'Flurry of negotiations' but no deal on Minnesota Legislature's final day

Minnesota lawmakers failed to reach agreement on a major construction package, tax relief and spending on economic aid during the COVID-19 pandemic as an end-of-session deadline passed Sunday night.

The potential billion-dollar-plus bonding bill — along with other unresolved issues — could still be hammered out in June if, as is likely, the Legislature is called back into a special session to address another extension of Gov. Tim Walz's peacetime emergency.

But facing a Monday adjournment deadline, legislative leaders were unable to break an impasse over the bonding bill, which the Republican minority in the House has said it would block until Walz gives up the emergency powers he has used to limit outdoor activity and shut down businesses to slow the spread of COVID-19.

Deals on pay raises for state workers and oversight of federal coronavirus relief funds also proved elusive after marathon negotiations between legislative leaders and the DFL governor.

While Walz loosened many of the stay-at-home restrictions last week, he extended the peacetime emergency until June 12. Another extension would trigger a special session of the Legislature.

The likelihood of a return trip to St. Paul appeared to lessen the pressure on negotiations in the closing hours of the regular session Sunday, the effective deadline for clearing legislation ahead of Monday's adjournment. The future of a borrowing bill to fund public construction projects also was tied to GOP tax relief and DFL spending priorities, said Senate Majority Leader Paul Gazelka, R-East Gull Lake.

"If there's no bonding bill, there's likely no tax bill or additional spending," he told reporters amid negotiations with the three other legislative leaders. He described "a flurry of negotiations" as legislators tried to wrap up work by Sunday night.

Walz's emergency powers have been one of the key disputes in the late-going at the Capitol, where Republicans lawmakers say the DFL governor should not be able to make unilateral decisions such as closing businesses. Walz and House Democrats contend that fast action is necessary as crises arise during the pandemic.

Walz urged legislators to reach a deal on bonding Sunday afternoon.

"Communities across the state are counting on the legislature to pass a robust Local Jobs and Projects Plan," the governor tweeted. "Work together and get this done for Minnesotans."

House Republicans also cited concerns about the size of the House's proposed $2 billion borrowing measure on Saturday when they voted as a bloc against the Democrats' plan. The Senate considered its own $998 million bonding bill Sunday, but some Democrats said it was insufficient and unfair. The measure failed to pass, 38-29. Bonding requires a supermajority in each chamber, so the House GOP and Senate DFL must sign on as well.

Sen. Scott Dibble, DFL-Minneapolis, blasted the GOP bill, saying it prioritized projects in GOP districts while punishing areas represented by the DFL. He said it failed to fund "shovel-ready" projects and transit upgrades. "This bill is nothing but a slap in the face to our metropolitan areas," he said.

Sen. David Osmek, R-Mound, dismissed suggestions of partisan favoritism, saying some of his requests did not make the cut either. He defended the bill as a "very reasonable approach — an affordable approach."

A dispute over state worker contracts is also wrapped into final negotiations. The issue sprung up after budget officials said that a previously projected $1.5 billion surplus could turn into a $2.4 billion deficit. The contracts were negotiated last year and determine the pay of more than 50,000 government employees.

Republican lawmakers argued that given the budget crunch a 2.5% raise scheduled for July should be delayed. The Senate GOP passed a bill Saturday night that would ratify the contracts but freeze the raise until July 2021. The pay raises would only take effect if the state swings back to a surplus.

While the Legislature has to ratify the contracts, state law does not say lawmakers can modify them. Minnesota Management and Budget spokesman Chris Kelly said the state agency is analyzing the legal effect of the Senate's action and whether the raises could still take effect.

House Democrats ratified the contracts with the raises. Their other spending priorities have included $100 million in housing assistance, pay for hourly school workers during coronavirus closures and wage increases for personal care assistants. The Senate Republican majority, meanwhile, has pushed for more oversight of the federal funding the state received to respond to the virus.

Lawmakers set aside many of the year's controversial policy debates to focus on the pandemic, coming together earlier in the session to approve more than $550 million in emergency spending.

They also came together over the past four months on several bipartisan priorities. They raised the age to buy tobacco products to 21, created an emergency insulin program, improved drug price transparency and agreed on a $17 million package to improve election security and safety.

While legislators had to wrap up bills Sunday night, they often gather Monday for a ceremonial adjournment to celebrate legislative retirements. The Senate had planned to meet outside on the south lawn of the Capitol to accommodate social distancing. But Gazelka said just after midnight that he decided to delay the send-offs until later in the summer given the expectation that legislators will be back to work in June.

"Unfortunately we have to have our sleeves still rolled up to get some work done, but I do want us to cherish that day," he said.

Staff writer Torey Van Oot contributed to this report. Jessie Van Berkel • 651-925-5044