Better dealmaking at the Capitol

Opinion editor's note: Editorials represent the opinions of the Star Tribune Editorial Board, which operates independently from the newsroom.

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An end-of-session deal that promises to make needed investments in Minnesota schools and health care while also cutting taxes has taken shape at the Capitol. In some respects, it is not unlike a bargain struck more than 20 years ago, when the House, Senate and then-Gov. Jesse Ventura brokered a three-way budget deal among Democrats, Republicans and an independent governor.

However, this latest dealmaking is marked by an uncommon dose of common sense and a bracing responsibility for the future.

The Ventura era was one marked by a series of significant budget surpluses. In 1999, after protracted negotiations, leaders finally agreed to divide the surplus into thirds so that each party could satisfy its priorities. DFLers used theirs to boost education spending; Republicans' share went to permanent tax cuts, while the independent governor used his for rebate checks. Unfortunately, the combination of higher spending and reduced revenue left the state with bitter choices when the economy plunged into recession the following budget cycle.

Legislative leaders say they are determined not to make the same mistake. This year's deal, the details of which are still being negotiated, would give the DFLers roughly $4 billion on increased spending. At the same time, Republicans would use a similar amount to reduce taxes. The key difference here? Another $4 billion would be saved as a hedge against future downturns.

Some extraordinary forces came together to produce such an eye-popping surplus projection. The key was a federal government that sent several checks to Americans coping with a crushing pandemic, more cash and loans to businesses forced to close for months, and wads of cash to states.

Some may think the amount set aside for the future is too great. We do not. It is needed both as a guard against inflation, already at a 40-year high, and, regrettably, the growing possibility of a recession. The two costliest items in the state's budget are K-12 schools and health care. Neither is a place where emergency budget cuts would lead to anything good.

The broad framework agreed to by Gov. Tim Walz, GOP Senate Majority Leader Jeremy Miller and DFL House Speaker Melissa Hortman includes a roughly $1 billion increase in education, a $1 billion increase in health care, another $1.3 billion on areas to be agreed upon by the leaders, and $450 million for public safety. They also have agreed in principle to a $1.4 billion bonding bill.

The tax side is still being negotiated, but several prospects exist. Republicans favor an income tax rate cut that would be ongoing and aimed at the broadest number of taxpayers. They have also pushed for the elimination of taxes on Social Security income. Democrats would prefer to see at least some money go to renters' credits, while Walz continues to push for rebate checks.

House Majority Leader Ryan Winkler told an editorial writer that while no one is getting everything they want, "The budget deal is responsible, unlike the one 20 years ago that created unrealistic spending and tax cut decisions that resulted in deficits in the future. We are not doing it that way. We are saving fully one-third of the surplus for the future. The tax cuts will be limited in size and scope but will impact people who can most benefit from them. Rate cuts at the lower level helps a little for everybody and a renter's credit could help with the cost of housing."

The framework is perhaps the most prudent one that could be achieved in a deeply divided Legislature. Schools and health care are two areas perhaps most stressed by the pandemic, and most affected by repercussions in the future.

Similarly, Republicans' push for a lower tax rate earmarks at least a portion of the surplus for ongoing tax relief that would show up in Minnesotans' paychecks week after week. It would be preferable to see slightly lower permanent tax relief, making room for slimmed-down rebate checks. The one-two punch of an immediate cash infusion this summer and ongoing tax relief in paychecks would be welcomed by many Minnesotans.

When this was written, House and Senate conferees on public safety remained unable to reach an agreement. This is too important to let fall to the next legislative session. There are needed and valid elements of change to be found in the Senate, House and governor's proposals, including recruitment inducements for police, stricter penalties for carjacking, money for local governments to meet their individual law enforcement needs, and better oversight of law enforcement. Leaders should be ready to step in this weekend to ensure compromise is reached here as well.

As is too often the case, far too much has been left to the very last minute. Even with a signed agreement by leaders, it is possible that things could yet fall apart. Legislators and the governor have until midnight on Sunday to pass their budget. They should not waste another minute of the time remaining to do right by Minnesotans.