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Responding to growing economic alarm, Gov. Tim Walz released an updated budget proposal Thursday that leaves most of a projected budget surplus unspent and plows extra money into health and natural disaster response.

Walz said he would shore up the state’s budget reserve fund with a nearly $500 million infusion and leave more than $1 billion unspent.

“Caution, caution, caution. If there was ever a time for a one-page budget and leaving money on the bottom line, this is it,” Walz said, adding that having a “rainy day” fund and solid budget are his priorities.

The DFL governor said calls for tax cuts and new spending on education will have to wait until a future session.

”I would see that expectations will be tempered now,” Walz said.

But Senate Majority Leader Paul Gazelka, R-East Gull Lake, said he doesn’t plan to set the tax cut issue aside.

“The argument that bonding puts money into the economy is the same argument we make that tax relief puts money into the economy,” Gazelka said. “So, we’re still going to have that discussion. But I think it’s prudent to make sure we have resources for the future. So, I think we’ll be able to work together to figure out a way.”

DFL House Speaker Melissa Hortman, DFL-Brooklyn Park, said the governor’s supplemental budget proposal is reasonable and responsible. She said it also provides flexibility in a time of great uncertainty.

Walz said he expects to field more requests for COVID-19 financial help in the days ahead, including from hospitals and other health facilities on the front lines.

Minnesota has a projected $1.5 billion surplus, but that estimate was released before the coronavirus sent economies worldwide into a slide.

Walz said he and advisers are heeding the “flashing yellow lights” of a diving stock market and worries about thousands of workers being sidelined until the crisis passes.

There are about $250 million in new spending initiatives in the Walz plan, some of which aren’t related to the health situation. He’s proposing more money for mental health care, rape-kit testing and child care assistance.

Walz said he would have more information about a state government COVID-19 response in the hours and days ahead. He said the governor’s residence is equipped with remote work equipment should he be pulled away from the Capitol.

With coronavirus concerns growing, Gazelka said he’s willing to move briskly on a bonding bill and other legislative proposals. But Gazelka said he is reluctant to call for an early adjournment of the session.

“I believe the House and the Senate will still remain open,” he said. “I want to make sure we are engaged all the way through.” 

Hortman agreed the session shouldn’t be cut short but said there could be break periods if the situation worsens.

Many policy bills, including new gun restrictions, education spending and marijuana legalization will fall away as lawmakers focus on areas of bipartisan agreement. 

“Each and every bill that’s a priority of this legislative session is on warp speed right now just to make sure we’re ready in the event we need to take a break. We want to do as much work as we can as fast as we can for the people of Minnesota,” she said.

Walz agreed lawmakers should consider clearing the agenda of proposals lacking broad support.

“This is not the time to posture around issues we can’t reach consensus on,” Walz said at a news conference.

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The DFL governor suggests leaving most of the state’s projected budget surplus unspent with the global economy shaken by COVID-19. He also urged lawmakers to finish their work soon.

Walz proposes slim budget as coronavirus situation worsens

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