Lawmakers are returning to the Minnesota Capitol to set the state’s next two-year budget on Jan. 14, and when they do, the session likely will be marked by delicate compromises and debates about fraud and oversight.
Unlike a historic session two years ago where a Democratic-Farmer-Labor Party-run state government enacted a more than $70 billion budget and created new social programs, the House and Senate will be narrowly divided between Republicans and the DFL. The parties will have to set aside their differences to pass a budget with little wiggle room.
The last budget grew spending by nearly 40% and ate most of a record $18 billion surplus. In response, Republicans campaigned on a message of balance in the Legislature. They were able to end DFL control of state government this fall by taking at least half of the seats in the House — and maybe more depending on the outcome of two election lawsuits.
On Saturday, the family of former Senate Majority Leader Kari Dziedzic, DFL-Minneapolis, announced she had died at age 62, following a battle with cancer. Her death will make the Senate evenly divided when the session starts in January.
Republicans also are expected to argue that more needs to be done about fraud after recent high-profile schemes in which authorities say hundreds of millions of dollars were taken. And they are signaling they’ll take a hard stance against any new taxes.
DFL legislative leaders have acknowledged the election results as a voter call for balance and are posturing for more negotiation and harder compromises than happened over the last two years. Already, a bloc of DFL senators has announced a moderate coalition committed to fiscal restraint and one of them has proposed a new measure to counter fraud.
House Speaker-Designate Melissa Hortman, DFL-Brooklyn Park, who has served as speaker since 2019, noted the shift at the Capitol in a panel discussion hosted earlier this month by law firm Fredrikson & Byron.
Melissa Hortman. (Courtesy photo)
“The job is to reflect the views of the people of Minnesota — they are closely divided views,” Hortman said. “If we respect the voters, and we respect they have asked for shared governance … then we will make sure to find ways we can make win-win scenarios and focus on the people of Minnesota instead of partisanship.”
DFL leadership says it recognizes a voter mandate for balance but has been clear they’re not ready to undo the big gains they made.
They don’t want to make cuts to new programs like paid family and medical leave, which they say are key to making life easier for families in Minnesota. And don’t expect them to entertain conservative pushes to dial back protections for abortion or medical treatments for transgender minors passed in 2023.
While balance is a change in direction from the last two years, it’s still a return to business as usual at the state Capitol, where control is often divided between parties. What could dial up tensions this session is just how close power is split in the Senate and House.
Lawmakers will have to figure out how to pass a budget, which may be closer to $68 billion in order to maintain new spending created by the last budget, which had several billion dollars in one-time spending. And they’ll have to do it before June 30 or risk a government shutdown. The GOP is expected to play a larger role this session in negotiations.
“It feels like we’re back in the game again,” said Senate Minority Leader Mark Johnson, R-East Grand Forks. “We’ve got the ability to exercise some leverage in the negotiations.”
Narrow margins
In the initial results for this year’s election, voters elected 67 Democrats and 67 Republicans — the first tied Minnesota House since 1979.
Though for at least the first few weeks, Republicans will have a majority. On Friday, DFL Rep.-elect Curtis Johnson, said he’d step down after a Ramsey County judge ruled he didn’t live in the Roseville-area district he was elected to represent, putting the House at a 67-66 Republican majority.
Republicans can now elect a speaker and appoint chairs for committees with what may be a temporary majority, but face trouble later if a tie returns. Johnson won in a safe DFL district.
There’s also a pending decision in an election challenge to a close Shakopee House race. If a judge sides with Republicans in that case, they could get another shot at an election in that district, where the DFL incumbent won by just 15 votes.
And it’s not just the Minnesota House that’s a tie or nearly a tie. The Senate will begin the session evenly divided.
Besides Dziedzic’s death, Sen. Nicole Mitchell, DFL-Woodbury, has faced calls for resignation after she was charged with felony burglary last April in connection with a break-in at her stepmother’s home in Detroit Lakes. Without her, the Senate would be split 33-32 with a slim GOP majority.
