Billions left unspent as divided Legislature flounders in final hours

In the end, the Minnesota Legislature ran out of time early Monday to strike deals on how to spend the state’s historic budget surplus, leaving billions on the state’s bottom line unless DFL Gov. Tim Walz and legislative leaders finish the work in a special session. 

Lawmakers blew past a midnight deadline, failing to pass new spending for public safety, schools, health and human services, tax cuts and a capital infrastructure bill. 

Because they passed a two-year budget last year, they don’t have to pass anything this year, but the state’s burgeoning problems in education and public safety had constituents clamoring for a fresh infusion of money, while both parties also sought to give some of the surplus back in the form of tax cuts and credits. 

Last week, House Speaker Melissa Hortman, DFL-Brooklyn Park, Senate Majority Leader Jeremy MIller, R-Winona, and Walz announced they had reached a broad framework for the state budget. 

The framework, which sets spending on the surplus for the next three years, included: $1 billion for education; $1 billion for health and human services; $450 million for public safety; $1.4 billion for a bonding bill; $4 billion for a tax bill and $4 billion left unspent in case of any future disruptions to the state economy. 

“We hope our Senate GOP colleagues will in the morning agree that we need to come back and finish the work for the people of Minnesota,” Hortman told reporters in a post-session press conference, arguing that lawmakers should return in a special session to finish passing bills. “There’s a lot of really important work that we can do for the people of Minnesota.”

Miller, for his part, called the process frustrating, blaming the House DFL for not finishing on time. He seemed less interested in a special session, even though the bills outstanding contain some of the Senate GOP’s top priorities, including full exemption of Social Security income from state taxation and an income tax rate cut. 

Walz told reporters that he expected to meet with legislative leaders on Monday to try to negotiate a special session agenda. 

“We’re happy to continue these discussions, but the reality is… we’re not interested in a special session. For goodness sake, get your work done on time,” Miller said.

The sticking points were numerous. On public safety, Miller said Senate Republicans pushed for more funding for law enforcement and tougher penalties for certain crimes. House DFL lawmakers, Miller said, relented on more funding for police but pushed back against harsher criminal penalties. 

“That just wasn’t acceptable to Republicans,” Miller said. 

Still, the session was not a complete wash. Lawmakers approved new money for higher education, veteran services and agriculture, which includes a drought relief package. Previously, lawmakers found compromise on replenishing the unemployment insurance trust fund and approving pandemic hazard pay to frontline workers. 

Despite recriminations between lawmakers of slow-walking offers and bad-faith negotiating, Hortman struck an optimistic tone for finishing bills in a short special session. She cast the inability to finish on time as a byproduct of a part-time Legislature whose calendar was set decades ago. 

“This has become a fairly typical occurrence,” she said. “We have a very complicated state budget, and a big state with a lot of people in it and the length of the legislative session set that we decided in 1970 has shown us over the last 20 years to not be long enough.”

Minnesota special sessions have occurred fairly regularly in the past few years, including monthly during the worst of the pandemic. 

The failure of lawmakers to approve the budget bills threatens to derail top priorities for the Senate GOP, House DFL and governor as the 2022 fall elections get closer. 

Senate Republicans started the session focused on supporting law enforcement, announcing a series of packages to bolster police departments with recruitment and retention bonuses. They also frequently pointed out rising violent crime in the Twin Cities to justify their tough-on-crime agenda. 

House Democrats, meanwhile, pushed hard for increased education funding to help address funding shortfalls in special education, as well as advocating for more affordable child care and health care for lower-income Minnesotans. 

The governor, who pitched direct payments to Minnesotans as a centerpiece of his economic agenda, compromised on several of his priorities, but still stood to see many of his proposal incorporated into a final budget deal.

Walz appeared ready to call lawmakers back to the Capitol to finish the budget deal struck last year.

“We’ll finish this. We have to. The ball is on the one-yard line,” Walz said. “This is the nature of deliberative bodies. They tend to be this way. It’s not an excuse, but it’s a reason.” 

Monday is the last full day of the 2022 legislative session, but under state law, lawmakers cannot pass any bills in the last 24 hours. Instead, lawmakers will meet to send off a long list of retiring House and Senate members who will not be running under the newly drawn legislative maps.