Lawmakers Avert Minn. Gov’t Shutdown With All Remaining Budget Bills To Be Signed Before Deadline; Tax Deal Nears

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ST. PAUL, MINN. (WCCO) — Threats to derail parts of a delicately crafted $52 billion budget agreement loomed in the final hours of the special session, but the Minnesota Legislature successfully passed up outstanding pieces of the two-year state spending plan and averted a partial government shutdown.

The last part of the budget, an education package, passed the Senate unanimously Wednesday.

“We obviously would’ve liked to have it done a little earlier but that’s the way things work,” Gov. Tim Walz told reporters as he handed off the signed bill to Secretary of State Steve Simon for it to formally become law. “Democracy moves at its pace.”

Lawmakers raised no taxes to fund what leaders called historic investments in schools and several other state programs and services, thanks in large part to a deluge of federal COVID-19 relief funds that sent more than $2.8 million for state government alone. That extra money came on top of a state surplus.

What’s left out Wednesday evening is a tax bill that would exempt from state taxes federal Paycheck Protection Program loans for businesses that suffered during the pandemic and made some extra federal unemployment benefits from last year tax-free. The House began debating late Wednesday and had not yet finished as of this writing.

The divided state government failed to come to a budget agreement before a mid-May adjournment of the regular session of their work and embraced an inevitable June session to finish up the budget, knowing Gov. Tim Walz would request a 30-day extension of his COVID-19 emergency powers June 14. They worked nearly to the very end before the deadline to keep parts of government from shutting down Thursday.

“We tried to navigate through extremely difficult situations,” said Senate Majority Leader Paul Gazelka, R-East Gull Lake. “[House Speaker Melissa Hortman] represents and is a liberal and I’m conservative and for those two sides to come together and just barely touch, close a deal and get done is way harder than you can imagine.”

Several billion dollars in federal relief money played a central — and unique — role in the budget negotiating process this year and made the deal possible, leaders say. And it’s also what contributed to delays: The U.S. Treasury released guidance on how to spend the latest round of stimulus funds near the end of the regular session.

“We really needed this extra month. What made it difficult was how to we spend this money and not add new programs that four years from now we’re going to have to pay for when there’s not going to be the money. That was extremely difficult,” said Gazelka. “Where it was beneficial, as a result of COVID and the lockdowns, we didn’t have the same resources as we had before so we were able to fill that in.”

Most of the $52 billion in spending passed and signed into law before a Tuesday night vote on a contentious public safety proposal in both chambers, which House DFL lawmakers originally vowed to change before dropping some of their demands for more police accountability measures.

The final deal on that part of the budget — which funds law enforcement, state prisons and the court system — didn’t include the more significant police reforms that the DFL and activists wanted to see pass. But it does authorize limits on no-knock warrants, money for body cameras for the Minnesota State Patrol and stiffer penalties for crimes assaulting police officers, among other provisions.

Sign-and-release warrants and making it a misdemeanor crime for publicizing a police officer’s home address online weren’t part of the original leadership agreement but were agreed to late Tuesday.

The legislature also moved to end Gov. Tim Walz’s emergency powers July 1, one month earlier than the governor had originally planned.