June 19, 2021

Legislature Returns for Special Session

The Minnesota Legislature returned to St. Paul on June 14th to begin the 17th month in a row the Legislature has met in either a regular or special session.  Yesterday’s starting point was triggered by Governor Walz’s decision to extend the Emergency Peacetime Order related to COVID-19.  While many of the restrictions in the Governor’s order have been eliminated or reduced, the Governor contends he still needs to maintain these powers to manage testing, vaccines, receive federal SNAP funds and maintain protections for renters through the eviction moratorium.

At a mid-morning press event, Speaker of the House, Melissa Hortman suggested the Legislature will likely need to return again in July and possibly August to deal with additional extensions of the emergency orders.  Senator Majority Leader, Paul Gazelka, in an afternoon media scrum suggested they will not be coming back in July or August.  Senator Gazelka argued the Governor’s Emergency Powers must end when the current Special Session ends.  This appears to be a point of contention which may also complicate a timely and smooth conclusion to the current Special Session.
Now that the Legislature has returned to St. Paul, they will go back to work on the state’s $52 billion budget. Since the legislature adjourned on May 17th, Committee Chairs, Agency Heads, Legislative Leadership and the Governor have been conducting ongoing negotiations regarding policy provisions and spending.  Over the past few days, 5 of the 13 budget bills have been wrapped up and their language released.  Those five bills and spreadsheets include Higher Education, Commerce and Energy, Agriculture and the Legacy Fund.  The Tax Bill has also been completed and released.
One of the challenges for the Special Session will be dealing with the minority parties in both bodies, their leaders have not been included in the ongoing budget negotiations.  In the House, the GOP members have laid out five provisions they want included in the final compromise.  Their demands include the following:
  • End of the Governor’s Emergency Powers,
  • Requiring the Legislature to spend any federal COVID-19 funds, nullifying the agreement between the Speaker, Senate Majority Leader and Governor Walz in May which allowed the Governor to spend $500 million in federal funding with no involvement of the Legislature,
  • Eliminating the additional federal Unemployment Insurance benefit,
  • Continuing the Minnesota health insurance, re-insurance program,
  • Passage of a bonding bill which includes corrections to language adopted in the 2020 bonding bill.

If members of the Minority Party are unwilling to support motions to suspend the rules and move bills quickly, the process for passing legislation could be drawn out over a number of legislative days.  Because we are now in a Special Session, the budget agreements will also move as standalone bills, and not conference committee reports.  This means amendments can be offered to these proposals further lengthening the time spent processing the individual pieces of legislation.

There are a number of challenging policy decisions still needing to be resolved.  Police reform is holding up the completion of the Public Safety Bill, Education funding is held up over a debate on vouchers and Governor Walz’s efforts to have Minnesota adopt the California Clean Car standards is hampering an agreement on the Environment bill.  

In a normal budget year, financial constraints make reaching a budget agreement a real challenge.  However, this year the state is flush with cash.  Since the regular session ended on May 17th, the state closed the books on May receipts. In May, the state received $3.306 billion in net general fund revenues, $1.796 billion (119%) more than had been projected.  This increase was largely tied to moving Tax Day from April to May 17th.  This brings fiscal year receipts for 2021 to $23.113 billion, which is $2.170 billion (10.4%) more than had been projected.   This $2.170 billion budget surplus can be combined with the nearly $3 billion coming to the state in the most recent round of COVID funding.  While the surplus and federal funds are only available for one-time spending, the state does have money available to make investments in programs and infrastructure.  In addition to these funds, the state also has roughly $2.377 billion in budget reserves.  The challenge for leaders is managing the expectations of groups who are seeking funding and not creating budget tails for the next biennium. 
The situation is very fluid and will likely change multiple times in the coming days.   It is being reported the negotiations on the Transportation Finance and Jobs bills are nearing completion.  It is hoped the Special Session can wrap up in 7 to 10 days.  The House is planning to meet over the weekend and begin processing bills on Thursday.  The Senate will also likely begin to move bills this week, however the Senate does not plan to meet over the upcoming weekend.