Walz, legislative leaders reach deal on taxes and spending

Three men in suits stand outside the state Capitol
DFL House Majority Leader Ryan Winkler (left), Gov. Tim Walz and Republican Senate Majority Jeremy Miller announce a broad deal on spending and taxes Monday.
Brian Bakst | MPR News

Updated: 3:30 p.m.

Minnesota lawmakers have cut a deal on how much money from the big projected budget surplus will go to cut taxes, give a boost to schools and be used to enhance public safety. 

The agreement comes with one week to go in the 2022 session. Many specific details will still have to be sorted out, but the signed framework will devote $4 billion over three years to tax cuts, $4 billion to new spending and leave about $4 billion unspent in case the economy sours.

Of the new spending, $1 billion will go each to education and programs in the area of long term care and social services. Another $450 million is bound for public safety initiatives.

Lawmakers are pressed for time to complete the bills needed to make it all happen. They must pass everything by midnight Sunday. The proposal also calls for a construction financing package of about $1.5 billion.

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“With an unprecedented surplus, we have the ability to make significant investments in the things that will improve Minnesotans’ lives, like health care, public safety, and education, while also providing tax cuts and putting money in Minnesotans’ pockets,” Gov. Tim Walz said in a statement Monday morning.

Republicans who control the state Senate have been pushing for permanent tax cuts the entire session. Majority Leader Jeremy Miller, R-Winona, said the deal includes them. Miller stressed that negotiators have a lot of work left to do in the next few days.

“My message to the conference committee members is focus on areas of agreement,” Miller said. “There is not much time to get this done before the end of session. Some of these larger bills need to be agreed to and wrapped up probably by Wednesday, at the latest.”

Democrats who have the majority in the House wanted more spending for schools and early childhood programs. House Speaker Melissa Hortman, DFL-Brooklyn Park, said the deal does that too.

“House DFLers have been working all session to reduce costs for families, support workers, and improve public safety,” Hortman said in a statement. “We have reached a bipartisan agreement on a budget framework that makes strong investments in families' economic security, education, health care, and public safety to address the challenges Minnesotans are facing. These investments are in addition to the budget we passed last year and the frontline worker bonuses that we got across the finish line last month.” 

Lawmakers are tapping into both a short-term surplus and one forecast years into the future. Only a fraction of that money has actually come in, but recent revenue updates show the money remains on track. The next two-year budget will be debated next year, so this represents an add-on to the budget set last summer, which runs through June 2023.

Once the May 23 deadline hits, the election campaign will start in earnest. In fact, candidate filing opens Tuesday and will extend until May 31.

Despite the call for legislative negotiators to work quickly, there were signs Monday that not everyone was on board.

House Education Chair Jim Davnie, DFL-Minneapolis, acknowledged the framework agreement and the tight timeline during a meeting of the education conference committee.

"Leadership has indicated that we have two days to resolve this, and delay is not on the table," Davnie said.

He wanted his Senate counterpart, Education Chair Roger Chamberlain, R-Lino Lakes, to present the next budget offer. But Chamberlain insisted it was Davnie's turn.

“I really have nothing more to say,” Chamberlain said. “You can talk and talk and talk if you wish. But tomorrow the Senate will have a hearing. We will post it. Please pay attention. If we don’t have an offer to discuss, we shall not be meeting.”

Conference committees all but stopped meeting late last week because many Republican legislators were in Rochester for the Republican state convention. And perhaps there was some hesitancy to announce deals ahead of that convention.

Walz also has to be careful about not aggravating his base. But the diminishing time means that most of the decisions will have been made by the time Democrats meet for their convention this coming weekend.

House Majority Leader Ryan Winkler, DFL-Golden Valley, mentioned that paid family leave and earned sick and safe time are among the issues that still need to be addressed in the future. Still, Winkler said he was pleased with the agreement.

“We’ve accomplished more with Republicans in the Senate and with the governor on a budget deal than we expected to be able to do by at this point in time in the session,” Winkler said. “So, I think this is a pretty significant breakthrough, and our members are appreciative that we’re able to move this forward at this point in time. I think everyone knew a compromise was going to be part of it.”

Winkler stood in for Hortman at a news conference announcing the deal because Hortman, who participated in negotiations and signed the agreement, is still on the mend from a case of COVID-19. She will be back at the Capitol later this week.

While time seems tight, it’s amazing how fast lawmakers can move when they have a deal framework. 

Sunday is effectively the last day to pass legislation because lawmakers can’t act on adjournment day, which is Monday.