Walz, legislative leaders reach $52 billion budget deal

ST. PAUL, Minn. (AP) — The leaders of the Minnesota Legislature and Democratic Gov. Tim Walz announced a $52 billion deal for the state’s next two-year budget on Monday, but lawmakers will have to finish the work during a special session next month and difficult negotiations still lie ahead on police accountability and other issues.

The agreement calls for a balanced two-year budget without raising taxes, while fully exempting from state taxes federal Paycheck Protection Program loans to businesses and unemployment insurance benefits that were raised during the pandemic. It also includes extra money for summer school to help students catch up after a year of distance learning.

“Minnesota did it again. We found commonality amongst ourselves,” Walz said at a news conference called to announce the deal reached at around 12:15 a.m.

Walz, Republican Senate Majority Leader Paul Gazelka and Democratic House Speaker Melissa Hortman once hoped to set the budget targets more than a week ago. They agreed it was impossible to nail down the language of the major budget bills and get them passed before Monday night’s constitutional deadline for the regular session to adjourn, so they’ll have to go into overtime.

“But you have three people who basically respect each other and are able to work well together despite huge ideological rifts between them,” said Hortman, of Brooklyn Park.

The governor plans to call the special session for no later than June 14, but the lawmakers said the work would begin earlier. Walz is required by law to reconvene lawmakers by that date as a condition for extending the emergency powers he has used to respond to the coronavirus pandemic.

The task of resolving their differences was harder this year than in 2019 because lawmakers mostly met remotely due to the pandemic and had fewer chances for one-on-one deal-making.

Deciding how to spend $2.8 billion in federal COVID-19 relief money was one of the main complications, the lawmakers said. The state didn’t get federal guidance on how it can spend that money until last week. Walz will control $500 million of that sum, while the Legislature will get a say in how the rest is spent.

The leaders have left it up to the conference committee negotiating the public safety budget bill to find common ground and decide which police accountability proposals passed by the House will make it into the final version.

Senate Republicans had resisted the policing package passed by the House, saying they wanted to focus on the budget and allow time to implement a policing bill that passed last summer following the death of George Floyd. The new package was spearheaded by the legislative People of Color and Indigenous Caucus, which had hoped to build on the momentum of the murder conviction of former Minneapolis police Officer Derek Chauvin in Floyd’s death.

“Depending on who you’re talking to, we’re either way apart or close,” said Gazelka, of East Gull Lake. “Because there are some things that we think that we can do, but again, some people would want a lot more, some people want less.”

Republicans also resisted calls by Walz and Democratic lawmakers for income tax increases on the wealthy and for some other taxes to provide continuing funding for education, saying there was no need for a tax increase when the state was facing a $1.6 billion surplus and had $2.8 billion in federal coronavirus aid coming.