Walz, legislative leaders miss deadline for budget targets

Minnesota Gov. Tim Walz speaks with reporters at the state Capitol.
Minnesota Gov. Tim Walz speaks with reporters at the state Capitol in St. Paul Monday during a break in talks with House Democratic and Senate Republican leaders on setting budget targets to guide negotiations for ending the 2019 legislative session.
Steve Karnowski | AP

Updated: May 7, 9:06 a.m. | Posted: May 6, 3:26 p.m.

Gov. Tim Walz and top legislative leaders worked into the night Monday but couldn't reach an agreement on top-line numbers for major spending areas of a new two-year state budget. That means they missed their own deadline for keeping the session on track.

Republican Senate Majority Leader Paul Gazelka said the talks have been complicated by fundamental differences in how each side built its budget.

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"There are two different directions," he said. "I wish we were on the same page, but we're not."

Gazelka said the primary difference is that the Senate budget relies on existing resources and holds down spending, while the DFL governor and House majority raise taxes to cover increased spending.

There's also that big disagreement over transportation funding. Gazelka said the governor's 20-cent-per-gallon gas tax increase is a red line.

"The gas tax is not going to happen. We made it very clear that that's not where we need to be," he said.

Walz expressed frustration with the stance of Senate Republicans. He said his transportation plan would bring generational change and theirs would not.

"Minnesotans are very clear that they want to have safe roads, bridges and transit to make a difference. They want us to think about and plan for the future," said Walz. "And I've proposed a sustainable, solid plan to try to get theirs. But as I've said, and this is a big difference, I said I'm willing to work with them."

Walz said he's waiting for Republicans to show a similar willingness to compromise on transportation and other key issues.

The sun sets on the Minnesota State Capitol.
Legislative leaders set Monday as a deadline to reach agreement on the top-line numbers for each major spending area in the next two-year state budget, but after meeting into the night they could not agree.
Evan Frost | MPR News file

"I hope I am getting some reciprocity on this idea that I said I am willing to talk to you about these things, and I am still hearing on the other side, and the offer that was given to me was zero," Walz told MPR News Tuesday.

One of the problem areas is education. Walz wants $700 million in new spending for schools, House Democrats want $900 million and Senate Republican are proposing $200 million.

"We've got time," Walz said. "But that's a sticking point."

Other sticking points include the wide differences in the health and human services budget including the fate of a 2 percent medical provider tax. The tax is set to expire at the end of the year but Walz says it needs to be extended. Republicans disagree.

It's getting close to crunch time at the Capitol. The governor and legislative leaders set their deadline for budget targets at the beginning of the 2019 session to build in a cushion for finishing their work and avoiding a chaotic ending. They have until May 20 to make it work.

House and Senate negotiators in several budget areas were busy meeting Monday in conference committees to try to resolve differences.

There's also a big gap in the competing tax bills. Both do a lot to line up the state and federal tax codes. But the House taxes the foreign profits of corporations, and the Senate does not.

DFL Rep. Paul Marquart, of Dilworth, who chairs the House tax committee, said the budget target is the key for finishing the work of the conference committee.

"We're pretty much where we need to be. We've gone through the spreadsheets and the side-by-side. So, both the House and the Senate are very familiar with the bills. So, I think we're on schedule and I feel good at this point that we'll get our work done."

Marquart's counterpart, Republican Senate Tax Chair Roger Chamberlain of Lino Lakes, said there are many similarities between the two bills but also big differences to resolve. Chamberlain was pessimistic about an end-of-day agreement on budget targets.

"With this divided government, all these components have to have some level of agreement to know where the targets want to be, and they've only had a couple few days to figure that out," Chamberlain said. "I don't know that that that's necessarily going to be possible."