Minnesota Legislature adjourns 2022 regular session without passing tax cut, spending bills

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The unusual dynamics of the 2022 session of the Minnesota Legislature created the circumstances for its partial collapse Sunday evening when the House and Senate ended the regular session without passing most tax and spending bills.

With more money to spend than any previous even-numbered year Legislature, there were resources to do some of what both Republicans and DFLers wanted: tax cuts, new spending and even additional savings. Having $9.25 billion in surplus and more than $1 billion in federal cash from the American Rescue Plan meant both parties could get some of what they wanted. Expectations were raised among rank and file lawmakers and constituency groups.

But coming amid a two-year budget, and with an election looming, failure was an option. The government won’t shut down if none of the spending and tax cuts bills are passed. Gov. Tim Walz’s threat not to call a special session may have served as a catalyst for action, but in the end, it didn’t push lawmakers toward success — and may not have actually been true.

As Sunday became Monday, House Speaker Melissa Hortman, DFL-Brooklyn Park, said she’d accepted Walz’s invitation to meet to decide on how and when to convene a special session. Past practice for Walz has been to require agreement on bills before he calls sessions. He said that would be the plan again.

“There is a relatively brief window of time within which we need to have an agreement that makes sense to come in and finish up,” Hortman said, adding that that window was this week, before the Memorial Day Weekend. “I think all of the bills are close enough that that could be within a day or two.”

Senate Majority Leader Jeremy Miller seemed less interested. “We’ve had members from the Senate working darn near around the clock for a week, what is one or two more days going to do?” said the Winona Republican. “We are not interested in a special session.” 

While he said he was willing to listen, “I never say never,” he said it was better for everyone to return to their districts.

Both houses adjourned around midnight. Both will come back in on Monday, but can’t pass bills.

“We have to,” Walz said. “The idea that the clock struck midnight we turn into a pumpkin or something, no, we’ve had special sessions every single time because the work needs to get done.”

What happens now?

The failure wasn’t a surprise. A little before 10 p.m. — two hours from the end of the 2022 regular session — House Majority Leader Ryan Winkler acknowledged that all would not be wrapped up before midnight.

“We’re going to keep trying to close up agreement on bills but there’s no agreement yet on how we will process them,” Winkler said. “We’re not going to pass all these bills before midnight.

“If we’re going to do them, it will be in a special session,” the Golden Valley DFLer said. “We’re ready to go, we just need these major bills to come together, and when they do everything should be ready to start going.”

Those major bills are on education, transportation, public safety and judiciary, and health and human services. Winkler questioned Miller’s claim that the Senate GOP wouldn’t be interested in a special session.

There is a deal on a tax bill. It was agreed to by the House DFL and Senate GOP Saturday. But the House leaders will not pass it until they are sure the big-spending bills are going to pass the Senate. “This is an all-in kind of scenario,” Winkler said.

A few things were accomplished Sunday. A drought relief package and new investments in rural broadband installation were sent to Walz.   

If nothing further is passed — minus already adopted bills that include spending on unemployment insurance, extending the state’s reinsurance program, sending bonus checks to pandemic workers and funding additional pandemic response — the money stays in the bank. If the economy cooperates, it will be up to the Legislature and governor elected this November to decide what to do with that cash when a new two-year budget is negotiated in 2023.

Any spending from the surplus would be on top of the $52 billion, two-year budget passed last June.

The DFL leadership this year was insisting on a significant education bill that was closer to their priorities than they ended up within the tax bill. 

Addressing public safety also continues to be difficult, something that dates back to the sessions following the 2020 murder of George Floyd. This year, the Senate GOP introduced plans to spend heavily on recruiting and retaining police officers and proposed a host of “tough on crime” policies for longer criminal sentences and new or expanded crimes. 

The House DFL plan had some money for police but leaned far more heavily on boosting criminal investigations and non-police initiatives, primarily money for community nonprofits that do violence intervention work. Republicans and Democrats have negotiated largely in secret since Friday evening, but they appear to still have major differences in how to address violent crime.

Part of the duel Sunday was between lawmakers who insisted that such work could be completed quickly and those who knew it couldn’t be. Even if deals on education, health and human services, transportation and public safety had been reached Sunday, it would have been a challenge for the staffers who draft bills and fit them into existing statutes to complete the paperwork. 

A window of optimism

A week ago, optimism was in vogue. Walz, Miller and Hortman announced a deal to divide the surplus into thirds, with one third going to tax cuts, one third going to spending and one third left in reserve. The deal totaled $12 billion, combining money in the current surplus with additional surpluses now projected in the next two-year budget period that starts next July. 

But the Gang of Three only set dollar totals for each area of spending, leaving sometimes-bickering committee chairs to decide what was in and what was out. And even after agreements are reached, there must be time for legislative staff and lawyers to draft bills. 

When confronted with the shortage of time and the lack of deals last week, Walz teased reporters. “I know it’s your job to be skeptical. It’s the air that you breathe on this,” Walz said. 

But he pointed to recent deals on a fix to the unemployment insurance fund, on bonus checks to pandemic frontline workers, and on cash for him to meet future pandemic response costs. He said he predicted such in his state of the state speech three weeks ago.

Even if Miller’s caucus wanted more in tax cuts, and Democrats might think not enough was spent on education and social programs, Walz said: “Come here Monday. Come here next Monday. Give ‘em an opportunity here.” 

What got done this session

There were successes in the regular session. After months of talks and fighting, the House and Senate agreed to spend $4.3 billion of reserves and federal American Rescue Plan money on reinsurance, unemployment insurance fixes, checks for some frontline workers and COVID funding.

Of that, $2.7 billion will go toward repaying federal borrowing that kept unemployment insurance checks flowing during the pandemic and refilling the state trust fund that was drained before the borrowing started. Another $500 million will be distributed to some 670,000 health care, food service and emergency workers who stayed on the job in the early months of the pandemic.

Walz will get $190 million to spend as he thinks necessary on pandemic costs such as additional vaccination, testing and healthcare staffing. And $891 million will subsidize the rates of individual and small group health insurance customers who have high medical costs, a program known as reinsurance. 

And, the Legislature finally — after five years of trying — further modernized liquor laws, helping craft brewers and distillers by letting larger brewers return to selling growlers (64-ounce jugs) and crowlers (32-ounce cans) out of taprooms while letting smaller operators sell bottles and cans in-house.

But other high-profile issues could not get through both houses of the Legislature. Recreational marijuana was favored by the House and governor but not the Senate. Paid family leave saw different approaches from the House and Senate, with neither supporting the other’s version. The idea of a gas-tax holiday went nowhere. And there was no support among either chamber’s leadership to bring the so-called Page Amendment before committees. That constitutional amendment named for former state Supreme Court Justice Alan Page would have made education a right and funding it the paramount duty of the state.