Supplemental Budget
On Thursday, March 17, 2022, Gov. Walz released an updated supplemental budget following Minnesota Management and Budget’s (“MMB”) revised budget forecast earlier this month which projected a budget surplus of $9.25 billion. A major component of Walz's revised budget proposal was an increase in direct payments, colloquially referred to as “Walz Checks.” Originally presented as one-time payments of $175 for single filers and $350 for joint filers, Walz’s revised budget calls for $500 for single filers and $1,000 for joint filers. This adds an additional $1.3 billion to the proposal, raising its total cost to roughly $2 billion. One thing notably missing from the updated supplemental budget was a moratorium on the state’s gas tax; a proposal that has been floated by numerous Democrats in recent weeks.
Legislature Hits Roadblock on Unemployment Insurance
Unemployment insurance appears to be the first major speed bump for legislators this year. With March 15, 2022, as the deadline for many businesses to file their income taxes, the date also stood out as the deadline by which the Legislature needed to reach a deal addressing the deficit in the state’s unemployment insurance trust fund and avoid substantial automatic tax increases on businesses. Gov. Walz and legislative leaders met multiple times, including into the evening on Monday, March 14, in an attempt to reach a compromise, but were unsuccessful. Minnesota employers can now expect a roughly 15% increase in unemployment insurance taxes for the first quarter of 2022.
House Majority Leader Ryan Winkler (DFL-Golden Valley) has stated that the House DFL majority will not pass unemployment insurance funds until Senate Republicans agree to a package of “frontline worker” bonuses. The 2021 budget session dedicated $250 million in federal funds for one-time payments to workers who couldn’t work remotely in the early stages of the COVID-19 pandemic. The legislature charged a bipartisan task force with determining how, and to whom, those payments would be made. That group failed to reach a consensus and the funds have not been distributed. The House DFL has since quadrupled their proposal from $250 million to $1 billion in “bonus” payments.
Commissioner of the Minnesota Department of Employment and Economic Development (DEED) Steve Grove has commented publicly that if a deal is reached later this session, department staff will need to retroactively review hundreds of thousands of tax statements and develop a mechanism to credit employers for any amounts overpaid.
Parade of Retirement Announcements Continue
On Thursday, March 17, 2022, Senator Tom Bakk (DFL- Cook) announced his intention to retire at the end of his current term, setting an ending to one of the most prominent legislative tenures in recent memory. The senator from the Arrowhead region of northeastern Minnesota has served as both the Senate Majority and Senate Minority Leader. While a member of the Senate DFL Caucus, he served as chair of the Senate Tax Committee and sought the DFL endorsement for governor in 2010. Most recently, Sen. Bakk made news by leaving the DFL Caucus after 26 years, declaring himself an Independent, and subsequently being named the chair of the Senate Capital Investment Committee by a Republican majority leader. Sen. Bakk has been a stalwart champion of iron range mining throughout his career and is often considered the leader of the Iron Range Delegation. Of the 48 legislators that have already announced their retirement, only three have served longer than Sen. Tom Bakk’s 28 years of service.
Federal Update
Senate Judiciary Begins Supreme Court Nomination Hearings
The Senate Judiciary Committee today kicks off its four-day marathon of confirmation hearings for the nomination of Ketanji Brown Jackson to the Supreme Court. Senate Judiciary Chair Richard J. Durbin, D-Ill., said the hearings will include a traditional schedule of one day for introductions and senator statements, two days for senator questions and one day for outside witnesses Jackson's confirmation process won't avoid political heat as the midterm election season gets into full swing, but there are several reasons to believe this confirmation process won't be as contentious as the past few. Three Republicans previously voted to confirm Jackson to the federal appeals court, and even so, the Democratic caucus can confirm her without Republicans' help. Jackson, who would replace retiring Associate Justice Stephen G. Breyer, worked as a public defender and on a commission to overhaul criminal sentences before she was appointed to federal courts in Washington.
White House to Release Fiscal 2023 Budget
The White House will deliver President Joe Biden's budget on March 28, an Office of Management and Budget official said. The fiscal 2023 release will contain a full set of documents, including detailed appendices, justifications and analyses rather than a "skinny" budget that provides little more than topline figures for government agencies. The annual budget submission, usually due in early February, was delayed as the fiscal 2022 appropriations process dragged on for over five months beyond the start of the new fiscal year. Biden signed a $1.5 trillion omnibus spending bill into law last Tuesday, less than a week after the final numbers for all government agencies were unveiled.
Please reach out to any of the Larkin Hoffman Government Relations team members with any questions.
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