REGIONAL- Over $10 billion of surplus cash will stay in the bank for now, as last-minute haggling between Republican and DFL state legislators late Sunday night failed to produce any spending bills by the constitutionally mandated deadline.
Better than expected economic recovery from the COVID-driven recession netting the state a whopping $9.25 billion in surplus revenue, and there is an additional $1 billion from the federal American Rescue Plan as well. Both parties had grand plans for funding tax cuts, bonded infrastructure projects, public safety, education, and more, but a divided Legislature started the session with starkly opposing ideas, and the gaps were too large to close by Sunday’s deadline.
It’s become common practice for the Legislature to create the need for a special session to wrap up its work, but this year was supposed to be different, Gov. Tim Walz adamantly said in April when he called out leislators for dragging their feet.
“The Legislature is doing what the Legislature does. They’re waiting until the last minute,” the DFL governor said. “I want to be very clear, there is no special session. We’re not going to have the taxpayers of Minnesota pay per diem. We’re not going to have them pay wages to these folks who had six months to do their work. There is no special session.”
However, on Monday Walz found himself eating those words as he negotiated with House and Senate leaders for a short special session.
“We have to,” Walz said. The idea that the clock struck midnight we turn into a pumpkin or something – no, we’ve had special sessions every single time because the work needs to get done.”
But a disadvantage for Walz is that the work he’s talking about doesn’t have to get done. State government is already funded through last year’s $52 billion budget bill to June 30, 2023. If the state was staring into the eyes of a new biennium without having passed major bills for education, transportation, public safety and the judiciary, and health and human services, a special session would be absolutely necessary to avoid a government shutdown. None of those were passed when time ran out this year, but with another year to go on the budget, there’s little incentive for already reluctant Republicans to want a special session.
But the light of day produced no better results than the dark of night. Republican Senate Majority Leader Jeremy Miller, DFL House Speaker Melissa Hortman and Walz agreed not to a special session, but to a period of time for the parties to “decompress” and then try again.
Hortman is already be on board for a special session.
“There is a relatively brief window of time within which we need to have an agreement that makes sense to come in and finish up,” Hortman said, adding that that window was this week, before the Memorial Day Weekend. “I think all of the bills are close enough that that could be within a day or two.”
But if Miller holds fast to his position, nothing will happen until next year.
“We’ve had members from the Senate working darn near around the clock for a week, what is one or two more days going to do?” said the Winona Republican. “We are not interested in a special session.”
A deal on what lawmakers called the largest tax cut in Minnesota history was struck last Saturday. Republicans got the plum they were seeking with the elimination of the state tax on Social Security benefits, and the DFL secured an expanded and simplified credit for renters.
The Social Security tax elimination would mostly benefit taxpayers who have $100,000 or more of total income. Meanwhile, there was already a credit available to renters, but it required a standalone application. The tax agreement creates a refundable rental tax credit as part of filing income taxes, and more people will be eligible for the credit because it will be figured on taxable income rather than total income.
The bill also lowers the minimum income tax tier from 5.35 percent to 5.1 percent, and includes several other benefits to certain groups of taxpayers.
But unlike the agreement on a broadband funding proposal that was passed and sent to Walz for his signature, Hortman linked the tax bill to all of the other unresolved major spending bills. The tax bill wouldn’t move in the House if the rest weren’t resolved and assured of moving in the Senate. When the clock struck midnight on Sunday, the tax bill agreement was moot, only to be revived in a special session.
Retiring Senator Tom Bakk, Cook-I, is a veteran of many special sessions, and with the insight gained from participating in both DFL and Republican party caucuses, and he had some sharp comments during a speech on Monday for all involved in how his final session ended
“This session didn’t end in a way that should make anybody proud, and I think both the governor and the leaders should be very careful about pointing fingers over the next few weeks and figure out how we get a better outcome than where we left it last night,” Bakk said. “It did not serve the people of this state very well and there’s plenty of blame to go around.”
He called on Walz to bring in the chairs of the conference committees for each of the stalled bills.
“Bring the people in the room that are actually making the decisions that know the bills and work through it,” he said. “We can’t be that far apart. Don’t try to delegate it to others and don’t put leaders in a position of having to cut a deal and then come back and have to sell it. And I think, Governor, if you do that we’re going to get an outcome that we’re all proud of and will serve Minnesota.”
But Bakk also implored his legislative colleagues to follow the state constitution and get back to doing the people’s work in the legislature within the legally designated time frame.
“The deadline isn’t June 30,” he said. “It seems like that’s the thing, that the real deadline is June 30 when the government is going to shut down. That’s not what the constitution says. So let me challenge everybody to roll up their sleeves, and you’re not going to get everything you want, but get the work done.”