Minnesota legislators are taking their Spring Break this week, giving everyone time to contemplate how far apart House DFLers and Senate Republicans are on the main issue of the 2022 session: how and how much of the surplus money — along with unspent cash from the federal American Rescue Plan — the state should spend.
The most-common conclusion: very far apart. DFLers generally want to spend more of the $9.25 billion surplus and $1.15 billion in ARPA funds on policies and programs with a little set aside for tax cuts. Republicans want to spend a bunch of money on tax cuts with a little set aside for policies and programs.
Matt Shaver, the policy director of Ed Allies, an advocacy group for students of color and those with special needs, used Legos and a map of the state to display the gap between the House’s $1.2 billion for new education spending to the Senate’s $30 million.
“If every mile was 10 million dollars, the two sides would be the distance from the Mall of America to International Falls apart,” Shaver said in a Tik Tok video in which he suggested negotiators could meet at the halfway point of McGregor, Minnesota.
But education, while one of the most obvious areas of disagreement, isn’t the only one: The House wants to spend $240 million on environmental programs; the Senate proposes $1 million. The House would spend $56 million on agriculture and rural development; the Senate: $5 million.
And while both the House DFL and Senate GOP propose spending around $200 million on public safety programs, their plans go in very different directions.
On taxes, the Republican-controlled Senate passed a $3.4 billion tax cut, primarily by nearly halving the lowest income tax tier and ending the state’s remaining taxes on Social Security income. Senate Republicans are proposing spending about $3 billion on new spending, with the bulk of that going to increase pay for long-term care workers.
The House DFL has proposed $1.6 billion in tax cuts, which are mainly targeted at lower-income residents and families via child care credits, rental credits and student loan credits. In turn, they have crafted new spending that totals around $5.4 billion on education, early childhood programs, health and human services, housing and other areas of government.
[image_credit]REUTERS/Brian Snyder[/image_credit][image_caption]Gov. Tim Walz[/image_caption]
But an early test of how Walz, House Speaker Melissa Hortman and newish Senate Majority Leader Jeremy Miller might be able to broker deals didn’t end well. A series of meetings to agree on worker bonuses and unemployment insurance failed, though related talks on renewing the state’s “reinsurance” program, a mechanism to subsidize some health insurance premiums, was more successful.
Not just one-time spending
You can’t listen to floor debates or committee hearings for long without hearing someone call the budget surplus “historic” because, well, it is. Taken together, the surplus and the unspent ARPA funds are about 20 percent of the state’s current two-year, $52-billion budget.
And while previous surpluses, often in the range of $1.5 billion, disappeared when projected into the following budget period, this time the state is forecasting another $6.3 billion surplus in the 2024-2025 biennium.
That has allowed both the House and Senate to do more than propose one-time spending — expenditures that only affect the current budget and don’t obligate the next Legislature to either keep the spending in place or cut it. So the House DFL can take a chance on new ongoing programs and the Senate GOP can impose what they repeatedly describe as “permanent, ongoing tax relief.”
Yet concerns over the future, despite the current revenue forecast, contribute to Walz’s preference to use one-time rebate checks instead of cutting tax rates.
Failure is an option
While the House and Senate have each made serious spending proposals, most aren’t to be taken seriously. That’s because they aren’t meant to be a path to an agreement but rather a statement of positions. As in previous sessions when the two parties share political power, any controversy is either wrung out in closed-door leadership negotiations or dropped on account of being intractable.
Unlike some recent session-ending dramatic finishes, however, there is no government shutdown awaiting if a deal isn’t reached this year. The state is not yet halfway through the two-year $52 billion budget adopted last June. If unspent, the surplus simply goes into the bank, and the unspent ARPA funds go to the Legislative Advisory Commission, a group of lawmakers that Walz needs to consult before spending the money, though he does not need the group’s approval.
Failure, therefore, is an option. Such an ending, however, will leave a lot of disappointed people among those with expectations for spending on social programs, or tax cuts, or bonus checks, or reductions in unemployment taxes — or any of the other much-touted uses of the money.
The politics of the session are a choice between whether doing nothing and waiting for the election is more advantageous than getting something to talk about during the campaign.
“Republicans are open to any ideas to put money back into the pockets of Minnesotans,” Miller said last week. But the Winona Republican said he thinks their plan is the best way to do that.
DFLers are reluctant to agree to tax rate cuts — even for the lowest tier of income — because every taxpayer pays some of their taxes in that bracket. “Rather than do a little bit for those who don’t need it, we thought: How can we move the dial, really make a difference, in the lives of our families, our workers and our senior citizens?” said House Taxes Chair Paul Marquart, DFL-Dilworth.
When the session reconvenes on April 19, it will have a month to finish its work.
