No budget agreement in sight, GOP questions COVID-19 spending

With a midnight deadline looming on Monday to finish the legislative session, it appears increasingly likely a 21st special session of the Minnesota Legislature in the past 20 years will be required to balance the budget.

Oddly, the hangup this time around isn’t too little money to go around, it’s too much money.

"Now it’s a $4.4 billion dollar surplus," Republican House Minority Leader Kurt Daudt said. "I mean, this is, in modern history, the largest surplus anybody can remember."

The quandary is over how to allocate that money, about $1.6 billion in state surplus funds and $2.8 billion in federal COVID-19 relief funds. Republicans favor using the federal money to exempt most COVID-19 unemployment benefits and all the Payroll Protection Program (PPP) loans from state taxes. The governor and House Democrats favor PPP exemptions only for loans below $350,000.

"If the legislature does not act, Minnesotans who were displaced workers by no fault of their own are going to be taxed and have to be in out-of-pocket on those federal benefits," Daudt says.

Republicans are also concerned about whether the Legislature will have any say over how the federal COVID-19 relief money will be spent. So far, it’s mostly been the governor deciding how the first round of relief was spent.

"We need to vote to keep federal money under legislative control," Republican Senator Michelle Benson said in a video message on Tuesday. She says she’s uncovered questionable spending for out-of-state communications consultants through public data requestss, including hundreds of thousands of dollars people in New York and Washington to do "messaging" in Minnesota.

"Somebody in Minnesota could have done that work, probably could have done it better and could have met the needs of Minnesotans without wasting taxpayer money," Benson says.

This week while at a St. Paul Saints game promoting COVID-19 vaccines, Gov. Tim Walz defended the spending.

"We wouldn’t have had to spend as much as that if there had not been so much misinformation out there," Walz said. "Had there been not so much, you know, having to run an ad telling people not to drink bleach. Yeah, that’s frustrating to me."

The disagreements over federal COVID-19 relief along with the issues of police accountability and taxes mean a special session is all but certain to be necessary.