Gov. Tim Walz implored state lawmakers Sunday to reach agreements rather than careen toward deadlock, telling a joint session of the Legislature that a projected $9.25 billion budget surplus leaves plenty of room for compromise.
In an evening State of the State speech delivered from the House chamber – the first in that setting since 2019 – Walz set an upbeat tone about the direction of the state.
“We've proven that compromises can work. We've proven that we can balance budgets, and we've proven that we can invest in the future,” Walz said. “And because of that I'm here tonight to tell you the state of our state is strong and moving forward."
Aside from the surplus, the DFL governor stressed that the worst of the COVID-19 pandemic appears to be in the rearview mirror.
“The last two years have been incredibly challenging,” Walz said, and then added that because he and lawmakers worked together, “Our budget reserves have hit a record high, and our COVID infections and hospitalizations have hit record lows.”
The public health crisis has consumed much of Walz’s attention and fueled his critics who say he went too far in clamping down. COVID-19 has killed about 12,500 people in Minnesota, led to 1.4 million documented infections, strained the health system, upended the economy and caused lingering divisions between those who took it as a grave threat and those who saw it as overblown.
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Walz is seeking a second term in November against a yet-to-be-determined Republican opponent and a smattering of third-party candidates. His party is expecting political headwinds two years after Democrats swept to full control of Washington and four years after he cruised to the Minnesota governorship.
The outcome of this legislative session could have a big bearing on how voters perceive his leadership.
“Coming out of the pandemic, there are urgent issues that we can’t put off and we need to address quickly,” Walz said.
“We may not agree on everything. And if we're being totally honest, some of us won't agree on anything,” Walz said. “But we owe it to the people of Minnesota to try and find common ground, to try and put some of those differences aside, to move at least some things forward.”
Having been in session since the end of January, lawmakers are struggling to find agreement on a fix to a pandemic-battered unemployment insurance fund and a promised financial reward for workers who exposed their own health to perform critical jobs during the virus outbreak. The two have become linked and both are stuck.
Walz didn’t lay out a new solution but said both could be addressed if majority House Democrats and majority Senate Republicans give a little.
The divisions run deeper than those two items. The two chambers have fundamentally different plans for using the surplus.
The GOP Senate has approved a deep, permanent income and Social Security tax cut but is constrained when it comes to spending on new or expanded programs. The DFL House is pushing more-targeted tax relief alongside billions more for schools, child care, environmental protection and more.
Both have more money for public safety programs and crime prevention but take vastly different approaches.
For his part, Walz is closer to the House when it comes to divvying up the surplus. And he wants to deliver quick one-time tax rebates of $500 for individuals and $1,000 for joint tax filers.
“We can cut taxes for the middle class without massive tax cuts for corporations and the wealthiest Minnesotans,” Walz said. “They don't need a tax cut.”
Starting Monday, the House and Senate will be plowing through their differing budget proposals all week, with debate and votes intertwined with political messaging that will punctuate this year’s election campaign.
DFL House Speaker Melissa Hortman said once all those bills pass off the floor the true negotiations can commence.
“We're always anxious to get into conference and kind of get that real boxing match going with the Minnesota Senate,” she said.
In a pre-taped video released ahead of the Walz speech, Senate Majority Leader Jeremy Miller reiterated his caucus’s priorities. He said the overlap with concerns of the public – touting a three-strikes plan that would stringently punish repeat offenders, money for reading education to boost student achievement and the ongoing tax cuts.
“We have four weeks left of the legislative session,” Miller said. “We are asking Democrats to join us in our efforts to help get good things done for the people of the state of Minnesota.”
The Legislature has until May 23 to wrap up its business. Walz has already declared that he won’t call a special session if lawmakers don’t meet the deadline.