ST. PAUL — Minnesota lawmakers closed out the 2021 legislative session on Monday, May 17, with a framework for a budget and many policy questions unanswered.
After several days of closed-door talks, Gov. Tim Walz, House Speaker Melissa Hortman, D-Brooklyn Park, and Senate Majority Leader Paul Gazelka, R-East Gull Lake, emerged with targets for each of roughly 13 areas of state government and with a rough outline of policy proposals that would get a fast track when lawmakers return for special session in June.
The broad-strokes plan included tax relief for business owners and Minnesotans who lost their jobs due to the pandemic along with a spending bump for schools and mental health supports. And it left out a proposal to increase taxes on those who make more than $500,000 a year.
While the last-minute deal paved the way for a state budget agreement, it didn't outline which policing law changes, adjustments to the governor's executive powers or re-writes of a "clean cars" emission standards could be up for approval when legislators return to St. Paul.
Over the next month, lawmakers will meet to hash out spending details now that they have budget targets and they'll determine what can get done, as well as what falls by the wayside, this year.
Here's a look at where some of the biggest issues stood and what remained unresolved as lawmakers ended the regular session.
Lawmakers didn't pass a single budget bill during the 2021 legislative session but in the final hours of their last workday, legislative leaders and the governor emerged with a $52 billion framework on what should be included in the state's two-year spending plan.
"Overall, it's a good package that will really help Minnesota and it was so essential to have the federal funding from President Biden and the Democrats in Congress, really that's what made it possible to fund a number of priorities and to do tax cuts," Hortman said.
Bolstered by a $1.6 billion budget surplus and a $2.8 billion boost coming from the federal government, the leaders said Minnesota would be able to provide tax relief to those who collected unemployment insurance during the pandemic and to businesses that took out federal loans to keep employees on their payroll.
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Now that the regular session is over, conference committees will turn to informal workgroups and lawmakers will be able to craft 13 or 14 budget bills laying out specific funding for schools, roads and bridges, public safety and other areas of state government. And they'll reconvene in mid-June to take up the proposals.
The budget is the one thing lawmakers must do before they call it a year. The Constitution requires it, and if they can’t figure out a compromise by June 30, the state could face a government shutdown.
COVID-19 and peacetime emergency
One of the biggest sources of friction this year has been around the COVID-19 pandemic and the state’s response to address it. Walz in March of 2020 issued a peacetime emergency as the pandemic bore down in the state. And every month since, he has asked the Legislature or Executive Council to grant a 30-day extension.
The governor extended the emergency last week and said he likely will need to do so again in June to allow the state to continue drawing down federal emergency funds, maintaining a moratorium on evictions and keeping up and running COVID-19 testing and vaccination sites.
"There's very few things that we just have to manage," Walz told reporters on Monday, noting that the state had begun curtailing restrictions on capacity, masking and social distancing in recent weeks. "I know it is an irritating point for many folks, but it was the nature of managing COVID."
Republican lawmakers have attempted to end the peacetime emergency and to roll back the governor’s executive orders with little success. Gazelka said the governor's move to end the state's mask mandate following CDC guidance was a step in the right direction, but more could be done to unwind the peacetime emergency and reinstate additional authority with the Legislature.
GOP lawmakers counted as a win a bipartisan agreement to place the bulk of $2.8 billion in federal funds headed to the state under the control of the Legislature. Walz would decide how the remaining $500 million gets spent with some legislative input.
Police accountability and transparency
Democrats said police accountability and transparency measures would still move through the Legislature as part of the larger bipartisan compromise, but they left up to conference committee members which provisions would ultimately become law.
The issue had so far divided Democrats and Republicans on the committee with Democrats insisting that further policing law changes were critical in the wake of the deaths of George Floyd and Daunte Wright, while Republicans said last summer’s bill was sufficient to address police brutality.
House Democrats’ version of the public safety omnibus bill included a slate of proposed changes, including studying police officers’ qualified immunity, banning traffic stops for minor vehicle infractions, establishing citizen oversight councils of police departments and creating a database to track officer misconduct.
Senate Republicans on Monday, May 17, said they would be open to proposals that ensured more trust between police and community but raised concerns about plans they viewed as "anti-police."
Minnesotans won't see their state income taxes raised under the two-year budget plan, but hundreds of thousands could see a tax cut if lawmakers approve a plan to erase income taxes on federal loans and unemployment insurance.
The Department of Revenue this week started assessing whether it could automatically refund the taxes to those eligible or if those individuals would have to refile after lawmakers approved the plan.
