Ewald at the Capitol

Third Committee Deadline

Today is the last day before the legislature’s Easter/Passover break — a much-needed break for many legislators, staff, lobbyists and advocates. Today’s third and final committee deadline requires committees to act favorably on major appropriation and finance bills. The week has been jam-packed with committee hearings to act on their respective omnibus budget bills.

The Senate’s Omnibus Tax Committee was the first bill to be passed in the Senate. The bill passed on April 7 with a vote of 42-24. However, because Minnesota’s Constitution requires tax bills to originate in the House, the Senate tax bill was laid on the table after the vote. Expect more omnibus bill debates once the legislature returns from break.

Governor to Deliver State of the State Address

Gov. Tim Walz is set to deliver his fourth Gubernatorial “State of the State” address Sunday, April 24 at 6 p.m. The speech will be given to a joint session of the Minnesota State Legislature at the Minnesota House Chamber. This is only the second time he’s delivered it to an in-person audience since he took office in 2019. The last two were delivered remotely from a social studies classroom at Mankato West High School in 2021 and from the governor’s mansion in 2020.

Budget Bills Advancing

With a budget surplus of $9.25 billion, committees in both bodies have ambitious priorities this session. Here are some of the notable proposals we will pay attention to in the weeks ahead:

E-12 Education
The House and Senate education funding proposals could not be further apart. The Senate bill appropriates just $30.7 million, most of it one-time, while the House bill appropriates over $1 billion for K-12 education, most of which is ongoing.

Senate

$30 million, one-time, for Language Essentials for Teachers of Reading and Spelling program
$700,000 annually for Regional Centers of Excellence to support literacy efforts

House

$422 million in FY23 and $997 million in FY24-25 for unfunded special education costs
$25 million in one-time funding to help schools mitigate loss of funding due to declining enrollment
$94 million to address teacher shortages and increase the diversity of the teaching workforce
$18 million for additional school meals aid
$67 million to expand voluntary pre-kindergarten

Taxes
The House and Senate tax omnibus bills demonstrate substantial differences between the DFL House and Republican Senate.

Senate
The Senate debated a tax bill that reduces the first-tier tax rate for all filers from 5.35 percent to 2.80 percent, and fully eliminates the state income tax on all Social Security benefits. The bill provides $8.43 billion in tax relief over the next three years. The bill also provides conforms with federal IRS Code through Dec. 31, 2020. The Senate bill contains far fewer provisions than the House bill and the Senate Tax Chair has commented that she plans to bring forward a second tax bill after the Easter/Passover/Spring Break.

Additional Senate provisions:

conforms the state tax code to the federal Internal Revenue Code as amended through Dec. 31, 2020
updates the four income tax brackets for inflation as provided under current law

House
The House tax bill proposes to include $1.6 billion in tax reductions and credits with a strong focus on providing $372.6 million in tax relief for renters by converting Minnesota’s renter’s credit into a refundable income tax credit.

Additional House provisions:

$325 per child income tax rebate
100 percent subtraction for taxable Social Security benefits for taxpayers with adjusted gross incomes up to $75,000 (married filing jointly)
income tax subtraction for up to $10,200 per person of unemployment compensation received in 2021
increases from $500 to $1,400 the maximum student loan credit
increases funding for local government aid and county program aid
conforms the state tax code to the federal Internal Revenue Code as amended through Dec. 31, 2020
allows taxpayers who file with an individual taxpayer identification number to claim the working family credit
increases the angel credit allocation in tax year 2022 by $7 million
provides funds to counties for economic aid to businesses and rental assistance
several property tax related changes

Health and Human Services
Like many of the policy areas this session, the HHS bills in the House and Senate are dramatically different.

Senate
On Tuesday, the Senate HHS bill was passed to the Finance Committee. Unlike many Omnibus HHS bills in recent sessions, this bill contains significant spending of $300 million to attempt to stem the closure of group homes for the disabled.

House
The House has not completed their bill and the chairs of the Health and Human Services Committees have told their members that there will be a “significant” amendment to bring the bills and spreadsheet into conformity today. In the meantime, the bills contain major spending including a “Public Option” for insurance and a new program in which the Health Department would oversee nurse staffing ratios in hospitals.

