After missing deadline after deadline established to push Minnesota lawmakers to complete a state budget and avoid a government shutdown, the state Legislature pulled an all-nighter to finish one day before that ultimate deadline.

They failed.

Working until 2 a.m. Wednesday morning, the House and Senate completed 11 of the 13 omnibus spending bills that will fund government programs and agencies for the next two years, beginning on July 1. Lawmakers approved a compromise public safety and judiciary omnibus bill that contains a handful of new police accountability and criminal justice reform measures. A day after hearing complaints that the bill did not go far enough to meet demands for additional changes in response to the deaths of George Floyd and Daunte Wright, DFL and GOP negotiators added a few additional items.

The House and Senate majorities then seemed to reach a deal with Gov. Tim Walz to end the peacetime state of emergency on Thursday, 15 months after it was first declared to respond to the effects of the novel coronavirus and five days after Walz had announced he would end the state of emergency on Aug. 1.

Ending the emergency on July 1 was to be qualified by language in the state government budget bill, language that would let Walz retain emergency powers over state employee redeployment and to maximize pandemic increases in food stamp benefits. It also would have let him keep powers to continue vaccination and testing for the virus. But House Republicans voted no on the bill, claiming it let Walz hold some powers longer and declare a new emergency later if he decides it is necessary.

Then the whole thing fell apart, with Gazelka saying the way the deal was presented — as a three-party compromise — violated his agreement with the House leadership. In response, the Senate’s GOP majority stripped away the last few compromise measures added to the police accountability agreement. After a break, the House returned and stripped off the exceptions to ending the state of emergency, leaving only the July 1 end. The Senate agreed and the bill was adopted.

“The Governor has held onto these powers far too long and used them far too broadly. We’ve been clear that we were going to end these powers, so I’m not surprised Walz tried to outmaneuver us – but he does not get to say he let them go,” Gazelka said in a statement early Wednesday. “The emergency is over because the Senate and the House said so.”

In the press release that seemed to trigger the GOP’s anger, Walz said agreeing to the July 1 date was possible due to an agreement with the federal government to extend the food stamp benefits without a declared state of emergency. “Our agreement with our federal partners to extend those benefits for Minnesotans, coupled with the thoughtful plan outlined in the House Democrats’ amendment to wind down the emergency response in state government, means that we can close this chapter of our history and celebrate the brighter days ahead,” Walz said in a statement released shortly before midnight and just after House DFL leader Ryan Winkler offered the amendment. “I ask our colleagues in the Minnesota Senate to adopt this amendment, help us finish the job, and avoid a government shutdown.” 

Eviction moratorium offramp approved; no big changes to election law

The argument over emergency powers set lawmakers back after they appeared to be hurtling toward adjournment. Instead, they are now set to return to the state Capitol on Wednesday to finish up work that includes adopting a taxes bill and for the Senate to vote on an education funding measure. 

The taxes omnibus lacks the tax hikes that DFLers began the session demanding. Instead, it reduces state taxes by nearly $1 billion. Much of that is that is in the form of tax forgiveness on two federal programs passed in response to the COVID pandemic: income taxes on payroll protection program loans and the $600 a week jobless benefit top-off.

The taxes bill was also the place where various last-minute agreements were placed, including funding to woo a forest products plant to Cohasset; $6.2 million to begin planning for a I-94 freeway lid in the Rondo neighborhood of St. Paul; and a $250 million fund for “heroes” bonuses for essential pandemic workers, especially long-term-care employees.

That $250 million fund — from federal ARP money — will be governed by rules crafted by a “front-line worker pay working group” of lawmakers and governor’s appointees that is to report back to lawmakers by Labor Day. That agreement — deciding which employees are eligible and how large the bonuses will be — must be approved by the Legislature before the money can be distributed.

The 13 spending bills are set to spend $52 billion over two years. All of the agreements were aided by unexpected increases in state tax collections credited to a faster-than-projected recovery from the COVID recession. Also helping is the billions of dollars sent to the state from the federal government. The American Rescue Plan law alone sent $8 billion to state and local governments, with $2.8 billion of that being sent directly to state government.

The money available was such that lawmakers didn’t spend it all. A state rainy day savings account was replenished to $2.3 billion, and $1 billion of the ARP money is being saved until the 2022 session. Recent tax collections also suggest that the November economic and revenue forecast could report a surplus in the $2 billion range.

