Minnesota special session begins, business relief grants and loans pass

The Minnesota Legislature convened in the first 2020 special session on Friday, June 12. In advance of any official proceedings, House and Senate legislative leaders outlined their caucus priorities for the coming week(s).

Senate Majority Leader Paul Gazelka (R-East Gull Lake) announced the intention of his caucus to limit a special session to just one week. He framed the GOP agenda around a vote to end the peacetime emergency, tax relief, police accountability measures, and a bonding bill. Other Senate Republican leaders shared that the House and Senate have reached some agreement on legislation related to COVID-19 business relief and a framework for the distribution of federal funds to local governments.

Speaker of the House Melissa Hortman (DFL-Brooklyn Park) pushed back on the Senate majority’s announcement, calling it a “cut and run” approach, and said that the House intends to operate this special session until its work is done. Hortman also indicated her assumption that the Legislature may have several special sessions through the rest of the calendar year to address the ever-changing landscape of the COVID-19 pandemic. Many of the special session priorities outlined by Speaker Hortman mirrored those of the Senate. She expressed disappointment with the “very limited” police reform package put forward by Senate Republicans.

On Friday, the Senate voted 38-29 to end the Governor’s recent extension. Three DFL Senators (Franzen, Hoffman, and Eken) joined ranks with the Republicans on the vote, although Senator Melisa Franzen (DFL-Edina) indicated on social media that her vote was a mistake. The House took up a similar motion that, after many hours of heated debate, failed 61-73.

Despite some of the political gamesmanship happening, the Legislature began work to pass $62.5 million in COVID-19 business relief grants and loans. The bill passed the House on a 129-5 vote and was taken up later in the Senate and passed 67-0. The House also passed an omnibus health and human services omnibus bill on a 124-6 vote.

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Regular session: From Surplus to Bust

Policymakers walked into the session with a $1.5 billion surplus that some envisioned using for supplemental investments while others had plans for tax relief. However, that surplus was quickly erased and turned into a projected $2.4 billion deficit in light of the pandemic. Minnesota cannot deficit spend so this budget problem must be addressed by June 30, 2021. The Legislature and Governor are not required to balance the budget against the recent budget projection and will have until early December (the next full economic forecast) to better understand how the pandemic is affecting the state’s economy.

While federal CARES Act aid and FEMA reimbursement funds should provide some relief for the state, there are other factors to consider. If the Legislature is not in session, the Governor must exhaust state budget reserves before considering more drastic unallotment powers, which would permit him to cut funding for existing programs.

Minnesota Management and Budget (MMB) Commissioner Myron Frans has voiced fears of draining the reserve right now to balance the budget due to uncertainty around how the pandemic will evolve later this year.

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