State workers may lose pay raise as economy tanks

The Minnesota State Capitol from a distance.
The Minnesota State Capitol is seen on March 26, 2020. The state House voted Monday to ratify state employee contracts that would deliver salary increases at a time of a looming budget deficit. The DFL-backed move sets up a showdown with Senate Republicans, who say it’s not a good idea to raise salaries with a budget deficit looming.
Evan Frost | MPR News file

The contract agreements covering more than 50,000 employees were reached between bargaining units and Gov. Tim Walz’s administration long before the economic downturn triggered by the pandemic.

Then, the state had a $1.5 billion surplus. Now, the projections show a $2.4 billion deficit. 

The agreements call for a 2.25 percent salary increase for the first year of the state’s two-year budget cycle and a 2.5 percent raise in the second year. The first year salary increase began last summer. The second year begins this summer. The money for both was included in the two-year budget passed last session.

But the agreements require legislative approval.

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Rep. Leon Lillie, DFL-North St. Paul, said lawmakers should OK the agreements, which he described as “reasonable.” Lillie noted that many workers are on the front lines of the pandemic. 

“We know that our state workers are keeping us safe and healthy,” he said. “They’re our team, and these contracts were negotiated in good faith.”

DFL House Majority Leader Ryan Winkler, of Golden Valley, said lawmakers need to stand up for state workers.

"Now is not the time to go after those employees that we're counting on and go after the contracts that they have fairly bargained for,” Winkler said. “Layoffs and wage cuts are not going to help the economy. Nobody is going to be helped by more people making less money."

House Republicans opposed the bill.

Republican House Minority Leader Kurt Daudt said he’s grateful for state workers. But under the current financial circumstances, he argued the contracts are no longer affordable. Daudt said approving the contracts would be a slap in the face to unemployed Minnesotans.

“We cannot put our heads in the sand and pretend like this does not exist,” he said. “We cannot continue on business as usual, pretending like money that’s not coming in is going to come in magically somehow.”

Senate Republicans are also opposed.

Senate Majority Leader Paul Gazelka, R-East Gull Lake, said he is willing to let last year’s raise stand, but ratifying the contracts with another raise scheduled to kick in July 1 would be irresponsible. 

If lawmakers fail to ratify the contracts, provisions revert to the terms of the previous contracts, and state workers would see a pay cut. Time runs out on the contract debate on Monday, when the legislative session ends.

Gazelka said he has reached out to the Walz administration and the unions but has not heard back. He has asked the Walz administration and the unions to renegotiate and forgo this year’s raise.

“We really would like to let them keep their raise from last year, and if they’ll work with us, they can do that,” Gazelka said. “But our only option at this point is to approve the contracts, which give the raise in July or to say no. And if that’s my option, then it’s going to be a definite no.”