The House and Senate also reached agreement on the state government omnibus bill, which had previously disrupted momentum Friday when Senate GOP amendments were added that sought to end Walz’s emergency powers immediately and reduce the fines imposed on businesses that disobeyed his closure orders. The partial amnesty for rules-violating businesses did not make the final bill.

The bill also does not contain significant changes in election law: neither the Voter ID requirement sought by Senate Republicans nor the felon-voting restoration sought by House DFLers. It does contain additional safeguards for absentee ballot drop boxes at the request of the Senate GOP.

The last day also saw final approval of the housing finance bill, which contains $100 million in housing infrastructure bonds, the proceeds of which go to partner with nonprofits and local governments to build affordable multifamily and single-family housing. That is also the bill that contains the so-called off-ramp from the state’s eviction ban, which was imposed by Walz via executive order during the pandemic. The bill creates a phased end to those protections, beginning with tenants who don’t meet income eligibility requirements for federal rental assistance money and ends, next June, for those who can get help from the $675 million RentHelpMN program.

“Sign and release” added to public safety bill

The public safety bill was thought to be the final moving target of the session, at least before the fights over the state government bill and emergency powers fight reemerged. Lawmakers released a tentative deal over the weekend, but some in the DFL were quick to pan it, saying the proposed agreement didn’t go far enough to reform policing. Among the legislation Democrats wanted until the end was a limit on traffic stops for minor offenses like expired car tabs; and to change to body camera disclosure laws to allow families of those killed by police to view incident footage within 48 hours.

Poised to try to amend the deal on the House floor, DFLers avoided the issue by striking a deal with Senate Republicans. Lawmakers instead approved a measure proposed by the DFL known as “sign and release,” which allows courts to issue a warrant for some misdemeanor and gross misdemeanor offenses that directs police to notify someone of a missed court date rather than arrest them. Democrats said under the law, an officer wouldn’t have tried to arrest Wright in Brooklyn Center for his outstanding warrant.

In turn, the House and Senate also approved a bill that would make it a crime to publicize the home address of a police officer, a measure that Republicans (and some Democrats) wanted. The final deal on ending the peacetime emergency appeared to be part of a broader deal involving the policing measures, too.

The House DFL also stripped the public safety bill of a measure included in the initial agreement to spend $1 million on a grant program to fund body cameras for police departments, particularly in rural Minnesota where cost has been a barrier to their adoption. In a press release, Democrats from the People of Color and Indigenous (POCI) Caucus said they didn’t want to hand out the money without the new body camera regulations.

If the “sign and release” measure was a sweetener in the bill for Democrats, the POCI caucus said actions by the governor also helped nudge some across the finish line: Walz directed the police licensing board to publish more data publicly while also agreeing to spend $15 million of ARP money on community safety efforts and to require state-run law enforcement to release body camera footage to the families of those killed by their officers within five days. The final House vote was 75-59, with four Democrats voting against the bill with 54 Republicans. The narrowly divided Senate passed the bill on a 45-21 vote.

Included in the final public safety bill were new regulations on no-knock search warrants, a requirement for 911 operators to refer calls to mental health crisis teams when appropriate, and increased criminal penalties for people who assault officers, judges or corrections workers.

Also approved Tuesday was a $150 million fund to help businesses harmed by the COVID emergency and those damaged during civil unrest in St. Paul and Minneapolis following the murder of George Floyd by a Minneapolis police officer. The education funding bill, approved Tuesday/Wednesday by the Senate, provides a 2.5 percent increase in general student formula money in the first year of the budget and 2 percent in the second year. That spending also benefited from federal aid and is in addition to cash sent directly from the U.S. Treasury to school districts.

Legislators have not agreed to a traditional package of publicly financed construction projects known as a bonding bill. Senate Republicans had wanted a modest bill aimed at traditional bonding initiatives, such as preserving state buildings, improving clean water infrastructure and maintenance for higher education property. House DFLers proposed an expansive bonding bill that included money for nonprofits doing economic development work for people of color.

So far, the Legislature has approved a small package of corrections to bonding measures passed in 2020 that had stalled because of drafting errors. It was a win for Republicans, who wanted the bill passed all year while Democrats held it up in an effort to win more of their bonding provisions.