposal to ban no-knock warrants following the police killing of Amir Locke did not make it into the Main House Public Safety Bill and a floor vote is uncertain.
One of the few pieces of middle ground in both bills is $50 million so the state’s public defender system can increase staffing to national standards. These lawyers almost went on strike in March.
Education is one of the largest components of the state budget, and House Democrats want to expand it further by spending $1.15 billion of the surplus on schools. Their package focuses on mental health support for students, special education, and English language learners.
The Senate GOP proposal would spend just $30 million more. Republicans point out that the current two-year budget already includes a large increase in per-student funding, 2.5% in the first year and 2% in the second. Their goal is a “parents’ bill of rights” of program transparency measures.
The outdoor proposal that got the most buzz was to cut the statewide walleye limit from six to four, but it seems dead in the water. A bill to block the Walz administration’s “clean car” rules awaits a vote in the Senate but remains stalled in the House.
The main environmental bill in the House would limit deer farms to prevent chronic wasting disease. It would also ban PFAS, also known as “chemicals forever,” from several consumer products.
A proposed constitutional amendment to renew the Environment and Natural Resources Trust Fund through 2050 passed a few Senate committees with bipartisan support. The current amendment, which dedicates 40% of state lottery proceeds to outdoor projects, expires in two years. The new amendment, if approved by voters in 2024, would raise that figure to 50%.
An effort to legalize sports betting in Minnesota has taken on new life after casino-operating tribes gave it their tentative support in exchange for much of the action. He has progressed in House committees, but faces an uphill struggle in the Senate. A push to legalize recreational marijuana did not catch fire this session. It passed the House last year, but went nowhere in the Senate. A move to allow more direct sales of growlers and six-packs by craft brewers and spirits in larger bottles by smaller distilleries has had a taste of success in the House but remains bottlenecked in the Senate.