The politics of spending will be key to 2022 legislative session

Lawmakers diverge on how to allocate record state surplus

By: - January 31, 2022 6:00 am

The Minnesota State Capitol building in winter, St. Paul, Minnesota. Photo by Tony Webster.

The 2022 legislative session opens Monday, with lawmakers returning to St. Paul armed with ideas on how to spend the state’s projected $7.7 billion budget surplus. Those ideas include bold plans that have little chance of being enacted without major compromises on both sides.

Senate Republicans want big tax cuts for Minnesotans and businesses, as well as financial incentives to hire and retain police officers. House Democrats want paid family leave, more funding for schools and myriad other programs they say will promote economic security for the state’s most vulnerable and marginalized. 

Gov. Tim Walz this week published his supplemental budget, spoke in support of many House DFL priorities, and announced various proposals, including direct payments to Minnesotans he has dubbed Walz checks. 

The 2022 session comes as the omicron surge nears its peak, affecting how lawmakers and staff conduct business. 

If the country is divided over mask and vaccine mandates, so is the Minnesota Legislature.

The House DFL will continue working remotely, holding committee hearings entirely by Zoom. House Speaker Melissa Hortman, DFL-Brooklyn Park, had previously called for a vaccine mandate for staff, but backed off and is considering how such a rule could work in light of the U.S. Supreme Court ruling striking down President Joe Biden’s workplace mandate. 

The Senate GOP, however, will continue holding hybrid committee hearings, with many lawmakers in attendance, and it will not require senators to wear masks on the Senate floor. 

One final wrinkle bound to have an effect on the session is the fact that all legislative seats are up for grabs and the governor is seeking reelection this fall. Legislators are also awaiting the final drawing of new electoral maps expected to be handed down by the courts in February.

The Legislature is under no obligation to pass a single budget measure this year, having already approved a new two-year budget last summer during a special session. That scenario is unlikely, given some issues that were left unfinished last year, including the distribution of $250 million in pandemic bonus pay to frontline workers. 

To get you up to speed on what to expect, here is a rundown of some of the major proposals from the governor, House DFLers and Senate Republicans.  

Walz budget

Walz’s supplemental budget proposal would grow the state budget by 14%, from $52 billion now to more than $59 billion in the current two-year cycle. 

His plan would spend down the entire surplus and eat up much of the projected surplus in the upcoming budget cycle because of the ongoing spending the new programs would require.  

In recent days, he has outlined proposals on public safety, health care, education, social services and housing, as well as a $2.7 billion public works and infrastructure borrowing package. 

Walz has proposed legalizing recreational marijuana, supporting a plan sponsored by House Majority Leader Ryan Winkler, DFL-Golden Valley. The plan, which would align Minnesota with 18 other states with legal pot, is thought unlikely to pass this year, given Senate GOP opposition.

The governor seeks to spend $300 million on public safety, which would give local governments additional funding to address violent crime. The proposal includes $2 million for law enforcement recruitment bonuses, as well as funding for more body-worn cameras for police departments. 

Walz wants to issue direct payments to 2.7 million Minnesotans, dubbing them Walz checks, that would range from $175 to $350 depending on income and tax filing status: Single tax filers earning up to $164,400 would receive a payment of $175; a married couple filing jointly earning up to $273,470 would receive $350. 

Unlike the governor’s proposals, don’t expect lawmakers to start putting price tags on all of their spending plans yet. Hortman and her GOP counterpart, Sen. Jeremy Miller of Winona, say they are awaiting the February forecast before they start getting specific about the numbers. The late February update will give decision makers the most updated estimates on how much money is expected to be available to spend.

House DFL

Two issues that could see early action are the pandemic bonus pay for frontline workers and the debt resulting from federal loans to Minnesota’s unemployment insurance trust fund.

Legislators are deadlocked on how to distribute $250 million in bonuses to essential workers, with Republicans calling for health care workers to receive larger bonuses, leaving out people who provided child care, kept grocery stores and meat processing plants running and clean. Walz and the House DFL have proposed issuing $1 billion in bonuses, taking some money from the projected surplus to give out more money. 

Republicans have called on the governor to replenish the unemployment insurance trust fund, which currently faces a deficit, rather than force businesses to pay more in taxes to repay $1 billion the state borrowed from the federal government to keep unemployment checks flowing to workers laid off during COVID-19 shutdowns. Walz has proposed doing so, with support from House Democrats. 

Hortman outlined a number of areas where she, Walz and GOP leaders agree, signaling optimism that work on those issues can get done this session: tax cuts, public safety spending, early childhood education, pandemic bonus pay and unemployment insurance trust fund. 

“There’s a lot of common ground,” she said. “If people can avoid demagoguery, we should be able to get something done on those and we should be able to get something done expeditiously.”

Hortman seemed cool to the idea of issuing Walz checks. 

“I gave an opinion to the governor that when we did the Jesse checks in (1998), we looked back and wished we wouldn’t have done that because the administration was very complex and costly and maybe there was a more efficient way through the tax code,” she said. “If the mechanism of delivery is via a tax credit … I think that that’s a better way to do it.”

Claire Lancaster, a Walz spokeswoman, said both tax credits and Walz checks can be done.

“Minnesota’s historic surplus gives us an opportunity to provide relief quickly, while also making long-term investments to permanently lower costs for Minnesotans,” she said in a statement.

Senate GOP

Senate Republicans outlined their priorities, focusing heavily on addressing rising violent crime and backing law enforcement. 

“We know crime rates are up, kids are falling behind and record inflation is eating away at family budgets,” Miller, the GOP leader, said last week. 

Republicans, like Walz, want to offer financial incentives to hire and retain police officers. But they are painting themselves as the staunchest defenders of police, even floating the idea of spending money on marketing to counter what Miller said was the “disrespect” from Democratic politicians.  

“We know more cops results in less crime,” Miller said.

State Sen. Warren Limmer, R-Maple Grove, chair of the Senate judiciary and public safety committee, said his caucus wants to see stiffer punishments for violent criminals. Current laws are too lenient, he said, and county prosecutors and judges are shifting focus away from crime victims.

“Much of the crime wave has been attributed to progressive policies like reducing and eliminating bail,” Limmer said. “We intend to remember the victims first before we make public policy.”

Limmer said he and fellow Republicans support proposals to make carjacking its own offense and would call for a number of minimum mandatory sentences for violent offenders. 

On taxes, Republicans argued that the state’s budget surplus is evidence that Minnesota taxpayers have overpaid. Miller said Republicans would instead focus on “permanent, long-term” tax cuts, citing some proposals to eliminate Social Security income from state taxes. 

Miller did not provide specific figures for how much they intend to spend on their law enforcement recruitment incentives, and he also did not give a figure how much their tax cut proposals may cost.

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