Legislature finishes $48.3 billion budget in overtime; Gov. Tim Walz expected to sign it

After weeks of tense, closed-door negotiations, the Legislature ended up exactly where many at the State Capitol expected it would when lawmakers convened in January: modest growth in some programs, no new taxes, and a second life for an important health care levy.

The Legislature adjourned early Saturday after a 21-hour special session in which members labored through a series of bills to fund Minnesota schools, parks, prisons, public health care and other services for the next two years — at a cost of $48.3 billion.

First-term DFL Gov. Tim Walz — eager to pass his first budget and send lawmakers home — applauded the Legislature for its work: "This budget will improve the lives of Minnesotans in every corner of the state and I look forward to signing it into law in the coming days," he said in a statement Saturday. "Minnesota is showing the rest of the nation that Republicans and Democrats can still find compromise and work together to get things done."

First-term House Speaker Melissa Hortman, DFL-Brooklyn Park, who won her gavel in the DFL's sweeping 2018 election victory, and Senate Majority Leader Paul Gazelka, R-Nisswa, also praised the final result.

Each secured some gains with important constituencies in time for the 2020 election, when all 201 legislators will be on ballots. With full control of state government on the line, the stakes will be even higher, given the need for redistricting after the 2020 census, when lawmakers will draw new legislative and congressional district maps, with Minnesota potentially losing one of its congressional seats.

"We held the line on raising new taxes and kept spending focused on priorities. For the first time in nearly 20 years, Minnesotans are getting a tax cut," Gazelka said, referring to a 0.25% cut in the second-lowest income tax bracket. Gazelka and his united GOP caucus also fought off a Walz and House DFL proposal to increase the gas tax by 20 cents per gallon and the metro sales tax for transportation.

The budget deal, Hortman said, "provides strong funding for education and secures health care for more than one million Minnesotans." Education spending, which is roughly 40% of the total state budget, will be about $1.25 billion more during the next two years than the previous two, or 6.7% higher. A complicated formula for funding school districts will increase 2% in each of the next two years, allowing the state to stave off program cuts and the loss of teaching positions.

The 2% tax on health care services will decline to 1.8%, but its continuation was a major victory for Walz and Hortman. Its sunset would have blown a hole in the state's burgeoning health and human services budget, which faces increasing pressure because of rising health care costs and the aging of Minnesota's population. More than 100 interest groups, including the influential hospital lobby that actually pays the tax, backed the levy's continuation because it helps pay for health care for the poor and people with disabilities. The rate reduction was enough to satisfy Republicans who originally wanted the tax to expire as scheduled.

The $48.3 billion in spending planned during the next two years is a bit more than 6% above the current two-year cycle. Lawmakers and Walz agreed to take nearly $500 million of the state's considerable rainy-day reserves to make the compromise work.

The Legislature stalemated on a series of contentious social issues — an entirely unsurprising result given the sharp division among lawmakers along partisan and geographic lines.

New restrictions on guns and abortion failed to pass. Recreational marijuana and sports gambling stalled out. So did efforts to make the legal tobacco buying age 21. Legislators could not agree on language to ban the practice of so-called conversion therapy — which seeks to turn gay people straight — on children and vulnerable adults.

Each side also pushed favored economic policies that the other side effectively vetoed. Senate Republicans sought to keep cities like Minneapolis and St. Paul from setting a higher minimum wage. House Democrats passed a sweeping paid family leave law that would have taxed workers and their employees to pay for it. Neither will become law.

The Legislature also worked together on issues of concern to both Democrats and Republicans.

A new law hopes to fight the scourge of the opioid epidemic and imposes a fee on the companies that sell prescription narcotics — a significant victory after a robust effort by the drug industry to defeat it.

Labor and business found a compromise on the issue of wage theft, making it a felony and committing more than $4 million to enforcement.

The Legislature passed a law requiring assisted-living facilities to be licensed and subject to more rigorous regulation after a Star Tribune series revealed that thousands of seniors and vulnerable adults had been assaulted, raped or robbed in senior care centers.

It set up a task force to consider Minnesota's investigation and prosecution of sex crimes after a Star Tribune series revealed shoddy police and prosecutions that had left victims without justice. Lawmakers created the first policies to govern solitary confinement among prisoners, following a Star Tribune series on abuse of the practice.

State government will spend significantly more on cybersecurity, a pressing concern given the torrid pace of attacks on state computers that store data on everything from police to health records. Secretary of State Steve Simon will also be granted $6.6 million to help secure Minnesota voting systems in the face of Russian attempts to hack and disrupt elections.

Not all lawmakers applauded the 2019 session, which was similar to previous years in its process — often compared to making sausage. Lawmakers set early deadlines for themselves to make the negotiating more public and transparent.

But it was not to be.

Walz, Gazelka and Hortman spent days and nights behind closed doors in a conference room resolving complex issues. They were shut off from the press and public, though other lawmakers and agency staff shuttled in and out. They declined to discuss their deliberations in a vow of secrecy known as the "cone of silence," a reference to a comedic 1960s TV show "Get Smart" about an inept spy.

The 2019 process earned the derisive nickname "the tribunal" around the Capitol.

In a closing speech at 6:45 a.m. just minutes before the House adjourned, Minority Leader Kurt Daudt, R-Crown, blasted the closed-door negotiations and 21-hour marathon, calling it "the worst process I think all of us have ever seen."

Staff writer Torey Van Oot contributed to this report.

J. Patrick Coolican • 651-925-5042