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Minnesota legislative leaders on Monday announced a broad agreement on spending in a new two-year, roughly $52 billion state budget but cautioned that many policy issues and details remain to be worked out. 

With a midnight deadline looming to end the regular session, any final bills will not pass until a special session next month. The deal, if eventually approved, would avert a July 1 state shutdown.

The accord does not raise taxes and exempts federal pandemic-related business loans and enhanced unemployment payments from state taxes. It also has a big spending increase for education, including summer school programs.

"We have reached an agreement on target numbers,” Gov. Tim Walz told reporters Monday morning as he stood with Senate Majority Leader Paul Gazelka, R-East Gull Lake, and House Speaker Melissa Hortman, DFL-Brooklyn Park.

“There’s work to be done as there should be in the Legislature,” Walz said. “This year has been a battle."

Negotiators “did not address every policy issue at this point,” said Gazelka. “The work is not done. It just began. But now we have clear guidance of where to go.”

Hortman described the K-12 deal as a “historic investment” in public schools.

Legislative leaders and Walz negotiated in private throughout the weekend, facing not only the deadline to end the session, but also the deadline for state and federal income taxes, without a decision on whether federal business and unemployment COVID-19 aid would be taxed. 

Senate Majority Leader Paul Gazelka spoke with Cathy Wurzer prior to the deal being announced.

House Speaker Melissa Hortman spoke with Cathy Wurzer

House Speaker Melissa Hortman spoke with Cathy Wurzer prior to the deal being announced.

"We left the state Capitol at about 12:15 (a.m.), a little bleary-eyed, and we think that we're on the precipice of an agreement, but we want to make sure that we're all on the same page,” Hortman told MPR News Monday morning, prior to the deal announcement. 

Gazelka told MPR News in the morning that there was some movement on making changes to police accountability — although he still said there would not likely be full-fledged citizen oversight of police or an end to qualified immunity for officers. 

Echoes from past ring anew

It’s been a sticking point for months between Senate Republicans and House Democrats, in the wake of the 

“I think there's really a substantial amount of reform that's possible,” Hortman said. “The waterfront of criminal justice reform includes policing, but also, there's a lot of the corrections side. And there's a lot we can do and a lot of areas. So I'm pretty confident that we'll be able to find common ground.”

Gazelka also suggested that his caucus is backing away from threats to deny state parks and other funding if the Walz administration stuck to plans to tighten clean air regulations and require auto dealers to make more electric and hybrid vehicles available. 

Hortman said there had been some discussions about a bonding bill, including money to help parts of the Twin Cities rebuild following the riots last year after Floyd was killed. But she said that will take further discussions with the minorities in the House and Senate, since state bonding requires a 60 percent supermajority to pass. 

Both leaders said that an end to the session was slowed by a massive influx of federal COVID-19 aid. Direction from the federal government on how the money could be spent came only last week. 

Federal rescue dollars to start flowing to Minnesota

Watch: Legislative leaders unveil two-year budget deal:

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Minnesota legislative leaders said Monday they’ve reached bipartisan agreement on a two-year, roughly $52 billion state budget. With a midnight deadline looming to end the regular session, any final bills will not pass until a special session next month. 

Deal reached on Minnesota budget; special session needed

Senate Majority Leader Paul Gazelka speaks with Cathy Wurzer

House Speaker Melissa Hortman speaks with Cathy Wurzer

Deal reached on Minnesota budget; special session needed

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