They’re stuck at the Capitol.
Lawmakers are trying to come to terms on the next two-year state budget. But what divides Republicans and Democrats is more than just numbers.
They disagree on how government should grow. That’s nothing new, but it is good to understand why.
Minnesota’s current general fund budget is $45.5 billion. It will expire June 30 and lawmakers need to agree on a replacement.
Budget projections show planned spending for 2020-2021 will increase by nearly $2 billion. That’s if lawmakers add nothing new.
Why? Mostly because of three factors.
Inflation — stuff almost always costs more, especially when it comes to government spending.
Population growth — more people means more services government needs to provide.
New programs — lawmakers on both sides of the aisle like to put the true cost of new initiatives they approve in the later years of budgets (its called ‘the tails’ in Capitol lingo).
Republicans say that $2 billion in additional spending should be enough. They say state government should make do with the money it has now.
They want to trim some programs — specifically health and human services — and put those savings into other priorities.
Democrats say that would be devastating.
DFLers argue voters backed them in November, allowing them to take back the House and keep the governor’s office, because they campaigned on increasing government services.
That includes a total of $2 billion more for education, health care and transportation infrastructure.
To pay for it, Democrats want to raise taxes — on gasoline, auto sales, tab fees, businesses and the wealthy.
Gov. Tim Walz, Senate Majority Leader Paul Gazelka and House Speaker Melissa Hortman met for about 12 hours this week to start to rectify those differences. They didn’t make much progress.
Responding to questions about the productiveness of their talks, Walz said they had some “deep philosophical conversations.” That might sound like late-night dorm room talk, but it might help the three sides eventually find a compromise.
But right now they remain stuck. Here’s the big four sticking points:
Education: Public schools — from preschool to postsecondary — is roughly half the state’s general fund budget. Democrats want to increase spending by more than a billion dollars while Republicans have proposed about $300 million.
One of their biggest differences is how much to put into the per pupil funding formula that school districts use to cover day-to-day expenses. Democrats have proposed about $515 million in new funding while Republicans have suggested $95 million over the next two years.
Health care: Republicans want to allow a 2 percent tax on medical providers expire at the end of the year as planned. Democrats say without the $700 million the tax raises each year health programs for the poor will be at risk.
DFLers also want to expand MinnesotaCare, the insurance for the working poor, to give residents a public option for health care. Republicans say it will be too costly and the low reimbursement rates public programs provide for services will hurt rural hospitals.
Taxes: Leaders of both parties want to better align Minnesota’s tax code with federal changes in the Tax Cuts and Jobs Act of 2017. Republicans don’t want to raise new revenue while Democrats say businesses and the wealthy should pay more to fund new spending.
House Democrats want to raise more than $1 billion from tax changes related to federal conformity, which includes taxes on income companies bring back from offshore tax havens. Republicans don’t want to tax foreign profits to raise revenue.
Transportation: Democrats want to increase taxes on gas and auto sales and hike tab fees to pay for about $10 billion in transportation projects over the next decade. Republicans want to use existing resources, including money from the general fund, to fund road and bridge projects.