Minnesota House leaders propose about $3.7 billion in spending cuts

Minnesota House leaders are proposing cuts of about $3.7 billion over the next four years in their newly released budget framework, seeking to head off a looming deficit.

The House plan seeks to reduce the projected budget deficit by cutting about $1.16 billion over the next two years and another $2.6 billion in the 2028-2029 fiscal cycle.

House leaders would achieve most of those savings by not covering inflationary costs for parts of state government — making agencies eat the difference — and by reducing human services spending growth by about $1.3 billion over four years.

“These budget targets represent a compromise between Democrats and Republicans,” House DFL Leader Melissa Hortman said at a Monday news conference. “If Democrats were setting targets on our own, these targets would of course look very different, because we would have asked the wealthy and large corporations to pay their fair share in order to make additional needed investments in public education and affordable health care.”

The Minnesota House is tied 67-67 between Democrats and Republicans, giving GOP lawmakers an equal say in the budgeting process. House Republicans have said they won’t agree to any tax increases.

Speaker Lisa Demuth, R-Cold Spring, said the budget targets show that “House Republicans are holding strong on fiscal responsibility.” She said their proposed reductions “would represent the largest spending cut in state history.”

“I look forward to our [committee] chairs working to put together a common-sense budget that makes life more affordable for Minnesotans,” Demuth said in a statement Monday.

Walz and Senate Democrats have separately proposed their own budget reductions for the next two years.

Lawmakers are trying to avert the potential of a multibillion-dollar deficit in the future. Budget officials released an economic forecast in March showing Minnesota’s projected surplus for the next two years had shrunk, while an anticipated deficit in the 2028-2029 biennium widened.

Minnesota’s next two-year budget is expected to total about $66 billion.

The governor and legislators will ultimately have to reconcile their spending plans to pass a two-year state budget. A budget must be in place before July to avoid a government shutdown.

Walz told reporters Monday that he thought the bipartisan House budget framework was “really encouraging.”

“This bodes really well for us getting a working budget, making sure we’re funding the things Minnesotans care about but also addressing those over-the-horizon structural issues,” Walz said.

House DFL leaders said they and their Republican colleagues set aside “ideological battles” to reach the spending agreement. Rep. Zack Stephenson, DFL-Coon Rapids, said it “was the first real test of the power-sharing agreement, our ability to get things done in this system of divided government, and I think it’s clear that we passed that test.”

But tough discussions lie ahead as the House, Senate and governor hash out their spending differences.

Senate Democrats’ budget plan accounts for a borrowing bill of up to $1.3 billion to pay for state construction projects. The House plan allows for a $700 million bonding bill, said Hortman, DFL-Brooklyn Park.

Education funding could be one of the most contentious subjects. Walz and Senate Democrats have both proposed trimming education spending by more than $680 million.

Hortman said the House’s budget framework is “substantially different” when it comes to education spending, calling for a $40 million increase in the next two-year budget and no net change in the following cycle.

The education cuts proposed by the governor and Senate, Hortman said, are “not a place we could ever land.”

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