Walz, legislative leaders reach state budget deal

Updated: 8:45 p.m. | Posted: 4:25 p.m.

Minnesota Gov. Tim Walz and legislative leaders announced a state budget agreement at a Capitol news conference Sunday night.

"This is a budget that invests in education, health care and community prosperity in a fiscally responsible manner," Walz said just after 6:30 p.m. Sunday, joined by Republican Senate Majority Leader Paul Gazelka and Democratic House Speaker Melissa Hortman at a Capitol news conference. "Today we proved that divided government can work for the betterment of the people we serve."

Significantly, the deal does not include an increase in the state's gas tax. The total budget will be a little over $48 billion.

Other provisions of the deal include:

1. a 2 percent increase each year of the biennium for the E-12 education funding formula

2. an income tax rate cut in the second bracket

3. continuation of the medical provider tax at 1.8 percent instead of 2 percent

4. $500 million in bonding, with a large portion of that going to housing projects

   Conference committees will now start filling out the details of the budget compromise.

   Hortman said there likely will be a one-day special session on Thursday to finish up work on the budget — though House Minority Leader Kurt Daudt issued a statement saying House Republicans "did not plan to put up votes for a suspension of the rules" to allow for the one-day special session.

   Check back for updates on other aspects of the compromise.

   The news comes after a weekend of ongoing budget discussions at the Minnesota Capitol as the clock ticks down on the 2019 legislative session.

   Neither Walz, Gazelka nor Hortman said much publicly during the past week on the progress of their negotiations toward a deal for the next two-year budget. Gazelka and Hortman maintained the "cone of silence" as they arrived for more talks with Walz on Sunday. Sticking points have been spending on education and health care as well as proposed tax increases to pay for the programs.

   The constitutional deadline for adjournment is Monday night, and none of the major budget bills had been completed by Sunday. The conference committees negotiating those bills were still waiting for the marching orders they needed to finish drafting their legislation.

   The Senate on Saturday approved a Republican plan for preventing a state government shutdown if a stalemate persists, throwing down a challenge to House Democrats and Walz to either agree or take the blame for a shutdown when the current budget expires June 30. But Democrats had little to gain by taking a vote on the "lights on" proposal, given that Republicans would then have few incentives to keep negotiating.

   The bill would fund government for up to two years at current projected levels assuming autopilot growth in the budget of about $1.9 billion. It just happens to be close to the Senate GOP's original budget proposal, with none of the tax increases sought by Walz and House Democrats to put more into education, health care, transportation and other programs.

   Democratic House Minority Leader Tom Bakk dismissed the gambit as throwing in the towel and accused Republicans of bargaining in bad faith.

   Special sessions have been necessary more often than not in recent decades when control of the state government is divided. The last time lawmakers finished a budget on time was under Democratic Gov. Mark Dayton in 2013, when Democrats controlled the Legislature. But the three other budgets under Dayton required special sessions.

   Republican House Minority Leader Kurt Daudt — who was speaker during the difficult budget negotiations of 2017 but has been on the outside looking in this time — issued a statement Sunday blaming Democrats for forcing a special session by insisting on tax increases.