Gov. Walz and legislative leaders fail to reach agreement Sunday night

Budget negotiations between Gov. Tim Walz, DFL House leaders and Senate Republicans broke off again Sunday amid an ongoing ideological clash over taxes.

The collapse leaves lawmakers just one week to bridge major divides and pass a state spending plan.

DFL leaders controlling the state House and governor's office and the Republican-led state Senate are working to pass a two-year budget expected to top $45 billion ahead of a May 20 deadline for the Legislature to adjourn for the year.

Both sides returned to the negotiating table Sunday evening to resume talks following a five-day impasse. But those talks deteriorated within 90 minutes, after Senate Republicans reiterated opposition to DFL-backed tax increases.

"If you're just no on everything…that's a real problem," Walz said afterward, adding that it's going to take "meaningful movement" to reach a compromise.

Talks are expected to resume Monday morning.

Walz and House Democrats are proposing a number of tax increases, including a 20-cent-a-gallon boost to the state gas tax phased in over the next four years. They also want to extend a 2% tax on hospitals and other medical providers that generates $700 million a year for health care and other services that is set to expire at the end of 2019. Democrats say the added revenue is needed to properly fund essential state services like schools, health care and road repairs in the years ahead.

Republicans oppose the tax increases and say lawmakers should craft a budget with money the state already has, including a roughly $1 billion surplus. They pointed to news that Minnesota took in nearly $500 million more than expected in taxes in April to fuel that argument.

"It's very hard to look Minnesotans in the eye and tell them we need more revenue for the next budget," state Sen. Paul Gazelka, the Republican majority leader, said at the time.

Lawmakers must resolve those differences in the days ahead as they work to close a roughly $2 billion spending gap between the rival budget proposals passed by the House and the Senate.

DFL leaders, who had offered to cut their spending levels by hundreds of millions of dollars in previous talks, wanted Republicans to deliver a counterproposal that included some new revenue as negotiations resumed. Instead of an offer, Gazelka brought a 12-slide PowerPoint on the GOP plan, making the case that taxes should not go up. He left the talks without addressing reporters waiting outside the governor's office.

"House DFLers are waiting for Senate Republicans to move from their destructive budget's starting position, actually make an offer, and get serious about compromise," Rep. Ryan Winkler, the DFL majority leader in the House, said in a statement.

The division between the two sides doesn't end with how much the state should tax and spend. Tucked inside the thousands of pages of proposed budget language are numerous policy proposals, including some contentious issues that split lawmakers along partisan lines.

Sunday's meeting marked the first formal negotiation since early last week, when leaders failed to meet a self-imposed deadline for reaching agreement on top-line spending numbers.

While they took a break from budget negotiations, Walz and leaders did convene in Albert Lea on Saturday for the Governor's Fishing Opener. Over the course of several hours on Fountain Lake, they reeled in a number of fish. A budget deal, however, remained elusive.

Torey Van Oot • 651-925-5049