Legislative Top 5: May 21, 2021

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A Budget Deal!

As expected, Minnesota’s regular legislative session ended on Monday without passage of the state’s next biennial budget. However, Governor Tim Walz and legislative leaders announced that day that they had reached a broad global agreement on the budget. The global agreement includes how funds will be allocated between different state agencies, how some of the $2.8 billion in federal American Rescue Plan funds will be used, and decisions on a few key policy details. Still to be determined are details within each agency budget on how the funds will be used, as well as most policy decisions, including some that have stymied House and Senate negotiators thus far. Committee chairs are tasked with leading these decisions.

What’s Included

Included in the agreement is the decision to fully conform to federal tax law regarding the Paycheck Protection Program loan forgiveness and unemployment benefits, meaning that businesses and individuals will not have to pay tax on these benefits. Additionally, leaders have committed to spending $70 million on broadband expansion.

Regarding the federal American Rescue Plan funding, the Governor will have a bucket of $500 million to use as he deems appropriate, while $550 million will be allocated for the legislature to spend in each of the next two biennia. The legislature will decide how to use the remaining $1.2 billion next year.

What’s Not Included

Described as a budget-only agreement, several key policy issues, including police reform and so-called “clean car” standards, are yet to be decided. During the regular session, the conference committees that have jurisdiction over these issues struggled to make any progress on negotiating either policy or budget issues due to lack of agreement on these policy issues.

Special Session Timeline

Leaders have given committees a Friday, May 28, deadline to adopt a spreadsheet detailing how the money allocated to the agency is to be spent. They provided an additional week for legislators to adopt policy provisions in committee, with decisions due by Friday, June 4. Staff would then have a full business week to prepare the formal bills for an anticipated special session on Monday, June 14.

House Republicans Unhappy

Several members of the Republican caucus in the House expressed dissatisfaction with the agreement. Minority Leader Kurt Daudt (R-Crown) told the StarTribune, “Who from the legislative branch would ever agree to let the governor spend $500 million on whatever he wanted should turn in their election certificates and find a new job.” It is rumored that the House Republicans will not agree to suspend the rules to pass bills for a one-day special session, which will force legislators to extend the session into several days.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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