Transportation
The House and Senate transportation funding proposals take two different routes to fund Minnesota’s transportation needs. The Senate bill includes increasing to 100 percent the dedication of the sales tax revenue from auto repair parts. The Senate also includes general fund money to transportation for required federal IIJA funds. The House proposal provides $225 million from the General Fund in FY22-23 and an additional $100 million appropriation in FY24-25. The House is also considering dedicating 100 percent of the revenue from the sales tax on auto repair parts to transportation with a significant portion dedicated to transit, but that bill is currently moving independently from their transportation bill.

Additional Senate provisions:

$300 million in trunk highway bond authorization;
Increases annual fees on electric vehicles;
$982.98 million for state roads and bridges;
$154.5 million for Corridors of Commerce;
$303.59 million for County State Aid Highways;
$79.75 million for Municipal State Aid Highways;
$69.1 million for town roads;
$69.01 million for small cities assistance;
$14 million for the Safe Routes to School program

Additional House provisions:

$80 million for high priority bridges;
$69 million for MnDOT facilities;
$30 million in county state aid;
$12 million for active transportation;
$11.5 million for a multimodal package to match the federal Infrastructure Investments and Job Acts;
$10 million for municipal state aid;
$10 million for multimodal transportation small city assistance;
$10 million for Greater Minnesota transit;
$7 million to replace a state utility aircraft;
$5.5 million for airports;
$4 million for township roads;
$1.9 million for safe routes to school;
$1.3 million to improve pollinator habitat and living snow fence;
$1 million appropriated to improve short-line freight rails

Legislators Losing Party Endorsement

So far, five sitting legislators in the Minnesota House and Senate have lost their party endorsement for re-election.

Rep. Tony Jurgens (R – Cottage Grove) lost GOP endorsement to Tom Dippel for Senate District 4. Rep. Jurgens has yet to confirm whether he is suspending his re-election campaign.
Sen. Eric Pratt (R – Prior Lake) lost GOP endorsement to first-time candidate Natalie Barnes in SD 54. Sen. Pratt has yet to confirm whether he is suspending his re-election campaign.
Sen. Jason Isaacson (D – Shoreview) lost DFL endorsement to fellow Sen. John Marty (D – Roseville) in SD 40. Sen. Isaacson confirmed he is suspending his re-election campaign.
Rep. John Thompson (DFL – St. Paul) lost DFL endorsement to first-time candidate Liz Lee. Rep. Thompson has yet to confirm whether he is suspending his re-election campaign.
Sen. Paul Utke (R – Park Rapids) lost GOP endorsement to Bret Bussman. Sen. Utke has indicated that he will run in the primary.

Some may choose to run in a primary election later this summer, but they face a difficult road if they do. Losing party endorsement means losing resources and cash for primary campaigns and those who lose their endorsement often lose their primary elections.

Retirements

As we have mentioned previously, a notable number of legislators in the Minnesota Legislature have announced they will not run for re-election in 2022. Here is a list of what we know as of April 7, though retirement announcements are expected to continue throughout the session.

16 House retirements
13 Senate retirements
12 House members running for the Senate
1 Senator running for the House
5 House members seeking other offices
3 Senate members seeking other offices

Resources

Dates to Remember

April 11–18: Easter/Passover/Spring Break
April 24: Gov. Walz delivers state of the state address
May 23: Constitutional adjournment date

They Said It...

“Rather than do a little bit to help a few and those who need it, we thought how can we really focus? How can we move the dial really make a difference in the lives of our families, our workers and our senior citizens? And that’s what our tax bill does.” – House Taxes Committee Chair Paul Marquart (DFL – Dilworth) on his committee’s omnibus bill

“This bill will do much needed tax relief. Minnesota continues to be a high-taxed state. We're at a time where our state coffers are full. And yet Minnesotans are struggling.” – Senate Taxes Committee Chair Carla Nelson (R – Rochester) on her committee’s omnibus bill