[image_credit]MinnPost photo by Peter Callaghan[/image_credit][image_caption]Senate Majority Leader Jeremy Miller, right: “Republicans are open to any ideas to put money back into the pockets of Minnesotans.” State Sen. Carla Nelson is at left.[/image_caption]
Does either party have the common sense to understand the 9.8B surplus was from the state of Minnesota getting 78B from Federal Government, in assorted COViD spending. Do the politicians understand that money cannot keep coming from DC, nor should it. Walz is trying to use Federal dollars for good will, while giving a couple hundred bucks or so to each Minnesotan. If you didn’t pay Federal tax, would you still get Walz cash? Throwing good money after bad to pay more for poor results in education, seems like a waste. No such thing as a rainy day fund in any one’s plans ?
I’ve never heard of giving bonus money 2 years later. And giving money away in an election year? Sounds like buying votes to me. For people who haven’t been paying attention to what’s going on on the economic front, we are facing record inflation. Here’s why. People were shut up for two years, and weren’t spending. On top of that, the government felt the need to just start sending checks to everyone. Whether they were working or not. In addition, renters were given a free pass to stop paying rent.
We are flush with cash, and inflation is not going away. So why not cut taxes and save the rest. Many will say they want the money spigot to stay on, but there’s a huge price to pay for that. When was the last time Minnesota had a budget deficit? Just curious.
As I recall there have been projected budget deficits a couple times in the last 20 years here in MN.
It’s important to understand that the GOP strategy of using one-time money for big tax cuts is to force reductions in regular budget spending in the out years. The GOP is betting that lower tax rates now will give them a lot of political leverage to prevent tax increases back to present levels when revenues fall done the line, really a very manipulative strategy that takes advantage of the public not following legislative matters too closely from biennium to biennium.
Don Trump shoveled $12 BILLION in cash to farmers in 2022.
Given how much of the farm vote he got, I don’t blame any politician for doing the same.
Here is a simple solution. Three parties are involved- not parties, but entities. The Governor, the House and the Senate. Divide the money three ways – $3 billion for each, with the remainder in the rainy day fund. Each party gets to decide to do with its $ billion.
If Republicans want to devote all theirs to tax cuts, fine. If most of it goes to rich people who don’t need it, they can m justify it. Rich Republicans will have more cash to fund their moves to tax havens like Florida.
Then Democrats can spend theirs on things that make Minnesota a better place to live – better transportation, education, healthcare and environmental protection. The contrast could not be greater.
They have very few things they are obligated to do. They could just wait until next year and see if that surplus is still projected. With all the turmoil internationally and nationality, doing nothing might be the prudent thing to do.
Yes and keeping all of that money in an investment fund for a couple years would generate another couple hundred million dollars in interest.
Money a family or an institution may need in a few years should never be put into the types of investments (equities) that earn the biggest rewards.
especially when we are a few months away from a recession
Bipartisanship from repubs? What are you smoking?
* They left behind the Great Recession along with 2 wars handled incompetently and without funding…and refused…totally…to help clean up THEIR mess.
* They refused to investigate the Jan 6 violent coup with most repubs supporting the Big Lie.
There is no bipartisanship with repubs who seem more willing to undermine our democracy than protect it.
It is no longer the GOP but the GQP.
And the fact that this viewpoint is not brought out in articles like this is only due either professional incompetence or outdated sense of maintaining journalistic neutrality.
“Democrats are saying the earth is round, but Republican leaders insist it’s flat. We report, you decide.”
Exactly, the obsession with Bi-Partisianship and Centrism is killing us. Also notice its really only a thing when Democrats are in control.
Well,that’s not a thing at all.
So the DFL want to tax more than the GOP and spend more?
Well Ron, the US Senate GOP wants to raise taxes on millions of hard working Americans. Is that OK?
Our MN Republican legislators see a problem with government spending on ordinary citizens’ needs, instead focusing on returning tax money to those wealthy enough to benefit by the tax cut.
The young women who have waited on me at the post office and grocery stores where I have been shopping for these last tough years most likely do not owe state taxes, due to their wages. They have gotten sick. They have been treated harshly by people with mask issues. They have had a bigger workload due to understaffing. They have helped those of us who had to shop for shut-ins and isolated vulnerable people though the pandemic. They have kept our communities running when others were side-lined.
And yet– the R legislators cannot seem to focus on their heroism and instead want to “save money” even though the money was certainly intended to help those adversely affected.
It would make sense to use some of the COVID and budget surplus to compensate those who served people throughout the pandemic.
Democrats: “Hey, where’s the fun in getting elected to public office if you can’t, you know, spend other people’s money?”
Republicans: “It’s not your money. Return it to the people who paid it.”
Dude, we all pay taxes. Every one of us.
Right but wrong: Its our money and its our government, and its our government that has been elected to deal with it. I am not so hot on the left that tell you to shut up and pay your taxes and they will tell me how they are going to spend them, nor am I so hot on the right that think everything is 1/2 price, all city, state etc. employees are lazy and inept, our roads and bridges etc. will somehow magically fix and build themselves, and think the rich deserve to get richer and the poor deserve to be poorer.
Thanks to your incredibly overheated economy the coming recession will take care of most of the surplus….