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'This year has been a battle': Walz, legislative leaders have agreement on new 2-year budget

Leaders have agreed on the money side of things, but there's still work to do on the policy issues.

Minnesota's legislative leaders say they've reached an agreement on a two-year state budget totaling more than $50 billion, but it will require a special session in June to pass the budget bills.

At a news conference Monday, the last day of the legislative session, Gov. Tim Walz, Senate Majority Leader Paul Gazelka, R-East Gull Lake, and House Speaker Melissa Hortman, DFL-Brooklyn Park, called it a "good day." But all acknowledged that, while they've reached an agreement on numbers, they have more work to do when it comes to policy issues.

"We have reached an agreement on target numbers. There’s work to be done as there should be in the Legislature. This year has been a battle," Walz said.

Walz said the goal is to write the bills by the end of May and then pass them in June. The Minnesota Legislature is required by the state Constitution to adjourn at midnight Monday, so a special session will be required to pass the budget. 

In a statement, Walz said:

“This bipartisan budget confronts the challenges we face today while investing in the future to help Minnesotans emerge from this crisis stronger than before. Not every Minnesotan was hit by COVID-19 equally – many families and small businesses have struggled tremendously over the past year. That is why it’s so important that we make it easier for families to get by, ensure our students catch up on learning loss, and provide support to our small businesses.

“I’m proud that the agreement we reached makes historic investments in education while providing tax cuts for Minnesotans across the state. This demonstrates that, despite a divided legislature, Minnesotans are united by our shared values: We look out for our neighbors, we want everyone to have an opportunity to succeed, and we all do better when we all do better.”

The governor said federal money to fight COVID-19 will remain in the executive branch but the legislature will have say over the rest of the money. 

The agreement comes on the deadline for state and federal income taxes. Lawmakers hadn't yet agreed on whether federal business and unemployment COVID-19 aid would be taxed. Walz said Monday that paycheck protection program and unemployment money will be fully conformed, so they won't be taxed.

Walz added that summer school program money will go out to districts on Tuesday, with Hortman calling it a "historic" investment in education, but later noted it's a "numbers-only agreement."

The agreement comes after the legislative leaders and governor negotiated the budget in private over the weekend. Throughout this year's legislative session, Republicans and Democrats haven't agreed on much, especially when it comes to policy issues like public safety reform. Meanwhile, Republicans said they wouldn't pass the environment omnibus bill if the clean cars rule wasn't scrapped

Gazelka said during the news conference that legislative leaders didn't discuss policy issues, that'll be up to the conference committees. He later said both sides kept "key promises" during budget negotiations. 

Special sessions have become commonplace at the Legislature. A special session to finish budget work has happened nearly every budget year (odd-numbered years) since 2001, and in two of the years lawmakers couldn't come to an agreement, which led to partial government shutdowns.

If the budget bills are not passed and signed into law by July 1, Minnesota faces another government shutdown.

A special session was expected in June anyway because Walz will likely extend his peacetime emergency powers for another 30 days, something he's done every month since the start of the COVID-19 pandemic. The Minnesota Constitution requires him to convene the Legislature if it's not in session to give lawmakers the opportunity to decide if they want to revoke the governor's powers.

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