Raises for state workers up for debate as Minnesota's budget heads into the red

With the state facing a projected $2.4 billion budget deficit, a debate has erupted at the Capitol over pay raises for tens of thousands of state employees, some of whom are on the front lines responding to the coronavirus pandemic.

Republicans in the Legislature argue the state can't afford the raises at a time when the government is in the red and Minnesotans are tightening their belts. But Democrats are pushing back, arguing cutting raises for employees such as corrections workers, nurses, epidemiologists and people processing unemployment applications will hamper the state's ability to respond to the pandemic.

The raises are part of the mix in end-of-session negotiations as Gov. Tim Walz and legislators rush toward a May 18 finish to the regular session.

The contracts, negotiated last year between the Walz administration and 11 state employee unions, included a 2.25% raise that kicked in last summer and another 2.5% raise that's slated to start in July. The contracts also increased employee health care contributions.

The raises for roughly 50,000 state employees will cost the state nearly $445 million in the current budget cycle and $757 million in the next budget, according to projections from Minnesota Management and Budget.

But under law, the contracts must be ratified by both the House and the Senate before July, otherwise they are void. That gives the Republican-led Senate some leverage over the final outcome.

Senate Majority Leader Paul Gazelka, R-East Gull Lake, said he wants the governor and the unions to work out a new agreement where they leave last summer's pay raises in place but eliminate the upcoming raises to save state money. He said the Senate froze all salaries for staff and legislators, including per diem payments, and they're looking into other ways to cut costs.

"I'm not asking them not to do anything we're not willing to do, and with 600,000 or so unemployment claims, we have to know this is a serious place we're in," Gazelka said.

But House Majority Leader Ryan Winkler, DFL-Golden Valley, said the contracts that were already negotiated are "reasonable" and are accounted for in the in the state's two-year budget. He said the state will have to increase its share of health care costs for workers if the contracts aren't approved.

"It doesn't help Minnesota's economy to lay off people or to reduce their compensation, it actually hurts the economy even more," Winkler said.

State worker salaries make up 7% of the state's two-year, $48 billion budget, Walz said, and the administration has already started to make budget cuts. Walz imposed a hiring freeze in April for any job that's not part of the state's response to COVID-19.

As part of the freeze, many vacant positions will remain open and Walz and his 24 cabinet members have taken a 10% pay cut for the rest of the year.

"The next wave in terms of unemployment may be state, local and county officials, and that's one of the things that we're looking at," Walz said this week. But he didn't close the door on renegotiating the contracts.

"Certainly, at this point in time, we have to leave everything on the table," he said.

Under divided government, ratifying the state employee contracts has often been up for debate at the Capitol. But union leaders say state employees such as 911 dispatchers, clerical workers and public health employees are doing their jobs under extraordinary circumstances. Some are put at risk in contracting the virus through their jobs caring for COVID-19 patients or working at state correctional facilities where there's an outbreak.

"State workers always step up, but right now when we're facing a pandemic, our members have been on the front line helping Minnesotans battle COVID-19," said Lina Jamoul, executive director of the Minnesota Association of Professional Employees (MAPE) union. "From epidemiologists who are tracking the spread of the virus, to our members in unemployment insurance, who in the space of a week are seeing more claims than in the entirety of 2019. They are processing those claims and sending out the checks."

Whatever happens to the contracts, outside political groups are already signaling that they could become a campaign issue.

John Rouleau, executive director of the Republican-aligned Minnesota Jobs Coalition political action committee, said Tuesday that the state should "immediately" freeze government salaries. "At a time when over half a million Minnesotans have filed for unemployment, workers have had their hours and pay cut and Minnesota spirals toward a budget deficit, state government must tighten its belt," he said.

Briana Bierschbach • 651-925-5042

Twitter: @bbierschbach