‘Transformational’ and also ‘bonkers:’ Minnesota Legislature ends its session of historic spending, policy changes

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If someone built a word cloud of all the DFL floor speeches of all their bills during this year’s legislative session, the dominant words would be “transformational,” “generational” and “historic.”

“Transformational is definitely on the bingo card,” House Speaker Melissa Hortman said when asked for a one-word descriptor. “Transformational and historic.”

DFL Gov. Tim Walz called it “the most successful legislative session, certainly in many of our lifetimes and maybe in Minnesota history.

“A lot of folks at the beginning were very skeptical that we could get the big, bold vision of transforming Minnesota,” Walz added. 

With a DFL trifecta and more money to spend than any Legislature ever — even adjusted for inflation — nearly every plank of the DFL platform was fulfilled. While their surprise majorities were attributed to a campaign built upon abortion rights and democracy following the overturning of Roe v. Wade and the Jan. 6, 2021, insurrection at the U.S. Capitol, DFL lawmakers and Walz moved forward on dozens of issues beyond those.

For Republicans, the gigantic words on their word cloud might have been more like: “partisan,” “overreach” and, as became quite popular, “bonkers.”

Every agenda item listed on a poster hung in the House DFL caucus room was checked off, though one item was amended slightly to reflect the lack of a child care tax credit.

“I was a little intimidated when (House Majority Leader Jamie Long) and his team put the big board up in caucus,” Hortman said. “I was like, ‘Whoa, holy buckets.’ What I wanted us to do was under-promise and overdeliver.

“We did kind of clear the decks,” she said.

Some of it was due to meeting expectations of DFL coalition members from labor to environmental groups, abortion rights activists and gun safety groups. But much was from pent up demand. For a decade, the DFL and GOP split power in St. Paul: Republicans had House control for all of DFL Gov. Mark Dayton’s second term, and they held the Senate from 2017 through the end of Walz’s first term in 2022. Neither party got all they wanted or even some of what they wanted. What passed then was what could be cobbled together in inter-party negotiations.

“You might have noticed, things are getting done around here,” Walz told those pushing for a paid family leave insurance program. “You would come here and you’d have a list of things that were well thought out and would improve people’s lives, and they would treat it like a wish list,” Walz said. “‘Isn’t that nice. Isn’t that cute.’

“Those days are over. That wish list is a to-do list and we’re checking it off.”

That list is lengthy — and expensive. With the help of a $17.5 billion surplus (that would have been $19 billion had the DFL not changed the way inflation was included mid-session), the 2023-2025 budget will be 40% higher than the current budget.

Democrats codified abortion rights, paid family and medical leave, sick leave, transgender rights protections, drivers licenses for undocumented residents, restoration of voting rights for people when they are released from prison or jail, wider voting access, one-time rebates, a tax credit aimed at low-income parents with kids, and a $1 billion investment in affordable housing including for rental assistance.

But Senate Minority Leader Mark Johnson, R-East Grand Forks, said “productive” is a euphemism for tax hikes and spending.

“We’re seeing nothing but tax rises on Minnesotans. We’re seeing mandates going to our schools. We’re seeing a complete change of priorities in this state,” Johnson said.

DFL mostly avoided infighting

Before the legislative session, one question for the DFL “trifecta” was how they would bridge the political gap between their own members. The party is much more concentrated in the Twin Cities metro than it once was, resulting in a more ideologically united bunch. But there still are differences when comparing lawmakers endorsed by the Democratic Socialists of America to others in Republican-leaning districts carried by Donald Trump in 2020. Is it harder to fight amongst friends than political adversaries?

Much attention was paid to four new DFL senators that narrowly won elections handing the party control of the state Senate. The small bloc representing political swing districts had outsized power to shape — and limit — the Democratic agenda and were pushing for things like eliminating the state tax on Social Security that clashed with the views of some party leaders.

There certainly were things that Democrats from Greater Minnesota or suburban swing districts voted against or stopped altogether. 

Sen. Grant Hauschild, DFL-Hermantown, took credit for thwarting some fees on outdoor recreation and gun bills that failed, for example. Sen. Rob Kupec, DFL-Moorhead, was among those who had concerns with a new delivery fee that was narrowed in scope. Sen. Judy Seeberger, DFL-Afton, pushed for modest changes to gun legislation that became law. Sen. Heather Gustafson, DFL-Vadnais Heights, won some help for small businesses in the paid family leave bill. Other Democrats blocked a new Citizens’ Board to oversee permits at the Minnesota Pollution Control Agency and limited environmental regulations impacting Greater Minnesota.

