With billions unspent, Minnesota lawmakers race the clock to decide top needs

ST. PAUL — Minnesotans could receive rebate checks or see their taxes slashed.

Police departments around the state could get funding to help them scale up staffing to respond to mounting crime.

And customers could again be able to buy growlers from a handful of the state's biggest breweries.

As the state Legislature enters the home stretch of the 2022 session, billions of dollars of budget surplus money are at stake.

Over the first two months of the legislative session, lawmakers in the divided Legislature have set the goalposts for their priorities, leaving some expansive gaps between DFL and GOP plans. And when they get back from a one-week break on April 19, they’ll enter a month of swift legislative action and (likely) tough negotiations about what can appease both Democrats and Republicans at the Capitol.

As lawmakers go home for the 2022 legislative recess this week, here’s a look at where some of the biggest issues stand.

Just ahead of the legislative recess, the GOP-led Senate approved and the DFL-led House introduced their tax bills, complete with a nearly $7 billion split between them.

Republican priorities included cutting the lowest tier of the state’s income tax, eliminating the tax on social security benefits and conforming the state tax code to federal law. Meanwhile, Democrats said they would take a more targeted approach that included tax credits and rebates for child care, renters and homestead credits and a bigger student loan tax credit.

If approved, the Senate GOP plan would cost $3.3 billion next year and $5 billion in the two years that follow. The DFL proposal would come with a $1.65 billion price tag in the first year and $1.6 billion in the next two years.

Neither tax plan included a proposal from Gov. Tim Walz to pay out $500 in direct payments to taxpayers that earn under a certain threshold. Negotiations about a final tax plan are likely to continue when legislators return to St. Paul.

Both Republicans and Democrats said that reducing violent crime and improving public safety would be a top priority this year. And they’ve laid out different plans to accomplish that.

Senate Republicans pitched a $65 million package to help recruit more law enforcement officers around the state and they proposed setting tougher penalties for carjackers and those who commit a violent offense with a weapon.

In an effort to prevent criminal offenders from committing additional crimes, they’ve also advanced legislation to require prosecutors to bring charges against offenders in certain cases. If they don’t, the prosecutors could face misdemeanor charges, under the bill.

By contrast, House Democrats proposed a heftier $150 million public safety bill with targeted funding aimed at helping communities around the state with the highest rates of violence and increasing crime. The plan attempts to address root causes of violent crime such as offering diversion programs for juvenile offenders and relying on community groups to deter violence.

Both Democrats and Republicans have proposed boosting funding to public defenders in the state, who threatened to strike in March and ultimately renegotiated their contracts after they raised concerns about inadequate staffing and excessive caseloads.

House Democrats and Senate Republicans in the days before the legislative break rolled out plans for education funding that are billions of dollars apart.

DFL lawmakers proposed spending an additional $1 billion in the coming budget year, and more than $2 billion in the following two years to boost Minnesota schools. The biggest spending provisions would build out mental health services, including counselors, for public schools and add $500 million in support for special education and English language learner programs in the next three years.

By contrast, Republicans in the Senate put forward a $30 million supplement for schools that would focus on training elementary school teachers in new strategies to teach reading. They have also passed several pieces of their proposed " Parents Bill of Rights " that would require teachers to make learning materials available to parents.

Conversations about a compromise plan are set to start later this month.

Legislative leaders and the governor remained in negotiations this month about a compromise that could refill the state’s unemployment insurance trust fund and counteract a payroll tax hike on employers.

Lawmakers in March missed a deadline to repay the federal government $1 billion for sending Minnesota resources to help those who were out of a job during the pandemic. They also disagreed on how much the state should spend to replenish the jobless fund.

The Senate in February advanced a $2.7 billion plan to repay the federal government the $1 billion and to replenish the fund to prevent a tax hike for Minnesota employers. Walz also supported that plan. But the House countered with a less expensive proposal that would repay the federal government but not fully replenish the state’s fund.

Legislative leaders met for weeks in an attempt to strike a deal but have so far failed to agree.

The Minnesota House ahead of the recess passed a $ 1 billion plan to send $1,500 checks out to front-line workers who stayed on the job during the pandemic. But Senate leaders said they’re not interested in the plan.

