Notes from the Capitol

The 2021 legislative session has come and gone, and we are once again headed into extra innings. The legislature adjourned yesterday, as required by the Minnesota Constitution, without passing a budget, without addressing how to appropriate the $2.8 billion Minnesota received from the federal American Rescue Plan, and without acting on major tax policies including federal conformity for the Paycheck Protection Program and COVID-19 unemployment benefits.

Although the legislature did not wrap up the budget before the adjournment, Governor Walz and legislative leaders announced yesterday that they have reached an agreement on budget targets. This means we now have a framework for how the legislature will proceed with a special session. Most Capitol observers expected some delay following the end of the session before the budget framework would come together.

Some of the key details of the agreement include:

  • $1.298 billion in new spending, including:
    • $125 million in new funds for economic development, workforce, and labor
    • $110 million in new funds for housing, including $100 million for Housing Infrastructure Bonds
    • $70 million for broadband
  • The State’s budget reserve will increase from $1.6 billion to $2.4 billion
  • Of the $2.8 billion in federal support:
    • $500 million is granted to the Walz administration to continue addressing the pandemic
    • $1.233 billion is reserved to be appropriated in the 2022 session
    • The remainder was used in the 2021 budget agreement

So what’s next? Per the agreement, committee chairs and agency commissioners must complete their budget proposals by May 28 and bill language by June 4. These proposals will then be processed during a special session called no later than June 14.

Does this mean things are done? Not exactly. Committee leaders and commissioners still need to come to an agreement on $1.3 billion in new spending in the next 10 days. That in and of itself is a lofty goal. Significant policy disagreements are still outstanding and not resolved in the budget agreement. Throughout this session, the House DFL has called for additional public safety reforms. While the Senate GOP has indicated that it is willing to engage in negotiations, it is unclear if they will be willing to go far enough to satisfy the demands of the House DFL Caucus.

Additionally, the Senate GOP has been very vocal these past few weeks about the need for the Walz administration to either stop or pause its rule-making process to adopt car emission standards. This issue got heated enough in recent days that Sen. Ingebrigtsen (R-Alexandria) argued in conference committee that the Environment and Natural Resources bill will not pass unless it includes language pausing the rule-making process.

It’s possible that bills that deal with the budget and remaining policy issues will be finalized by June 4. But it is probably equally as likely that these policy issues, or others that are still waiting in the weeds, pop up and create a stumbling block for a smooth conclusion to the session.