Nicole Mitchell. (John Autey / Pioneer Press)
Mitchell, who is scheduled to go to trial later in January, has said she doesn’t plan to resign, even as DFL Chairman Ken Martin and DFL Gov. Tim Walz have called for her to step down.
It would take two-thirds of the Senate — at least 45 members of the 67-seat body — to remove Mitchell from office. Sen. Rob Kupec, DFL-Moorhead, suggested Mitchell step down last May, but it’s unclear how many DFLers would be willing to vote to give up a majority.
Despite Mitchell remaining in office, Senate Majority Leader Erin Murphy, DFL-St. Paul, has said Mitchell should be able to complete her trial before the Senate makes a decision. Murphy removed Mitchell from committee assignments and caucus meetings last spring.
Erin Murphy. (Courtesy of the Minnesota Senate)
Republican Senate leadership hasn’t said whether it plans to immediately resume its push to remove Mitchell when the session begins.
The Senate likely will need to work out a form of shared leadership at least until Dziedzic’s seat is filled.
Waste, fraud and abuse
One thing you’re bound to hear Republicans talk about a lot next year is “waste, fraud and abuse” in state government. Hundreds of millions of dollars have been lost in several high-profile fraud scandals, at least two of which have attracted FBI investigations. The session is still weeks away, but Republicans have already been working to make it a central issue.
Besides the Feeding Our Future affair, where authorities say fraudsters stole $250 million meant for children’s meals during the pandemic, federal authorities also are investigating an alleged scheme where autism treatment centers stole millions in Medicaid dollars.
DFLers have said they already passed safeguards against fraud in 2023, though amid GOP calls for more action, they’ve offered up new proposals. Sen. Heather Gustafson, DFL-Vadnais Heights, plans to introduce a bill to create a statewide office of inspector general that would be responsible for reviewing the use of government resources.
Gustafson is part of a new “Blue Dog Coalition,” a group of eight DFL state senators who say they want to take a middle-of-the-ground, “fiscally responsible” approach to running the state.
Heather Gustafson. (Courtesy of the candidate)
“I’ll believe it when I see it,” said Republican House Speaker-Designate Lisa Demuth of Cold Spring, noting all eight senators voted in favor of the $72 billion budget in 2023, as well as a swath of other bills enacting progressive priorities like free public college and paid family and medical leave.
Lisa Demuth. (Courtesy photo)
Budget constraints
Before the election, DFLers said the coming budget wouldn’t be quite as ambitious as the last. Now no longer in control of the House, and with a budget forecast showing limited capacity for expansion and a possible deficit in the future, constraints have grown.
December’s budget forecast showed Minnesota will have a $616 million budget surplus for the coming two years, but if current revenue and spending trends hold, the state could face a $5.1 billion surplus in 2028-29.
Republicans have said that’s because of DFL growth of government in recent years, but Murphy said she’s confident the state will be able to manage.
“We’re in a strong position with a modest surplus,” she said. “We can balance the budget into the next biennium, which is our job, and we can look into the biennium that is four years away, where we’re starting to see a potential deficit, and take care of that as well.”
Lines in the sand
DFL and GOP leaders acknowledged the coming year will be marked by delicate negotiations, though party leaders in both the Senate and House have drawn clear lines about where they wouldn’t be willing to compromise.
On the DFL side, Hortman and Murphy both said they would not entertain GOP legislation on what Hortman called “socially divisive” issues, and efforts to link them to other bills tied to key functions of the state, like the budget or bonding for infrastructure.
In the 2024 session, Senate Republicans said they wouldn’t pass a public infrastructure bonding bill if the DFL-controlled Senate took up a measure to put a version of the Equal Rights Amendment that included the right to an abortion to voters in a future election.
Republicans, on the other hand, said they plan to take a hard line against new taxes.
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