During closed negotiations about the hero paychecks and a plan to repay the state’s unemployment insurance trust fund, Senate Majority Leader Jeremy Miller, R-Winona, offered to let House members decide how $250 million in hero paychecks would be sent out. But that was contingent on House leaders agreeing to pass a $2.7 billion proposal to repay the federal government and replenish the state’s unemployment trust fund.

House Speaker Melissa Hortman, DFL-Brooklyn Park, rejected that offer and said it was a step backward since the Legislature last year approved $250 million for the hero paychecks but lawmakers never agreed on how to disburse them.

For the first time this year, Republicans introduced a plan to set up paid family leave benefits for Minnesota workers. And it focused more on allowing businesses to opt in to the benefit rather than creating a new state program for workers.

The GOP proposal would rewrite state law to let insurers offer paid family and medical leave insurance plans to business owners and it would create a small business tax credit for each employee that enrolls in the program. Republicans said the changes would help more workers access the benefits without overburdening employers with the cost of a new program.

Democrats at the Capitol for years have encouraged the creation of a state program that would offer up to 12 weeks of partially paid time off for pregnancy, serious health conditions, family care, leave when a family member is called for active military duty and safety leave for domestic abuse situations. Each Minnesotan would contribute about $3 per week to the state program. The amount of pay a beneficiary receives would be based on a sliding scale.

While Democrats and Republicans disagree on the best approach, having both sides at the table could help to reach a compromise.

Meanwhile, a proposal to create a paid sick and safe time program that would allow workers to accrue up to 48 hours of time off each passed the Minnesota House but so far has not found support in the Minnesota Senate.

While even-numbered years at the Capitol are typically known as bonding years, where lawmakers focus their attention on a borrowing bill that can fund local projects all around the state, that issue has taken a back seat this year to the historic $9.25 billion surplus.

The chair of the Senate Capital Investment Committee last week asked lawmakers on that panel to vet local projects that would be top priority before the final stretch of the legislative session. Meanwhile, House Capital Investment Committee members have heard testimony on dozens of proposed projects that could encompass a state jobs and projects bill.

Both committees have toured hundreds of proposed project sites around Minnesota in the last two years. And they’re expected to advance their lists of priority construction projects in coming weeks.

Local governments and state agencies ahead of the legislative session put in bids that totaled more than $5.4 billion dollars. And state economists said Minnesota had capacity to borrow up to $3.5 billion to fund proposed projects. Walz earlier this year requested a $2.7 billion bonding bill.

Both chambers of the Legislature on Thursday, April 7, approved $1 million in emergency support to help the Minnesota Department of Agriculture manage the highly pathogenic avian influenza. So far, the illness that is contagious for birds has been detected in 21 Minnesota flocks, affecting 1 million birds.

Agriculture committee leaders were also set to meet after the legislative recess to iron out differences between their proposals to send out $10 million or more in aid to farmers and ranchers.

Both chambers approved plans to issue grants and loans to specialty crop farmers and ranchers that were hit hardest by the 2021 drought conditions, but differences in the bills set them up for a conference committee to decide which pieces of each should move forward.

The Senate tacked on to its proposal additional funds for the Minnesota Veterinary Diagnostic lab to purchase new equipment to aid in detecting avian influenza and limiting its spread. The plan would also set aside emergency funds for the Department of Agriculture to address that illness or others affecting Minnesota flocks.

House lawmakers, meanwhile, included a $13 million provision that would create grants to replace trees and seedlings destroyed by the drought conditions and to build up water infrastructure.

A Minnesota House committee before the legislative deadline approved a broad liquor bill that would allow breweries that produced up to 150,000 barrels a year to offer growler sales, up from the current 20,000 barrel cap.

That cap prevented the state's six largest craft breweries — Castle Danger, Fulton, Indeed, Lift Bridge, Schell's and Surly — from selling growlers.

Stakeholders including craft beverage producers, wholesalers, liquor retailers and Teamsters met in private for months to hammer out an agreement. And they told lawmakers that the plan had pieces that they could all get behind.

A key Senate gatekeeper, Commerce Committee Chair Gary Dahms, R-Redwood Falls, on March 31 said he’d not yet read the proposal but had previously said he’d only bring up bills for consideration that had support from all stakeholders involved.

Follow Dana Ferguson on Twitter  @bydanaferguson , call 651-290-0707 or email  dferguson@forumcomm.com.