State budget deal includes several provisions excluded from ‘global’ deal signed by Walz, legislative leaders

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The budget agreement reached two weeks ago between Minnesota Governor Tim Walz and the two top leaders of the state legislature has been called a comprehensive deal.

The two-page document – signed by Walz, Speaker of the House Melissa Hortman and Senate Majority Leader Paul Gazelka – contained the dollar amounts that each of the 14 spending bills could not exceed and 10 other provisions that were part of the agreement.

But this deal is not the only deal reached by the three leaders. Hortman and Gazelka now claim there were other stipulations that were not in the “Global Accord Task Force Framework,” including additional tax cuts and funds to help Minneapolis and St. Paul. to reconstruct buildings and property damaged by the unrest following the murder of George Floyd last year.

Gazelka, a Republican from East Gull Lake, said not all points of agreement were on the two-page document released two weeks ago. “We have had discussions on a number of issues which, frankly, are not written down anywhere,” he said. “We’re just trying to say these are the things that are important. It is the only document where there is something written with signatures. But there are some things we all want to see and try to go through. “

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Some of those things are still being negotiated, he said. “There are a few issues that each of us thought the other person had said a certain thing about and we’ll make sure those are clear as well.”

The numbers shown in the two-page document were described as the one thing Walz, Gazelka and Hortman would demand from lawmakers who would bundle the hundreds of other spending and language decisions into omnibus bills.

While Hortman, DFL-Brooklyn Park, backed down from additional provisions described as “pocket deals,” she admitted there was more than what was included in the deal unveiled at a press conference. May 17.

“We discussed all of this at the table,” Hortman said of the weeks of talks with Gazelka and Walz that ultimately resulted in the comprehensive spending deal. “There was a lot of conversation but not necessarily agreeing on things.” When there was enough feeling that the three were supporting something, direction was given to negotiators on each side, she said.

Two of those things are tax cuts. The global deal determined that the next budget would include $ 644 million in tax cuts over the first two years, with two measures making up the bulk of the money: waiving taxes owed on the regime’s loans. protection of paycheques linked to the pandemic; and taxes owed on the $ 600 per week of unemployment benefits.

On the last day of the regular session, Hortman said that “we have not given them any guidance on the $ 110 million” remaining after these two provisions were booked.

But on Friday, she acknowledged that two additional tax cuts must be included in the final omnibus tax bill: one favored by her, the other favored by Gazelka.

Hortman wants to restore the film production tax credit, which will cost $ 20 million. Minnesota once had such credit, but it has expired, and Hortman said he could bring film and television production to the state, employing film production workers who suffered almost complete job loss during the pandemic. “At some point someone will tell the story of George Floyd and it should be shot in Minnesota,” Hortman said.

The tax reduction favored by Gazelka would exempt certain building materials from sales tax for local government public security construction projects. It would cost states $ 17 million over the next two years.

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This left the Tax Task Force with just $ 73 million to work on, not $ 110 million, which put other tax credits at risk, including the historic preservation credit which will expire this summer if not renewed.

Adam duininck

When combined with federal credits for historic preservation, state credit can make sense of some otherwise unachievable projects, said Adam Duininck, director of government affairs for the North Central States Regional Carpenters Council. . “If we allow the tax credit to die out, we will lose our history and we will lose those high paying jobs that keep union members employed,” Duininck said at a press conference outside the Capitol. State Friday.

Rep. Cheryl Youakim, DFL-Hopkins, is the primary sponsor of the Historic Rehab Credit. She said she wanted this in the final bill, but “there are a lot of people claiming” their tax issue as well.

“That’s why we have people here, to get across the finish line,” she said.

Other agreements?

Hortman said there were other spending deals that weren’t included in the deal signed by her, Gazelka and Walz.

State Representative Cheryl Youakim

State Representative Cheryl Youakim

The first is that the Public Security and Justice Expenditure Bill must include money to fill the disaster emergency account and the Hometown Heroes fund, which provide financial assistance to firefighters struggling with work-related health problems.

Another is the expectation that $ 150 million in the labor and workforce omnibus bill will be used to help businesses affected by the pandemic or during the unrest following Floyd’s murder. The chairs of that task force – Rep. Mohamud Noor, DFL-Minneapolis, and Sen. Eric Pratt, R-Prior Lake – would decide how to spend it, Hortman said.

“We told President Noor and President Pratt that you can make loans, you can make grants, you can make loan bonds. Find out how to leverage that $ 150 million to reach as many people as possible, ”she said. “They have all kinds of tools in the toolbox to figure out how to do this.”

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Walz’s press secretary Teddy Tschann said there were no side deals the governor had made other than those described in the signed document. “Definitely no,” Tschann said.

He said there might be some agreements between Hortman and Gazelka that Walz didn’t sign. One of these is the reinstatement of the film tax credit.

Teddy tschann

Governor’s office

Teddy tschann

But during a KMOJ radio interview on May 24, Walz mentioned one of the provisions not described in the global agreement. – the $ 150 million to help Minneapolis and St. Paul.

“We have a budget, and I expect that in the budget agreement that we made, there will be $ 150 million to rebuild these streets,” he said. “I said it was a disaster, kind of like a flood or a tornado. These businesses here are the heartbeat. These are also opportunities, these are the dreams of these families. We have to make sure that we are there to support them and help them. “

Tshann said on Monday that the governor intends to say that although it has not yet been agreed, “it is a top priority and he is optimistic that they will reach a final agreement on this soon.”

This money remains controversial among many Republicans in the Senate, who see it as a bailout for cities that haven’t done enough to stop the riots. In the last session, aid was made available for businesses damaged by the riots, but the money was not earmarked for these businesses.

Gazelka said last week that it was not unusual for legislative leaders to clarify details of the global deal with committee chairs, but said these working groups were making decisions on the details of law projects.

“We don’t want to go past what the House and the Senate are doing,” Gazelka said. “I expect my Chairs and their committees to do most of the work, which they asked for two years ago.

It is only if the conference committees are unable to come to an agreement that the Big Three will intervene. And of those questions, most “will probably go overboard,” Gazelka said, if there is no agreement between him, Walz and Hortman.

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“ The public has no idea what’s going on ”

According to the agreement, the budget working groups were to have completed their spending spreadsheets by May 28. Some did, most didn’t. But given the secrecy of these working groups, details of the agreements have not been released.

State Representative Paul Marquart

State Representative Paul Marquart

Property Tax Chairman Paul Marquart, DFL-Dilworth, said no deal had yet emerged on the omnibus tax bill.

Representative Greg Davids, a Republican from Preston and the top GOP member on the House Tax Committee, said he was not aware of any side deals on tax credits or cuts. Although he said Marquart was kind enough to talk to him about problems, there has not been a meeting of a tax working group since the regular session ended on May 17.

“This is set up in the dark of the night in smoke-filled rooms,” David said. “The public has no idea what’s going on. And you know what’s really scary? One hundred and ninety-nine other members have no idea what’s going on. There are 201 members of the Minnesota Legislature.

Wording of the bill in 14 different budget areas is supposed to be completed by each working group by this Friday in order to give legislative staff time to draft the agreements in bill form for a special session scheduled for the 14th. June.



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