Minnesota leaders are debating the state's financial responsibility for helping Minneapolis and St. Paul pay for property damage and other costs related to last summer's civil unrest.

Gov. Tim Walz rolled out a budget this week that would borrow $150 million to rebuild damaged businesses and private property in the Twin Cities, and proposed a new fund to aid local governments with law enforcement costs during unrest and other emergencies.

Meanwhile, legislators are clashing over Walz's decision last year to use state disaster funding to help the Twin Cities rebuild from the damage caused by riots in the aftermath of George Floyd's killing by police. A new Senate proposal would block communities from getting reimbursed through an existing disaster account for civil unrest damages.

"I've heard over and over again from greater Minnesota, from my constituents: 'Please do not pay for this out of our taxpayer dollars,' " said proposal sponsor Sen. Julie Rosen, R-Fairmont.

Clashes over the aid will likely be a common theme throughout this legislative session. And the debate and demands for local support could flare anew if protests arise around the trial of police officer Derek Chauvin, who is charged with second-degree murder and manslaughter in Floyd's death and scheduled to go to trial March 8.

Walz's budget includes at least $4.2 million for anticipated state law enforcement expenses to handle violence and demonstrations around the trial. Several million more would be devoted to responding to threats around the presidential inauguration and ongoing risks to the Capitol. Last year, Minnesota's public safety spending was $24 million more than it typically would have been because of civil unrest-related costs, a Management and Budget department spokesman said.

The DFL governor's budget would also create a $35 million fund, dubbed the SAFE account, to reimburse local governments that call in surrounding communities' law enforcement agencies to help, as Minneapolis did during the rioting after Floyd's death.

"We saw an unprecedented amount of civil unrest; some of that turned into civil disobedience and crime, in arsons and other things," Walz said as he unveiled the budget. He said he is making the case to the Legislature that Minnesotans should work together to help out the Twin Cities, and he stressed the importance of using the state's disaster account to "help rebuild those corridors, to make sure that we understand that that benefits all Minnesotans."

The Federal Emergency Management Agency rejected Walz's request in July for disaster assistance to help with $15.6 million of fire damage to public buildings and equipment in the Twin Cities. The Minneapolis Police Department's Third Precinct station, a community clinic, Hennepin County Library and streetlights were among the public properties burned or otherwise damaged. In November, Walz announced he would use the state disaster account to reimburse local governments for the bulk of that cost, about $12 million.

The state created the fund in 2014 so it could quickly refund cities and counties after disasters, instead of requiring the Legislature to hold a special session to sign off on the money. But Rosen contended this week that the account was meant for natural disasters such as floods or tornadoes. She proposed changing the law to explicitly say that civil unrest does not qualify for the aid, and would make that change retroactive to Jan. 1, 2020.

Rosen said assistance for Minneapolis and Hennepin County is a "good discussion," but instead of using the disaster fund, she suggested legislators try to pass a bill to provide the $12 million. However, such a measure could prove challenging to pass in a divided Legislature.

"I want to make sure that the taxpayers of Minnesota are not paying for something that perhaps, by the actions of our executive branch and the mayor of Minneapolis, perhaps were [exacerbated]," Rosen said during a hearing. She was hitting on a theme the Senate's Republican majority has zeroed in on after the riots: that Minneapolis Mayor Jacob Frey should have given law enforcement more latitude to stop rioting and Walz should have brought in the National Guard sooner.

Walz and Frey have defended their decisions, saying they did the best they could to respond to a complex and fast-changing situation.

Sen. Ron Latz, DFL-St. Louis Park, countered Rosen's comments by reading off a long list of examples of people from outside the Twin Cities and state who were involved in creating the damage, such as a Brainerd-area man who was charged with helping burn the Third Precinct station and a member of the Boogaloo Bois from Texas who was charged with opening fire on the precinct and helping burn the building.

"It's awfully hard for the folks from greater Minnesota to say, 'It was all Minneapolis's fault, it was all Minneapolis political leadership's fault and the governor's political leadership errors,' " Latz said, adding that lawmakers should instead be focused on helping Minnesotans who end up suffering from the damage.

Emergency management directors and local government associations have warned state leaders against narrowing the scope of the disaster fund to exclude civil unrest, saying it could create future complications when the state applies for federal aid.

It is not clear how Rosen's proposal would fare in the Democratic-led House, where Twin Cities DFLers hold considerable sway. A House hearing on a different bill related to the disaster fund prompted a similar clash Wednesday over whether civil unrest reimbursements are a fair use of dollars.

However, the $12 million from the disaster account would cover just a fraction of the overall damage costs and is limited to certain public infrastructure.

Minneapolis estimated the summer riots caused more than $350 million in damage across the city, and St. Paul identified $82 million in damage.

While private insurers covered many of the businesses' expenses, the Lake Street Council has estimated that along that Minneapolis corridor alone, small businesses owners have suffered at least $200 million in uninsured losses.

Walz wants to use $150 million in redevelopment appropriations bonds to help small businesses and other private-property owners rebuild. Meanwhile, the Democratic-led House is pushing a proposal called the PROMISE Act that would use about $300 million from the state's general fund for redevelopment and relief programs for those hurt by the unrest. The Legislature did not pass that DFL effort during an initial attempt last summer.

Jessie Van Berkel • 651-925-5044