Amid fanfare at Capitol, Walz signs major pieces of $72 billion budget into law

ST. PAUL — Major pieces of a $72 billion state budget DFL lawmakers passed during what could shape up to be one of the most consequential legislative sessions in recent memory are falling into place.

Gov. Tim Walz on Wednesday, May 24, signed into law a dozen bills enacting a significant portion of what he and fellow Democrats call the “One Minnesota” budget. It’s a significant expansion of government spending backers say will reduce child poverty and make the state a better place to raise a family.

Standing in front of Democratic-Farmer-Labor lawmakers and state officials on the steps of the state Capitol on Wednesday, Walz told a crowd that Minnesota wanted to see the end of partisan gridlock at the Capitol and elected DFL majorities to boost education funding, protect abortion rights and enact policies like paid family and medical leave.

“It’s going to mean a fairer, more inclusive, better and more prosperous Minnesota,” Walz said. “We’re leaving no one behind.”

With control of the Senate, House and governor’s office, Democrats passed a wide range of legislation this session that stalled in past years when Republicans controlled the Senate.

The bills that Walz approved Wednesday will create $1.5 billion in new child tax credits, boost funding for education by $2.2 billion and provide free public college tuition to people from families earning $80,000 or less each year.

A health bill removes abortion restrictions from state law that had been struck down by a judge last year, including a 24-hour wait period.

Labor legislation creates a requirement for employers to offer 48 hours of sick time each year.

Republican opponents point to billions in new taxes in the budget despite the state’s historic $17.5 billion budget surplus. They dispute Walz’s “One Minnesota” characterization and say the bills DFLers passed and are in the process of enacting had minimal input from the minority — which represents districts containing just under half of the state’s population.

The $72 billion two-year budget represents a 38% increase over the last biennial budget of $52 billion — though Democrats say much of the increase is one-time spending and future budgets will not have the same increases.

Republican Senate Minority Leader Mark Johnson said while he was pleased lawmakers could reach an agreement on a $2.6 billion infrastructure investment package and providing $300 million in funding for struggling nursing homes, it was hard to see how the whole state would benefit from the budget.

“You look through the bills and unfortunately what you find over and over again, is government growth, and catering to special interests,” he said.

In addition to the 12 bills signed Wednesday, the governor had already signed several of the big budget bills into law, including a $1.1 billion housing bill and a $3.5 billion public safety package with new gun control measures and a measure allowing prisoners to reduce their sentences by participating in rehabilitation programs. He’s also signed an agriculture bill.

A few other items remain, including a bill legalizing recreational marijuana, the creation of a paid family and medical leave program, and the package investing $2.6 billion in state infrastructure.

Here’s a look at some changes in the slate of legislation the governor signed into law Wednesday:

Taxes — Child tax credits, direct tax rebates and an expanded exemption on Social Security income tax are in this bill. More than 2.5 million tax filers will qualify for rebate checks starting at $260 for individual filers earning up to $78,000 a year.

More than $1.5 billion in new child tax credits would offer $1,750 per child with no limit on the number of children. Joint filers up to $35,000 a year would get the full credit. Past those income levels, the credit would phase out at higher levels depending on the number of children.

Social Security income tax would be eliminated for about three-quarters of people who receive the benefit, Democrats said. The tax would be fully eliminated for single filers earning up to $78,000 and joint filers earning up to $100,000 a year. From that point it would completely phase out at $118,000 for single filers and $140,000 for joint filers.

The tax bill also includes a change allowing teachers to retire a year earlier with a full pension. The $97 million in pension portion of the bill will allow teachers to retire at age 65 instead of 66 and still get full benefits.

Transportation — A multi-billion-dollar transportation budget will create a new gas tax and a delivery fee on retail goods. Gas taxes will be tied to inflation and are expected to go up 5 cents by 2027. The current per-gallon tax is 28.5 cents. The new 50-cent delivery fee applies to deliveries over $100.

There are also new motor vehicle fee increases in the bill. Backers say the new fees and taxes help create new ongoing revenue streams needed to maintain the state’s transportation network.

Education — An education budget boosts funding by $2.2 billion for K-12 schools. It provides funding for mental health professionals in schools, and provides unemployment insurance for hourly school workers.

Early learning — This bill provides $300 million in “early learning scholarships” to cover preschool costs for low-income and vulnerable children and $40 million for Head Start programs.

Higher ed — Higher education gets a $650 million boost over the next two years from a budget bill that also creates a free public college tuition program for students from families earning less than $80,000 a year.

State government — This bill funds a $400 million boost for government operations in the next two years. But it also sets in motion a change to Minnesota’s flag and seal. A State Emblems Redesign Commission would explore options and produce a report by Jan. 1, 2024. The state would have to adopt the new flag by May 11, 2024.

The state government bill changes Minnesota’s threshold for “major” political parties — a move that will make it harder for third parties to get on the ballot. It also boosts funding for the public election subsidy, something backers say will encourage more candidates to take state campaign cash and reduce the influence of special interests.

Environment — Besides putting $1.6 billion into areas like clean energy, outdoor recreation and climate change mitigation, the environment bill contains a ban on PFAS, “forever chemicals” that have been linked to cancer and persist in the environment and tissue of living things.

Jobs — A jobs and labor package creates a new “sick and safe time” mandate, where employers must offer 48 hours of paid time each year for illness, medical appointments, child care or seeking help for domestic abuse.

Besides the sick time mandate, the bill creates new workplace safety regulations for warehouse and meatpacking workers, and a new nursing home work standards board.

Commerce — This bill creates a prescription drug affordability board that would set limits on the price of medication.

Health — The health and human services bill, which sets a $6.2 billion budget for the next two years, contains many provisions, including the creation of a health care affordability board and allowing people in the U.S. illegally to enroll in MinnesotaCare health insurance. It also eliminates remaining abortion restrictions in state law that were struck down by a judge last year, including a 24-hour wait period.

Minnesota will also create a new Department of Children, Youth, and Families, and provide funding to address homelessness.

Human Services appropriations — This bill invests $2.9 billion in areas like long-term care, substance abuse and addiction and nursing home employment retention.

Human services policy — Makes technical changes to disability and behavioral health programs and establishes new ways to apply for adult income assistance programs.

This story was updated at 8:25 p.m. on May 24 to correct that the teacher pension change provision was in the tax bill. It was originally posted at 5:31. The News Tribune regrets the error.

Follow Alex Derosier on Twitter @xanderosier or email aderosier@forumcomm.com .