Minnesota lawmakers unlikely to finish budget ahead of window for worker layoff notices
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After plowing through two deadlines — one constitutionally required for session adjournment and another for an aspirational pre-Memorial Day finish to budget work — lawmakers are setting a new target to complete a $66 billion budget.
It likely isn’t early enough to prevent thousands of furlough notices from going out to state workers starting June 1 — this coming Sunday. The letters would warn of possible layoffs that would result if the Minnesota Legislature can’t pass remaining pieces of the state budget before July.
Legislative leaders and the governor are hopeful they can avoid that worst-case scenario.
“We're running up against that June 1 deadline, reassuring state employees we're going to get this budget done. We're obligated by contracts come June 1 to print layoff notices,” Gov. Tim Walz told reporters on Wednesday. “Everyone understands that we do work up against deadlines all the time. I'm not happy about that, but it's the nature of it. But we're going to get it done.”
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State employee contracts require 30 days notice “whenever practicable” to employees who might get let go. Those who work for agencies and on programs that haven’t been funded yet are at risk. A few budget bills have been signed into law, but the vast majority of the two-year plan is unfinished.
For some, it’s a double whammy: Layoff letters could come just as the state implements new rules requiring that state employees work half the time each month in the office or work site.
The leader of the American Federation of State County and Municipal Employees Council 5, which is one of the biggest state worker unions, criticized lawmakers for pushing it this far and adding to the anxiety of employees.
“There is no excuse for holding workers hostage due to political inaction,” AFSCME executive director Bart Andersen said Wednesday.
State leaders met over the holiday weekend. One said Tuesday that there was progress in finishing outstanding bills. House DFL Leader Melissa Hortman said a special session is possible as soon as next week.
“We’re hoping to wrap things up this week, and then the revisor will finish drafting,” Hortman said Tuesday.
Lawmakers rolled out a workforce and jobs budget bill on Tuesday. But other proposals on taxes, education and health and human services were still being finalized. It’s difficult to gauge exactly where each of the budget bills stands since most of the work of crafting them has occurred behind closed doors.
Rep. Cedrick Frazier, DFL-New Hope, voiced frustration on Tuesday about a proposed change to Minnesota law governing non-compete agreements for Minnesota workers, which apply when certain employees move companies within the same industry. Democrats and Republicans on the workforce and jobs working group couldn’t agree on how to proceed.
“We continue to have a conversation about changing the law that would handicap workers at a moment when we are days away from sending out layoff notices because we can’t get the work done here,” Frazier said. “I am very frustrated about the whole idea of this happening here in this moment.”
Republicans on the panel said it was important to strike a deal that would roll back some of the policy.
“If we don’t do something to help our partnership and our large companies with noncompetes, it hurts Minnesota companies, this will hurt jobs, future growth in Minnesota,” Republican Rep. Dave Baker said. “We have people on this committee who have zero interest in negotiating anything. That’s why we’re here.”
Another hard deadline on the horizon is July 1. If a budget isn’t done by then, the state would face a partial government shutdown. Given some of the gridlock in these working groups, it could get close to that.
Leaders point to the narrow divide in the Legislature — 101 Democrats and 100 Republicans. That’s meant there has to be compromise in every bill that moves forward. And that’s tough.
Because committees in the House are evenly split, it takes support from both political parties to advance budget bills. There have been instances where Senate Democrats and some House members agree, which normally would be enough to move a bill out of a working group or conference committee. But that tied House makes it harder to get enough support to close deals.
That happened yesterday during a working group meeting on taxes. Senate Taxes Committee Chair Ann Rest, DFL-New Hope, put up an offer that was what House members proposed.
“Let it be known to our leaders that the House cannot even accept their own proposal. Now we will take a recess,” Rest said.
A leading House Democrat, Rep. Aisha Gomez, laughed off the remark. Moments earlier, previously told Rest that it’s hard to move portions forward without a full picture.
“We haven’t had the conversation about how we’re going to fund our bill, how we’re going to meet our target,” Gomez said. “If we cannot advance that, we cannot advance our bill.”
Additional details about the tax proposal came to light this week. Proposed provisions that would bump up Minnesota’s cannabis tax from 10 percent to 15 percent, along with a new electricity exemption for data centers is estimated to raise tax revenue by $108 million over the next two years.
That could be a challenge as Republicans have said they don’t want to raise taxes this year. At least one House Republican would have to support it for the measure to move forward.
Hortman and House Speaker Lisa Demuth, a Republican, signed off on the budget deal. That means they would be expected to support bills even if all others in their caucuses vote against elements of it.
Walz alluded to the tricky balance in appraising the situation on Wednesday.
“It’s been a real challenge because basically every single legislator has a veto, and that means building a coalition and making the case,” Walz said after a road project groundbreaking in Jordan. “ So as far as the leadership negotiations go, the chairs, the work groups or whatever, they have really been doing good work. And it's just time to bring it home.”
