As Minnesota legislators confront a lengthy list of issues at the Capitol this session, they have a significant financial cushion to address some of the needs.
The politically divided House and Senate and Gov. Tim Walz have dueling ideas for how to spend the state's estimated nearly $9.3 billion budget surplus, what type of tax relief Minnesota should provide as inflation climbs and how much money to devote to repairing and improving infrastructure.
Here are some of the top issues:
The Legislature typically passes a construction borrowing bill in non-budget years. Walz kicked off the debate by proposing a$2.7 billion infrastructure package. House Democrats have suggested a roughly $3.5 billion capital investment bill, while Senate Capital Investment Committee Chairman Tom Bakk said he would be surprised if they "anted up" over 2020's historically large $1.9 billion infrastructure bill.
The House must first reach a deal on a bonding bill, which requires a three-fifths supermajority to pass, before the Senate votes on it. The GOP lead on the House Capital Investment Committee said Walz's proposal is substantially more than Republicans are willing to support. Lawmakers are also waiting to hear exactly how much Minnesota needs to match for the approximately $6.8 billion the state expects to get from the federal infrastructure package.
With a two-year budget already in place, lawmakers do not have to pass any supplemental spending but are hoping to reach deals on some areas, given the historic nearly $9.3 billion projected surplus.
In late April, Minnesota leaders struck a multibillion-dollar deal designed to prevent tax hikes on state businesses while sending direct checks to workers on the front lines during the height of the pandemic.
The deal, signed into law by Walz, included $500 million for workers such as nurses, long-term care employees and others who continued to work in person as COVID-19 cases surged across the state and others went into lockdown. It also pumps $2.7 billion to refill the state's Unemployment Insurance Trust Fund, which was drained during lockdowns by a historic level of requests. Businesses were facing an April 30 deadline to start paying payroll taxes to replenish the fund.
Minnesota's divided Legislature is offering two competing visions on how to spend some of the state surplus on education — one involving a massive boost and the other a sliver of that amount focused exclusively on literacy.
House Democrats are proposing to spend more than $3 billion over three years to hire thousands of mental health workers, expand prekindergarten offerings and fund state and federally mandated programs that schools have long struggled to budget.
Senate Republicans' education priorities include $30 million for a literacy initiative and $700,000 for the state to hire reading coaches. The caucus introduced a slate of measures called its "Parents' Bill of Rights" earlier this session.
Walz is calling for a 2% boost in the state's per-pupil education funding formula and adding 6,000 slots to the state's pre-K program.
The 2020 election is shaping dueling visions for new voting laws. Republicans are proposing changes to how absentee ballots are received and counted. A longtime GOP priority to require photo identification to vote in Minnesota also passed the Senate last year, but it's opposed by Democrats in the House and is unlikely to go anywhere this session.
House Democrats, in their election law proposals, want to impose new civil penalties for intimidating or threatening election workers, painting it as a necessary response to a rise in harassment brought on by the discord over the 2020 vote.
House DFL members and Walz say the state needs to make changes to address the high cost of child care. The governor wants to raise payment rates for providers, which he said would increase access to affordable care for 30,000 children. Democrats are also renewing a call for a statewide paid family and medical leave program, offering to use surplus dollars to get the program started before eventually shifting to an employer payroll tax to cover costs. Republicans say the best way to help families is to lower taxes for all Minnesotans.
Walz is once again pushing to add a public option to the state's health insurance marketplace, arguing the plan would allow the state to use its leverage to create an affordable option when costs rise from insurers. And dozens of legislative Democrats are pushing a universal healthcare proposal. Republicans don't back either plan.
But the two sides were able to come together in late March to extend the state's so-called reinsurance program for three years. The program has been credited with helping to stabilize health care premiums on the individual insurance marketplace by helping insurers cover the most costly claims. The deal spends $700 million from state coffers over the next three years. It also requires insurers to provide postnatal care to some enrollees on the marketplace.
Walz proposed $450 million for "safe and affordable" housing projects, of which $250 million would go toward Housing Infrastructure Bonds to fund multifamily housing development.
Senate Republicans proposed adding $50 million to the state's current two-year budget to help people become homeowners, while House Democrats' housing bill includes nearly five times that sum for a mix of homebuyer and renter assistance, as well as programs to preserve and repair existing affordable housing. Democrats are also proposing funding to tackle the issue of homelessness this session.
House Democrats teed up the issue of legalizing marijuana for adult use last session when they passed the proposal for the first time in state history. Walz added funding to legalize marijuana in his supplemental budget bill and establish an expungement board to review past marijuana-related offenses. Legalization would eventually pull in tens of millions in new state revenue, according to budget estimates. Senate Republicans remain steadfast in their opposition, meaning the issue is unlikely to go anywhere this year.
Proposals to confront a persistent spike in crime around Minnesota are shaping up as a dominant theme for 2022 election campaigns. GOP proposals include tougher sentencing guidelines for carjackers and repeat offenders who commit crimes with firearms, repealing the five-year cap on probation, grants to help recruit more police officers and required reporting on prosecutorial discretion.
House Democrats are pushing a $150 million public safety budget proposal heavy on grants to community nonprofits and officer outreach in high-crime areas. Democrats also proposed funding for departments to hire investigators to study crime trends and money to help the Peace Officer Standards and Training (POST) Board study officer recruitment and diversity while also hiring more staff to probe alleged code-of-conduct violations in the profession.
Walz wants to send $300 million over three years to cities and counties across the state to address public safety needs in their communities. The budget also includes money to recruit more diverse peace officers and boosting investigative support to local agencies.
Minnesota lawmakers failed to meet a Feb. 15 deadline to agree on new political boundaries for the state's 201 legislative districts and eight seats in Congress. Instead, a special judicial panel released their own maps on that day. The new maps shifted district boundaries around the edges for the decade to come, with the most dramatic geographic changes occurring in two congressional swing districts in the southern half of the state.
In the Legislature, the court's approach in minimalizing changes to district boundaries means the suburbs will continue to be a battleground for control and no side scored a clear electoral advantage for the next 10 years.
Republican lawmakers who control the Senate said a record-breaking estimated budget surplus means Minnesota is collecting too much from taxpayers. They are pushing to spend $3.5 billion out of the surplus this year for a large permanent income tax cut and end to Social Security income taxes.
Walz aims to send one-time tax rebate checks to most Minnesotans — $500 for individuals and $1,000 for married filers — and both the governor and the House DFL majority want to expand tax credits for families with children. The House is pressing for a variety of other targeted tax breaks, including increased aid for renters and people with student loan debt. The House tax bill is roughly a third of the size of the Senate plan.