The “majority maker” Democrats even relented on a push to fully eliminate the state tax on Social Security, settling for exempting more people. They appeared to be more liberal than some of their predecessors, like former northern Minnesota Sens. Tom Bakk and Kent Eken.

Republicans have sharply and repeatedly criticized those DFL lawmakers for breaking campaign promises. On Monday, the Senate GOP’s campaign arm published footage of Seeberger saying she opposed any gas tax hike during the run-up to the 2022 election. Democrats passed inflationary increases to the gas tax as part of their transportation package.

During a Senate floor debate on Sunday, Hauschild said he still supports repealing the Social Security tax. But he also said the tax bill had money for other priorities. “I can bet you if I had a conversation with the 15% of seniors at the top income percentiles they would say, ‘Golly, I really think we can provide child tax credits to reduce childhood poverty rather than giving tax cuts to the very top,’” he said.

Progressive members of the Legislature also fought for priorities like a minimum wage for Uber and Lyft drivers, but they also did not grind anything to a halt.

The $2.6 billion package of infrastructure spending had unprecedented money for nonprofits in the Twin Cities area that aim to help people of color and boost economic development in the metro. And DFL budget bills paid for many other spending priorities of BIPOC legislators.

While Republicans got very little of what they wanted, they did leverage a supermajority threshold for a bonding bill financing public construction projects to eke out more money for struggling nursing homes. That final infrastructure package also had more cash for upgrades to things like roads, bridges and water treatment in Greater Minnesota compared to a bill the DFL had threatened to pass.

Republicans decry tax, fee increases

Overall, Republicans were less enamored of the work product of the 2023 session, pointing to tax hikes during a period of record surpluses, tax cuts and rebate checks that were smaller than even DFLers had proposed and new spending that could be unsustainable in the event of an inevitable economic downturn.

And Sen. Jim Abeler, a Republican from Anoka who is one of the few Republicans who sometimes vote in favor of the majority’s bills, was surprised how DFLers transformed a narrow, one-seat majority into a mandate for a broad agenda that excluded Republicans. DFLers held a one-seat advantage in the Senate and a 70-64 majority in the House.

“One seat was won by 321 votes, that’s 161 people changing their mind,” he said of Senate District 41 where DFLer Judy Seeburger won. “Based on that, we’re getting no inclusion and ideas that could have been so much better.”

Currently, the state is spending $51.6 billion over the two year period that ends June 30. It is budgeted to spend $71.5 billion in the two years that begin July 1. Some of it is one-time spending to draw down the surplus. But some is ongoing spending that is able to continue for the next four years because of money from the tax hikes and an expected $5.3 billion surplus for the budget that begins in mid-2025. That budget is projected to be $66.1 billion, according to Minnesota Management and Budget.

Meanwhile, the state’s rainy day fund, used for economic downturns or other emergencies, has nearly $3 billion.

The budget bills sent to Walz contain $3 billion in tax cuts and credits aimed at low-to-medium income residents, especially those with children, and tax increases targeted on corporations and higher-income earners.

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In addition, a paid leave law will cost employees and employers about $1 billion a year via payroll taxes for an insurance program that replaces some income when workers can’t work for illness, childbirth or to care for relatives. The transportation omnibus bill includes the first significant increase in transportation taxes since 2008 with $1.48 billion coming from an inflation-index gas tax, a new delivery fee and increases in the motor vehicle sales tax and annual car tabs.

The seven-county metro will see a 0.25% sales tax for housing and a 0.75% sales tax for transit. DFLers have called it a record tax cut, but Bill Walsh of the conservative Center of the American Experiment notes that no tax rates were cut and much of the tax relief flows via refundable tax credits to low-income families that currently have no tax liability.

So after a session where nearly all of its agenda items were checked, what does the DFL do for an encore when they reconvene next February? “It is a pretty short list,” said Long, the House majority leader. Among them are taking another run at sports betting, another capital construction bill and helping the University of Minnesota buy back its hospital, though Walz said Sunday he might consider a special session yet this year for the hospital purchase.

“We have really run the table in a lot of ways, in terms of the priorities we’ve put forward and the work we’ve done,” Long said.

But GOP Rep. Pat Garofalo saw the future differently.

“Today, as we pat each other on the back and congratulate ourselves for excessive spending and even more borrowing, know this: The spenders are not done,” the Farmington lawmaker said. “I will guarantee you that when this session adjourns, the demand for even more spending and even more borrowing will inundate legislators to meet the ‘unmet needs’ of the state of Minnesota.”

Editor’s note: This story has been updated to correct the metro sales tax for transit to 0.75% instead of $0.75.