The budget puzzle at the Capitol is beginning to fill in.
On March 22, Gov. Tim Walz offered a scaled-back state government budget request that calls for $49.351 billion in spending over the next two years. On Feb. 19, before the latest economic forecast projected slower growth and a shrinking state surplus, Walz offered a $49.472 billion budget package.
On Monday, DFL House leaders followed with their own $47.8 billion budget targets. The GOP-led Senate is expected to announce its own targets today (March 28).
Of the two proposals released so far, Walz’s is far and away the most detailed. It includes spending reductions of $131 million from his Feb. 19 request. About 10 percent of that reduced total—$13 million—comes out of the judiciary and public safety divisions.
However, in most cases, reductions don’t eliminate budget lines; they only ratchet them back.
For example, Walz initially sought $2.903 million over 2020-21 to hire 11 new lawyers for a beefed up criminal investigations unit in Attorney General Keith Ellison’s office. The new request seeks $2.305 million—a $598,000 reduction—but still calls for nine new AG prosecutors.
Such reductions were necessitated by a forecast that reduced the state’s projected surplus from $1.5 billion to about $1 billion—and even less factoring in inflation. After the governor repriced his requests to reflect the new data and factored in two spending bills already passed this year, his original plan left only a $261 million positive cash balance. Before the forecast, MMB projected a $789 million positive cash balance.
However, by reducing spending, closing some tax loopholes and phasing in some aspects of federal tax conformity while returning unspent reinsurance dollars to the general fund, Walz’s revised budget projects a $562 million positive cash balance at biennium’s end.
“We made tough choices,” Walz said. “And at the end we are also in a fiscally solid place for a One Minnesota.”
The governor told reporters Friday that his plan relies on preservation of a 2 percent health care provider tax, which Republicans derisively dub “the sick tax.” GOP leaders are determined to let that tax sunset at the end of the year and consider any plans to retain it a tax hike.
Walz also seeks a 20-cents-a-gallon gas tax hike to finance roads and bridges, and House Democrats on Monday said they stand with him.
Compared to Walz’s budget revamp, House leaders offered few details with their announced budget targets.
Partly, that’s because leaders hand their targets over to committee chairs, who then figure out where to spend what’s available. But it’s also because Democrats declined during a Monday press conference to offer details on their forthcoming tax bill.
What is certain is that DFLers will raise taxes when their tax bill is released in the coming days—and that Republicans won’t like it. In fact, they already dislike what they’re seeing.
“Minnesota has a $1 billion surplus and hundreds of million in fraud in our public welfare programs,” said House Minority Leader Kurt Daudt, R-Crown, in a written statement Monday. “But House Democrats’ answer is always the same—raise taxes, take more money and make life more expensive for every family in Minnesota.”
At Monday night’s House Ways and Means Committee meeting, Republican members were stunned to hear House leaders’ plan to divert $425 million in general fund money from transportation toward education and other expenses.
“That’s irresponsible, it’s short-sighted and it certainly doesn’t bode well for the conclusion of this session,” said Rep. Pat Garofalo, R-Farmington. “As I take a look at this budget resolution, I think an appropriate name for it is ‘The Special Session Budget Resolution.’”
Because there is more detail to work with, we’ll dig into parts of the governor’s revised proposals, broken out by the budget divisions of greatest interest to attorneys.
Judiciary: Walz’s revised plan leaves intact the Judicial Branch’s key requests—with one major exception.
A $1.758 million request to add two new trial court judges over the 2020-21 biennium remains intact. Likewise, a $612,000 biennial request to sustain five treatment courts in Anoka, Olmsted, Scott and Wright counties is unaltered.
So is a $2.14 million two-year request to fund mandated psychological examiner services. The courts have seen these expenses jump in recent years, primarily because psych-exam requests in criminal proceedings are on the rise.
A $5 million, two-year Supreme Court request for cyber-security enhancements also remains unchanged. That initiative involves hiring 5.5 full-time workers over the biennium to ward off major data breaches and protect the courts against cyber-attack.
Salaries are the big loser in the new proposal. The Judicial Branch requested 3.5 percent salary increases across-the-board for the district courts, Court of Appeals and Supreme Court. Those have been scaled back to 3 percent. The change saves the state about $4.2 million compared to the governor’s Feb. 19 plan.
In a written statement, Chief Justice Lorie Gildea signaled that she personally will advocate for the branch’s full request, just as she did during 2017’s budget negotiations. The judiciary is an independent branch of government but relies on the Capitol for funding.
“We are confident that the governor and Legislature are committed to preserving Minnesota’s nation-leading justice system,” Gildea said, “and are hopeful that we can work together to pass a budget that ensures an efficient, effective and accessible court system for all Minnesotans.”
Of that, $3 million comes out of a plan to build up pretrial supervision. Commissioner Paul Schnell said the courts have been ordering his department to provide more supervision and assessments on a pretrial basis, largely to address income and racial inequities.
“The pretrial supervision money would allow people who might not otherwise be able to make bail be able to be released under some supervision by the court,” Schnell said.
The program still gets increased funding in the governor’s new plan—just at a reduced rate. Rather than the $8.175 million originally proposed for 17 full-time equivalent staff hires, the governor now seeks $5.175 million for 12 new agents.
The governor is also scaling back by $2.1 million his request for DOC intensive supervised release. The governor originally pitched $9.6 million over two years, but now seeks $7.5 million. That includes 19 new agents over the biennium, five fewer than the originally proposed 24.
Plans to beef up the DOC’s integrated case management and victim notification systems are being scaled back as well, by a combined total of $2.032 million.
Plans to increase prison safety by spending $45.3 million to hire 167 full-time equivalent prison workers—including 120 corrections officers—remain unchanged. Likewise, Schnell’s plan to boost starting corrections officers’ salaries to just under $20 an hour remains intact.
There is even a bit of new spending in the governor’s revised corrections request. Walz now recommends spending $1.8 million over the biennium to hire six employees for a new corrections ombudsman’s office. Schnell said DOC will not host that office but does provide the seed money to get it launched in the governor’s new budget.
Attorney General: In addition to scaling back Ellison’s plan to build up his office’s criminal division, Walz’s revised AG budget pares back plans to boost AG office workers’ pay. What had been a 5.4 percent increase to the office’s overall budget for salary hikes is now a 4.4 percent increase. That saves the state $450,000 over the biennium compared to Walz’s Feb. 19 proposal.
One request in the AG’s original budget request was zeroed out in the revamp. That was a $358,000 request for a modernized e-discovery system. The request is now unfunded.
Human Rights Department: The governor’s Feb. 19 budget proposed 17 new staff hires and four new Human Rights offices in Bemidji, Duluth, Rochester and Worthington. His new budget scales that back to 12 new staffers and just three offices. The Worthington office is cut out of the governor’s new plan.
While the DFL House plan doesn’t fill in many specific blanks, Monday’s targets do reveal how much leaders want to spend, overall, in each budget division. Here are two key examples.
Judiciary: The Judiciary division—overseen by the House Judiciary committee chaired by Rep. John Lesch, DFL-St. Paul—has finance authority over civil law, data practices and the courts. The DFL House resolution spends $1.048 billion in this division over the 2020-21 biennium. That’s an increase of $91.4 million over its current base.
Public Safety: Though there is some policy overlap with Judiciary, the Public Safety committee chaired by Rep. Carlos Mariani, DFL-St. Paul, is firmly in charge of financing cops and corrections. Monday’s House resolution provides $1.525 billion for the 2020-21 biennium. That’s an increase of $121.4 million over base spending.
A link to a more complete list of House budget targets is available with this story at minnlawyer.com.