Minnesota lawmakers react to budget talks

Minnesota’s 2019 legislative session officially ended Monday, but without a budget all sides can agree on, state lawmakers likely will return to the Capitol later this week to vote on leftover sections in special session.

In northwest Minnesota, Sen. Mark Johnson, R-East Grand Forks, said he hopes to vote on a detailed budget Thursday.

“It just depends on if everybody can come to the table … and get agreement on those bills that we need to get through," he said.

On Sunday, Gov. Tim Walz, a newly-elected Democrat, along with leaders of the House and Senate, announced that lawmakers reached an agreement on a roughly $48 billion spending plan for the 2020-21 biennium. However, there are still several sections dealing with health, human services and agriculture left unfinished by the Legislature’s constitutional deadline of midnight on Monday, May 20.

For legislators to take official action on gaps in the budget, Walz has to call a special session, bringing legislators back to the Capitol for final passage. Johnson and Rep. Deb Kiel, R-Crookston, said the governor might call legislators back Thursday.

So far, Walz has agreed to back off from his initial request to increase the state gas tax by 20 cents per gallon, something Johnson and Kiel have said they're pleased with.

Meanwhile, Kiel called provisions to maintain a state healthcare provider tax a “loss” for small business owners and rural hospitals in her district. For years, the state has collected 2 percent off the top of most medical bills and hospital stays to fund low-income patients accessing healthcare. The state was planning to sunset the tax this year, but instead legislators have agreed to continue collecting the tax at a reduced rate of 1.8 percent.

“That is very damaging to our rural hospitals,” Kiel said Tuesday. “I don’t think people realize that.”

As more experienced doctors near retirement, Kiel said young medical professionals trying to get a start in rural Minnesota could struggle with this tax.

“It just makes it much more complicated to come into the rural area, establish a business, and then you have to pay that provider tax,” she said.

Republicans won a small tax cut -- a quarter of a percent -- for middle-class Minnesotans on the second rung of the state’s four-tier income tax plan. Johnson said this was the first time in several years the state has cut income taxes.

Once legislators return to St. Paul in special session, they'll vote on the state agricultural bill, which Johnson said provides $5 million toward equipment for a proposed soybean processing and biodiesel plant in Crookston .

“They’ve got the commercial side that’s doing the big soy biodiesel producing side of it, but there’s also a researching side of it through the University of Minnesota that can handle a little bit larger than a bench test,” Johnson said. “They can do a field, or 160 acres worth of beans in there, to get more of a market based (result).”

The Senate passed this proposal and the rest of the agriculture bill on Monday, Johnson said. The House was unable to vote on the bill before midnight, when representatives were forced to gavel out. Johnson and Kiel said they don't expect the bill to change much in special session.

Regarding a request from the city of East Grand Forks to change the way the state gives out local government aid -- general fund dollars dispersed to cities to offset property taxes -- Johnson said he's keeping his fingers crossed.

The state's formula specifically uses a city’s amount of pre-1940 housing to determine need. The city of East Grand Forks lost most of that kind of housing in the 1997 flood, prompting it to this year request the Legislature to consider instead the city’s amount of pre-1970 housing.

In general, cities across the board have been requesting an overall increase in city and county LGA. The governor has said he’s pushing for a $30.5 million increase. Legislators have yet to share in agreement on that.

“I’m a little leery of how that money is put in there,” Johnson said. He was concerned Monday an overall increase doesn’t necessarily mean all cities will benefit.