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Minnesota lawmakers face $7.7B surplus in 2022 session

January 22, 2022 GMT
Gov. Tim Walz, right, and Lt. Gov. Peggy Flanagan tour a construction project at the University of Minnesota where they announced their $2.7 billion plan to bolster infrastructure across Minnesota, Tuesday, Jan. 18, 2022, in Minneapolis. (Glen Stubbe/Star Tribune via AP)
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Gov. Tim Walz, right, and Lt. Gov. Peggy Flanagan tour a construction project at the University of Minnesota where they announced their $2.7 billion plan to bolster infrastructure across Minnesota, Tuesday, Jan. 18, 2022, in Minneapolis. (Glen Stubbe/Star Tribune via AP)
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Gov. Tim Walz, right, and Lt. Gov. Peggy Flanagan tour a construction project at the University of Minnesota where they announced their $2.7 billion plan to bolster infrastructure across Minnesota, Tuesday, Jan. 18, 2022, in Minneapolis. (Glen Stubbe/Star Tribune via AP)

MINNEAPOLIS (AP) — The Minnesota Legislature will enjoy a $7.7 billion surplus when it convenes Jan. 31, a strong financial position but one that is bound to set up clashes in this election year over whether to spend the money on plenty of needs or return it to taxpayers.

The main job for lawmakers in even-numbered years traditionally is to assemble a public works borrowing package known as a bonding bill. But the enormous surplus will dominate the session, which runs through late May.

Some themes are already emerging. Gov. Tim Walz wants permanent increases in child care spending to help families. Republicans want to use the surplus to cut taxes.

COVID-19 will continue to cast a shadow over the Capitol. A top piece of unfinished 2021 business is bonus money for frontline workers. House committees will meet remotely in most cases because of the ongoing disease threat, while the Senate will hold hybrid hearings that lawmakers and the public can attend in person or online.

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Here’s a look at some of the major issues in play for the 2022 session:

THE SURPLUS

Minnesota Management and Budget last month projected a stunning $7.7 billion surplus, saying strong growth in income, consumer spending and corporate profits since the initial shocks of the pandemic are driving “extraordinary revenues.” And that figure doesn’t include more than $1 billion in federal COVID-19 relief that hasn’t been parceled out yet.

Walz says he’ll propose a supplemental budget before the session that will include more money for roads, bridges, infrastructure, schools and the Minnesota National Guard. He has also said it will include tax cuts. But he’s given few specifics so far. Some money is already committed, including $870 million to replenish the state’s budget reserve.

BONDING

Bonding bills tend to be political footballs that come together toward the end of the session. They require a three-fifths majority in both chambers to pass. Since the House Democratic and Senate GOP majorities are much slimmer than that, votes from the minority party are essential. That usually requires extensive behind-the-scenes deal-making.

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Gov. Tim Walz on Tuesday proposed a record $2.7 billion bonding bill that’s heavy on preserving assets that taxpayers already own. History suggests he won’t get nearly that much. The biggest previous bonding bill to become law, approved in 2020, came in at $1.9 billion. While initial reaction was positive from the Democratic House bonding chair, Rep. Fue Lue, of Minneapolis, the Senate bonding chief, independent Tom Bakk, of Cook, wasn’t ready to set a dollar target. But Bakk said asset preservation and deferred maintenance are priorities for him, suggesting there’s at least some common ground.

TAXES

Republicans’ top tax priority is rolling back an unemployment insurance tax hike that’s meant to repay the state’s debt to the federal government for jobless aid. They say the increase is hurting small businesses that are still struggling, and the surplus and unspent federal aid make that unnecessary. The Democratic governor has said he’s open to a fix.

GOP lawmakers would also like to eliminate the state’s taxes on Social Security payments. But Walz has been cool to that, saying all the benefits would go to upper-income Minnesotans because most households that collect Social Security are already exempt. Lawmakers are expected to offer more specific tax proposals in the coming weeks.

COVID-19

Lawmakers set up a special panel last year to decide how to parcel out $250 million in federal relief as “hero pay” to frontline workers who have carried the heaviest burdens during the pandemic.

The process failed. Senate Republicans wanted to offer $1,200 in bonuses to about 200,000 workers who they say took on the greatest risk. House Democrats wanted to spread the money more widely, providing roughly $375 to about 670,000 essential workers. A potential solution this year could involve tapping the surplus to add more money to the pot.

One reason a deal foundered was that Walz was unwilling to call lawmakers back to approve the plan unless the Senate GOP majority dropped a threat to use the special session to fire Health Commissioner Jan Malcolm over differences in how to handle COVID-19. Republican senators will be free to make good on that threat once the regular session convenes.

CRIME

Republicans plan to make crime a major issue in both the session and in the 2022 campaign. Warren Limmer, of Maple Grove, who chairs the Senate public safety committee, supports a proposal by police chiefs to require county prosecutors to report when they decline to charge suspects with felony-level crimes. Limmer also wants to give lawmakers more control over the Sentencing Guidelines Commission, which is appointed by the governor, in response to proposals that could shorten some sentences.

GOP Sen. Paul Gazelka, of East Gull Lake, who’s running for governor, plans to seek minimum sentencing for carjackings and crimes with firearms, and hiring bonuses for police officers who serve in high-crime areas.

Democratic lawmakers, who recognize that crime could be a potent issue against them in the November elections, are developing their own proposals and seeking common ground.

REDISTRICTING

The House and Senate have been going through the motions of redrawing the state’s political maps to reflect population shifts away from rural Minnesota over the past decade. But the partisan split means the job will almost certainly fall to the courts, as it usually does. A special judicial panel heard competing proposals earlier this month, and is ready to impose new congressional and legislative district maps by Feb. 15 unless lawmakers somehow reach a deal first.

WILD CARDS

The Democratic-controlled House last year approved a bill to legalize recreational marijuana for adults. It’s technically still alive, but it’s unclear whether it will get any traction in the GOP-controlled Senate. Backers of legalized sports betting plan to make another push this year. Neither issue breaks down cleanly along party lines. Neither does the Page Amendment, a proposal to amend the Minnesota constitution to make state government’s “paramount duty” to provide quality public education to all children. The proposal comes from Minneapolis Federal Reserve Bank President Neel Kashkari and retired Minnesota Supreme Court Justice Alan Page, an NFL Hall of Fame member. They’ve been making a renewed push, too.