As part of the budget framework, Walz and Democrats dropped a proposed tax increase on those who make $500,000 a year or more as well as on some capital gains. DFL lawmakers had proposed the hike to free up new revenue to fund boosts to schools, health care programs, workers and families.
But instead, legislative leaders agreed to use incoming federal dollars and surplus funds to provide tax relief and spending increases in those areas.
"Promises made, promises kept," Gazelka said, referring back to an early GOP commitment to sink any proposed tax increase.
In the long term, Democrats said lawmakers would have to have a deeper conversation about raising taxes on wealthy Minnesotans because the one-time federal money wouldn't be something the state could count on forever.
Legislative leaders and the governor came out of negotiations without a plan for a bonding bill. And they said they'd begin talks with minority leaders in the Senate and House to determine what could reasonably pass this year.
Minority leaders hold a position of power in bonding talks since higher vote thresholds are required to pass the plan in each chamber.
Lawmakers in October approved a $1.9 billion capital investment package, months after such bills are typically passed in even-numbered years. Typically legislators pass a smaller bill in odd-numbered years but DFL lawmakers have said the Legislature should move a larger bill to leverage historically low interest rates and to kickstart the state's economy.
Thanks to the additional federal aid funds, legislators said they were able to approve a $525 million bump for Minnesota schools compared to current levels over the next two years. In the following two years, schools would be set to receive $675 million.
Education groups said the extra funds were needed to help stave off teacher and staff layoffs after a year of uncertainty and enrollment decline spurred by the pandemic. Walz on Tuesday announced that he'd allocate $75 million in federal funds to open up summer programming to all students who wanted it.
Another $1.3 billion in American Rescue Plan Act funds were also set to funnel directly to Minnesota schools.
GOP lawmakers during budget talks dropped their proposal to free up state education dollars to let families enroll their students in private or parochial schools.
California clean car rule
A policy proposal to block or delay the implementation of a vehicle emission rule change didn't get resolved during private budget talks, so it will be up to a legislative conference committee to determine its fate.
Sen. Bill Ingebrigtsen, R-Alexandria, earlier this month threatened to hold up funding for the Minnesota Zoo, state parks and research on chronic wasting disease in deer unless DFL lawmakers voted to block a proposal to eliminate Minnesota Pollution Control Agency rulemaking around clean car emission standards.
The Walz administration rolled out the new emissions rules modeled after ones implemented in California and 15 other states in an effort to reduce greenhouse gas emissions. The rules would require automakers to expand electric vehicle options in Minnesota. An administrative law judge approved the change earlier this month. Several states have approved the policy through similar rulemaking processes.
GOP leaders have walked back the position and said they'd like to see a moratorium on the new rule. Democrats have said they support the new emissions standards.
The Minnesota Senate on Monday, May 3, approved a proposal to require photo identification to cast a ballot in the state, setting up a collision course with Democrats who oppose the plan. But without an agreement, the proposal could fall by the wayside, as legislative leaders said policy measures that can't pick up bipartisan support would be jettisoned heading into a special session.
Senate Republicans prioritized the plan in budget discussions and said it was key to preventing voter fraud and rebuilding faith in Minnesota’s elections. Democrats, meanwhile, said the plan could pose a hindrance to Minnesotans hoping to vote on Election Day and could sink the state’s highest-in-the-nation voter participation rate.
House Democrats have passed legislation aimed at creating an automatic voter registration system and restoring the right to vote to people convicted of a felony after they have served their prison sentence. Unless a compromise emerges, Gazelka suggested that the policy (along with many others that haven't found support among both parties) could be on the chopping block.
MORE ON LEGALIZATION EFFORT: Minnesota House casts vote to legalize recreational marijuana for adult use
The Minnesota House of Representatives last week approved a proposal to legalize recreational marijuana use for those 21 and over and expunge low-level crimes related to marijuana. While a historic vote, the plan appears stuck in the Capitol as Senate leaders have said it will go "up in smoke" in that chamber.
Barring a breakthrough, the bill seems unlikely to become law this year due to Republican opposition in the Senate. The policy wasn't part of a budget-writing framework and hasn't been taken up in a Senate committee.
A separate proposal to dramatically expand Minnesota's medical cannabis program was on its way to Walz's desk after both chambers approved it as part of a larger omnibus bill on Monday. The proposal would allow medical marijuana program members to access cannabis in its plant or flower form. Current rules banned smokable forms of cannabis.