One week from Monday, time runs out on the Legislature’s regular session, and hopes of an on-time finish are fading fast.
Conversations among leaders and Gov. Tim Walz’s administration over the weekend failed to yield a deal to pave the way for a tidy conclusion.
There wasn’t a deal announced. On the positive side, there hasn’t been a public blowup either.
Leaders are trying to reach a top-level agreement: How much to spend overall the next two years and how much in each budget category. Even after they get that, there’s a briar patch of issues to trip lawmakers up, from police accountability to election procedures.
Minnesota is in decent shape financially, but that hasn’t led to a smooth path to a new two-year budget.
What’s holding up an agreement?
Several reasons are at play. Minnesota has a divided government, with narrow Republican control in the Senate and narrow DFL control in the House. They’re negotiating with Democratic Gov. Walz and his team.
They have vastly different ideas on what shape the state is in financially and where it’s headed.
Minnesota has a projected $1.6 billion surplus, but some of that is considered temporary and doesn’t necessarily count inflationary cost pressures on programs. There’s a hefty budget reserve.
COVID-19 put the state’s finances on a bit of a roller coaster, but the state’s economy is generally looking up.
And the pandemic led to unprecedented help from the federal government, but that’s not going to last forever either. Lawmakers have to take that into account when building a new two-year state budget.
Walz and House DFLers proposed raising top-end tax rates so they could significantly ramp up spending on their priorities, including schools. Senate Republicans say there’s no way they’ll raise taxes.
That puts the focus on a tranche of federal money from the American Rescue Plan approved by Congress and President Joe Biden in March. The state is still awaiting guidance on how it can use billions heading into the state and when it will arrive.
But Senate Majority Leader Paul Gazelka, R-East Gull Lake, said the money must be in the mix.
“If there’s not offers using federal stimulus money — that’s the $2.6 billion of extra money we can use in many of our budget categories — it will be more difficult to get done,” Gazelka said.
It’s not just him. Several Democrats don’t just want to leave it to the Walz administration to parcel the federal dollars out.
“The federal issue is a real one and it’s an important one. This isn’t shirking the job. This is saying the Legislature should have a very active role in saying how that money gets spent,” said Senate Minority Leader Susan Kent, DFL-Maplewood. “But it’s hard to do that when we don’t know all the details of that. So it may be that we have to look at doing this in stages, but still get it done by June 30 so we can meet the real deadline.”
Special sessions have routinely been needed to finish work on the state budget.
The Legislature will want to avoid a government shutdown on July 1. If there isn’t clarity around the federal money, perhaps something scaled back gets approved now to make sure the government keeps running and more money gets divvied up in a special session.
But the risk there is that another round doesn’t come together, so those who want less spending win out. That won’t satisfy school districts, for instance, who are already issuing layoff notices amid budget squeezes.
What to watch
For now it’s a bit of a chess game.
The final week will likely see action on an eviction moratorium off-ramp if negotiators can strike an agreement.
And the House plans to vote on a marijuana legalization proposal.
The bill sponsored by DFL House Majority Leader Ryan Winkler has been through almost every committee. Along the way the effort has attracted four Republican votes in favor, although some haven’t committed to voting that way on the floor. While it should pass, there is little expectation for action in the Senate this year.
This is the first of a two-year session so everything that doesn’t get acted on this year picks up in 2022 where lawmakers left off.
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