After a 21-hour special session last week to complete budget and policy bills, the Minnesota Legislature passed a $48.3 billion budget for 2020-21. Gov. Tim Walz, who was part of negotiations, signed the bills Thursday and Friday.
Highlights of the budget include an increase in funding for education, no increase in the state gas tax, a tax cut for second-tier taxpayers and $40 million in funding for rural broadband expansion.
District 18A Rep. Dean Urdahl, R-Acton Township, said he felt good about the bills.
“One reason they are pretty good is all of the controversial items were taken out,” he said. “The gas tax didn’t happen, $68 million in cuts to nursing homes didn’t happen, comprehensive sex education across the board didn’t happen, to name a few.”
District 18B Rep. Glenn Gruenhagen, R-Glencoe, said he is relatively pleased with how the session ended with House and Senate Republicans holding strong against proposed tax increases and policy initiatives from Democrats.
“I think overall, it was a compromised session,” Gruenhagen said. “I’m encouraged about a lot of things, but disappointed the ‘sick tax’ will not sunset.”
Gruenhagen described the 2 percent tax on medical procedures, which pays for health programs but was set to expire at the end of the year.
District 18 Sen. Scott Newman, R-Hutchinson, said the legislative session was a good indicator of bipartisan agreement between the Democratic House and governor and Republican Senate.
“We realized that we had to compromise,” he said. “That’s just what we had to do.”
The $20 billion E-12 education bill increases the per-pupil formula by 2 percent in 2020 and 2 percent in 2021, a $543 million increase in education funding from the previous biennium. With the formula increase, Litchfield Public Schools will receive more than $215,000 in additional funding if its enrollment does not change, according to district business manager Jesse Johnson.
Meanwhile, the increase means an increase of more than $500,000 for Hutchinson Public Schools and $300,000 for Glencoe-Silver Lake School District, according to Newman.
The budget invests $126 more per student. Walz initially proposed a $189 increase in per-pupil funding, which the House matched, resulting in a 3 percent increase in per-pupil funding. The Senate proposed a 0.5 percent increase that would have resulted in additional funds of $32 per pupil.
Additionally, the education bill invests $47 million in voluntary pre-kindergarten programs, which funds 4,000 pre-school seats in low-income communities. The bill continues the funding for two years. Urdahl said he had hoped to see more funding or grants for day care centers with the state’s day care provider shortage.
The Legislature also approved $90 million for special education services and school safety and security enhancements.
Walz’s proposed 20-cent-per-gallon gas tax increase and increase on vehicle tabs and licensing did not pass. With the tax increases to roads and bridges, the sales tax increase on auto parts and a $1 billion surplus, Urdahl said the Legislature could not justify a gas tax increase.
Gruenhagen said he was disappointed that road and bridge funding for small cities under 5,000 was not included in this year’s transportation bill.
“House Republicans had included $28 million for small cities during the last two budget cycles,” he noted.
The state will appropriate $275 million for road construction, delivery and maintenance. After a scathing review of the $150 million electronic licensing system, the bill also pulls the plug on MNLARS, much to Newman’s approval, and opts for a new software.
State tax code
The state will conform to the federal tax code enacted in 2017 and implement a corporate business tax reduction.
The Legislature also passed a tax break for the second-tier income tax bracket, which impacts couples earning between $37,850-$150,380 and individuals earning between $25,890-$85,060. The rate will decrease from 7.05 percent to 6.8 percent.
Highlights from the Agriculture, Rural Development and Housing budget include $40 million for rural broadband expansion, $60 million for affordable workforce housing, funding for rural and farmer mental health programs, and $5 million for the Dairy Assistance Investment and Relief Initiative.
Urdahl said he was the second author on the affordable workforce housing bill and was glad to see it completed.
“It was one of my goals to get the workforce housing done, and it did,” he said. “It was one of my goals to see a bonding bill get done, it didn’t. I wanted to see more done for child care, too. I didn’t really get done what I wanted to see (with child care).”
The Legislature passed a $15 billion health and human services bill over the next two years that includes new prescription drug transparency requirements, an insulin program and funding for mental health services. Newman noted that landmark protections for elderly and vulnerable Minnesotans will go into effect next year, including the explicit right of senior care facility residents to place cameras in their rooms and funding for more agency staff.
“In addition, the successful health insurance premium security program will remain in place — a proven method for lowering health insurance rates for families, farmers and small businesses,” he said.
Urdahl was pleased that $12 billion in tax increases did not pass, however he was disappointed that the 2 percent tax on health care did not end.
“The main thing the Democrats got was that the health care tax sunset was removed and changed to 1.8 percent,” he said.
Gruenhagen said this tax raises health care costs on Minnesotans and their families.
“We would likely need a Republican House, Senate and governor before this unfair and immoral tax could be reconsidered in the future,” he said.
Republicans in the House and Senate were pleased to block $12 billion in tax increases proposed in the original budget. With the special session and deadline, the Legislature had to compromise.
“If both parties walk away unhappy, then it probably was a pretty bipartisan deal,” Newman said.
Urdahl said the budget carefully prioritized what the government is spending.
“There was a relatively small increase in spending,” he said, “but that’s naturally what happens.”
Although he wasn’t happy with the overall process this year, Urdahl felt a lot of the policies passed were good.
“Lawmaking is like making sausage,” Urdahl said. “You don’t really want to see it get done.”