After 19 long months of legislative activity, Minnesota's part-time legislators will only have two months back in their districts. Another Special Session is expected in September.
The regular 2021 legislative session ended May 17, and a Special Session started shortly after. Legislators, both virtually and in person in Saint Paul, spent nearly two weeks trying to work together to pass a two-year budget. They finally reached a $52 billion budget agreement before midnight on June 30, avoiding a partial state government shutdown on July 1.
In addition to the budget, legislators also came to agreement on a $900 million tax relief bill for Minnesotans. On the last day, the House and the Senate finally acted on important Paycheck Protection Program loan conformity legislation. Governor Walz signed a bill that fully conforms to the federal law for PPP loan forgiveness and deductibility. It also includes forgiveness for Economic Injury Disaster Loans and Small Business Administration grants,
The National Federation of Independent Business reported that the state’s Reinsurance Program was retained for one more year. This Republican-backed plan has been successful in not only stabilizing the Minnesota individual health insurance market, but also reduced premiums by about 20% on average. Governor Walz and the House DFL caucus wanted to end this critical program and apply the budgeted money to other spending. They planned on having individuals who have benefited from this program in the state’s individual health insurance market utilize the federal tax credits that are available temporarily through 2022.
It is estimated that close to 50,000 Minnesotans may not be able to benefit from these tax credits and insurers estimated this would cause a large 25% across-the-board increase for everyone in this market. Fortunately, the Senate majority Republican caucus stood strong and insisted on funding for this program through 2022. The legislation also authorizes another federal waiver to be requested to continue the program.
According to the NFIB, the budget bill also contains a property tax cut for small businesses with lower taxable market values. The legislation increases the exemption for the state general property tax from the first $100,000 in value to $150,000, and businesses with a market value of $150,000 or less will not pay the state general. The state general tax accounts for 20 to 30% of the property taxes of many small businesses.
A couple of DFL-backed provisions that did not make it into the signed bill:
- A new 11.15% top tax bracket for joint filers earning more than $1 million and single fillers earning over $500,000. This would have given Minnesota the second-highest rate in the country behind California.
- A billion-dollar paid family leave program that would have imposed a new tax on every employer and employee in the state to finance it.
Following passage of the state budget and tax package, the DFL-controlled House, led by Speaker Melissa Hortman (DFL- Brooklyn Park), adjourned Sine Die, a Latin phrase for "without a day""– meaning with no specific time to reconvene. However, the Republican-led Senate did not. Instead, Majority Leader Paul Gazelka (R- Nisswa) and his caucus remained in session.
When the legislature, or a body of the legislature, is in session, there is a shortened time frame for the governor to sign legislation into law. By remaining in session, it allowed Senate Republicans to, "trust but verify" the governor's actions. The Senate put additional pressure on Governor Walz through the confirmation process, which only the Senate chamber has the ability to do.
The Senate previously used its confirmation powers to put pressure on the Governor twice in the last year, including when it took up a vote to refuse to confirm then Commerce Commissioner Steve Kelley.
Ultimately, the Senate confirmed Iron Range Resources and Rehabilitation Board Commissioner Mark Phillips and held information hearings of Board of Animal Health Chair Dean Compart, Department of Natural Resources Commissioner Sarah Strommen and Housing Commissioner Jennifer Ho.
Most notably, Minnesota Pollution Control Agency Commissioner Laura Bishop resigned prior to the Senate taking up a motion related to her post. Her resignation is a significant win for the Republicans. During Bishop's time as commissioner, she pushed the California Clean Car initiative through the Administrative Law Judge process, overstepped rulemaking authority related to additional enforcement on agriculture and industry.
Special Session Expected in September
The Legislature will reconvene in September to discuss the rollout of $250 million from the federal American Rescue Plan. A provision in the tax bill calls for a Working Group to determine the process for doling out the financial support to Minnesota’s essential workers on the front lines of the COVID-19 pandemic, including long-term care workers. Appointees to the Working Group will make recommendations about who is eligible for this support by September 6, 2021.
Majority Leader Gazelka appointed Senators Mary Kiffmeyer and Karin Housley to serve on the Working Group. The House appointed multiple DFL members.