Gov. Tim Walz calls special session to finalize state budget deal

The Minnesota Legislature will resume work Friday in a special session, with the goal of wrapping up a two-year, $48 billion state budget.

The announcement capped a week of closed-door talks between Gov. Tim Walz and House and Senate leaders scrambling to fill in details of state government budget bills left unresolved after the regular session of the Legislature ended amid discord at midnight Monday.

"I am proud that we came together across party lines to build a budget that will improve the lives of Minnesotans," Walz said. "Now it's our responsibility to take that budget across the finish line."

Lawmakers were still watching closely Thursday to learn the fates of hard-fought policy provisions from previously passed bills that had to be negotiated anew after the end of the regular session. It remained unclear, however, whether the final votes needed to ratify a budget agreement can be completed by 7 a.m. Saturday, the deadline agreed to by Walz and legislative leaders in both parties.

Many of the bills coming up for vote in the special session will be stripped of their more ideological components, reflecting the bipartisan compromises needed to keep the two-year budget agreement on track and avoid a government shutdown in July. Driver's licenses for immigrants in the U.S. illegally, a gay conversion therapy ban and tax credits for private school scholarship donors were a few of the many ideas cast aside to save the accord reached Sunday between Walz, GOP Senate Majority Leader Paul Gazelka and DFL House Speaker Melissa Hortman.

The trio of leaders scrambled to finalize hundreds of pages of bill language ahead of the special session. They spent long days and nights where they heard from key legislators and state agency heads to resolve differences between the House and Senate versions of budget bills. The framework for the special session was hashed out last Sunday.

Walz, Gazelka and Hortman agreed to increase education funding more than Republicans wanted but gave up a proposed 20-cent-per-gallon gas tax increase earmarked for infrastructure improvements. Walz also negotiated the indefinite extension of a provider tax on health care services in Minnesota, though Republicans, who opposed any tax increases, succeeded in whittling down the rate from 2% to 1.8%.

Uncertainty remained over how quickly lawmakers could fill in the details of the budget agreement. Senate Minority Leader Tom Bakk, DFL-Cook, and House Minority Leader Kurt Daudt, R-Crown, were largely left out of the leadership negotiations but still appeared to have cards to play in the endgame of any budget deal.

Daudt, expressing unhappiness with the provider tax, has threatened to slow down the special session using procedural rules that require supermajorities to overcome. Another point of leverage is a $500 million borrowing bill that was made part of the budget agreement and which also requires a supermajority of lawmakers, thus requiring GOP votes in the House.

As for the budget details, in some cases even bipartisan support wasn't enough to save a proposal. On Thursday, scarcely 24 hours before the planned votes, word circulated that a high-profile emergency insulin measure was left out of a massive health and human services bill.

"I was shocked," said Sen. Matt Little, a DFL lawmaker who had pushed for the provision.

The final agreement contains hundreds of millions of dollars of new spending for schools, parks and roads. A deal on transportation funding includes $56 million to replace the state's troubled license and registration software system. Lawmakers also reached an 11th-hour deal to use more than $6 million in federal election security funds.

But they could not compromise on many of the emotionally charged items that drew droves of Minnesotans to the Capitol throughout the session. House DFL leaders dropped plans to require comprehensive sex ed in elementary schools, tighten teacher licensing laws and have all employers provide 12 weeks of paid family leave.

Republicans, meanwhile, scrapped proposals to slash Minnesota Historical Society funding and provide tax credits for donations to scholarships for private schools, a priority for school-choice supporters. A Republican-sponsored effort that would create uniform statewide labor laws, effectively ending the minimum wage hike and paid leave rules in Minneapolis and St. Paul, was also axed.

"From the Senate side, we tried to take the nonstarters off the table as early as possible and really get to work on the things that we can make some progress [on]," said Republican Sen. Eric Pratt, chairman of a Senate jobs committee and proponent of the labor law provision. "Same thing with paid family medical leave. All of those kind of came off the table around the same time."

Many particularly divisive issues were tied up in the massive Health and Human Services budget bill, which had not yet been publicly posted Thursday afternoon. Dueling plans reflected unresolved battles over abortion, therapy aimed at changing a patient's sexual orientation or gender identity, and raising the smoking age to 21.

DFL Rep. Tina Liebling, chairwoman of the House's Health and Human Services Committee, said the final deal struck by party leaders going into the special session would not include language banning conversion therapy for Minnesota children, despite bipartisan efforts to reach a compromise. The push to raise the tobacco age also faltered.

The status-quo outcome for many policy items wasn't surprising given the political dynamics of the state's divided Legislature, the only one in the nation. Leaders from both sides had warned members for months that partisan policies folded into the budget bills could be cut during negotiations.

"We always sort of knew that we weren't ever going to get everything, because we put the moon out there," said Rep. Kaohly Her, DFL-St. Paul, a freshman who pushed for paid sick leave and other progressive DFL priorities. "We wanted it all and put it all out there and not all those things were going to make it. … Sometimes it's a compromise that has to be made to get the larger thing achieved."

Little plans to continue fighting on the insulin measure. He hopes legislators add the provision to the health and human services bill through negotiations or amend the bill during the special session. If that doesn't work, he said he expects supporters to revive the issue again next year.

"This is St. Paul," Little said. "There's always hope, right?"

Staff writer Stephen Montemayor contributed to this report.