Walz, legislative leaders reach deal on taxes and spending

Published 8:44 am Monday, May 16, 2022

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By Brian Bakst

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.

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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 early next Monday morning. The proposal also calls for a construction financing package of about $1.5 billion.

“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.

“Getting money back to the people has been a top priority for Republicans this session and I’m very happy we were able to accomplish this with permanent ongoing tax relief for hardworking Minnesotans, families, and seniors,” Miller said. “In addition to giving money back, this bipartisan agreement delivers targeted investments in public safety, education, nursing homes, and core infrastructure projects.”

And 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.

Over the weekend, Republicans endorsed candidates for statewide office and the Democrats who hold those offices now will get their party’s nod for reelection at the end of this week.

For governor, Republicans endorsed Scott Jensen, a Chaska family physician who served one term in the state Senate and launched his campaign by opposing COVID-19 restrictions put in place by Walz.

In courting delegate support, Jensen expressed contrition for even considering new gun restrictions, he pledged to pursue a commutation of former police officer Kim Potter’s sentence in Daunte Wright’s killing, and he said he would shut down government if lawmakers don’t pass a bill to require voters to show photo ID.

After he won the endorsement Jensen elaborated in response to a question.

“I think we’ve got plenty of rationale for having a big discussion on election integrity. I think Democrats and Republicans alike want that,” he said. “So I think we’ll have that discussion. And I think that if we can’t somehow get to a point where Minnesotans collectively feel good about their elections, I would be willing to shut government down, perhaps with the lights-on-only kind of bill, I would be willing to do that.”

Former Hennepin County Sheriff Rich Stanek, who bypassed the convention, hasn’t ruled out a primary run.

But Democrats are already coming out strong against Jensen, presuming he’ll be the fall foe of Walz. They have a press event scheduled for Monday to criticize his record on public education.

DFL state party chair Ken Martin called Jensen “the most extreme and dangerous candidate” of the Republicans running, adding, “In just the last two weeks, Scott Jensen has promised to ban abortion for rape victims and to throw one of his political opponents in jail.”

Republicans endorsed three attorneys for other statewide offices: Jim Schultz for attorney general, Kim Crockett for secretary of state and Ryan Wilson for auditor.

Schultz could face a primary challenge from former state Rep. Dennis Smith and perhaps 2018 nominee Doug Wardlow for the chance to run against incumbent DFLer Keith Ellison. Crockett will run against DFLer Steve Simon, who is seeking a third term. Wilson is taking on Democrat Julie Blaha.

At the Capitol, hopes are still high for an end of session deal that will set in place plans for the $7 billion or so that remains of the projected budget surplus.

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

There has been little said about progress or breakdowns in negotiations. That’s perhaps a sign that discussions are moving along.

Any deal will require some major concessions. Democrats will have to agree to bigger tax cuts than they would prefer, and Republicans will have to budge on new spending.

There is also concern about the ongoing strength of the economy. That could be reflected in an agreement that leaves some projected surplus money unspent just in case.

Both sides are going to have to ditch controversial items early this week if they want to move things along.

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. But in legislative time, this Sunday runs to 7 a.m. Monday.