A group of EMS officials from throughout the state gathered in St. Paul to highlight a need for more funding and a restructuring of systems. 

Erik Simonson, a lobbyist with the Coalition of Greater Minnesota Cities, an organization that lobbied for EMS funding last session, feels hopeful the Legislature will continue to fund the industry beyond a one-time infusion last year to stay afloat – even amid uncertainty with current negotiations.

“I think what you’re seeing right now in the Legislature will work itself out. It will happen in a matter of however much time it takes,” he said.  “I think so many (legislators) said as they were on their way out the door at the end of May, ‘We put a band-aid on the problem, we’ve got to come back in 2025 and find a long term, sustainable solution.’ Now what that is will be shaped by this Legislature in 2025 but I am confident that there are folks on both sides of the political aisle that are willing to roll up their sleeves and figure out how to get that done in a way that provides enough financial support so that people don’t have to worry about, are we going to be here next year?”

EMS is one of the top priorities for the House Health Finance and Policy Committee, said Rep. Jeff Backer, R-Browns Valley, who is the committee’s co-chair along with Rep. Robert Bierman, DFL-Apple Valley. 

“Last year was a band-aid, but it was an important band-aid. … We do need to do more stuff with EMS,” Backer said at the event. 

Backer himself is a volunteer EMT, who knows about the difficulties facing the industry, including workforce challenges and the fact that more rural EMS systems often receive lower reimbursement rates because many of their patients rely on Medicare and Medicaid. Last year, he helped author legislation for EMS funds. He said they’ll need time though to put together a plan. 

“Exactly what happens is going to be interesting if we don’t get together ’til the end of March … that’s going to create some challenges. If we can get together sooner, then we have more time,” he said. 

The governor’s budget proposal announced in January allocates funds for the newly established Office of Emergency Medical Services. Those proposed funds would go to things like operating expenses and grants. 

The Coalition of Greater Minnesota Cities is advocating this session for additional funding for EMS, as the group thinks the systems have to be well funded in order to work on longer-term strategies to help with workforce and systemic issues.

“If we don’t fix the financial challenge, we can’t touch any of those, right? It just becomes super difficult to try to find those kinds of solutions if we don’t have the money and keep the doors open,” Simonson said. “If we can fix the funding problem once and for all, and then let a lot of these great minds come to work and figure out ways to do things better and more efficiently.”

At the event, officials stressed the need for a longer-term solution that goes further than funding, though funding would help EMS systems that are struggling to stay afloat. Because of the financial and staffing hardships, among other challenges, many EMS providers have considered merging with another service provider, but that’s not always the best for patients. 

“I do think there are a lot of opportunities with consolidation and reducing overhead and sharing expertise,” said Becca Huebsch, the director of Perham Area EMS. “The challenge is … consolidation that’s planned and expected and not out of desperation. It’s one thing when you’re choosing to consolidate because it makes good business sense and you can continue to support your service areas. It’s another thing when you (have) two failing ambulances that say we can’t have two ambulances anymore, what can we do differently? And I think those are different situations, and maybe that’s not consolidation, maybe that’s actually a failure.”

Ava Kian

Ava Kian is MinnPost’s Greater Minnesota reporter. Follow her on Twitter @kian_ava or email her at akian@minnpost.com.

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Two years after the Minnesota Legislature passed the first-ever dedicated tax source for transit in the Twin Cities, hailed by advocates as a historic move to expand and support transit, a proposal deep inside Gov. Tim Walz’s budget proposal would use that regional tax to reduce state support for transit.

Transit and environmental advocates who pushed for the three-quarters of a cent sales tax in the seven-county region in 2023 are not pleased.

“This proposal would drastically undermine the promised expansion of bus service and Bus Rapid Transit throughout the metro area which was a centerpiece of the historic 2023 Transportation Bill,” stated a letter from 15 organizations, including the Sierra Club, Our Streets, Move Minnesota and the Bicycle Alliance of Minnesota. “The Legislature must defend its historic victory for equity and climate from the Governor’s proposed rollback.”

In presenting the proposal to the Senate Transportation Committee Wednesday, Met Council Chair Charlie Zelle said it was part of budget pruning Walz says is needed to keep the next two budgets balanced. The proposal would cut the transfer of $32 million a year in general funds to Metro Transit for rail operations.

“As a cabinet member, I’m fully aware of the stresses on the general fund, particularly in the next biennium, Zelle said. “We know the governor has to make tradeoffs. So choosing this reduction to this agency is one we accept and can manage without compromising the integrity of the operations.”

But Zelle acknowledged the disconnect that might be caused by him asking for less money from the Legislature.

“You will not often see a commissioner or a cabinet member come forward and advocate a reduction in revenue for an important service,” Zelle said. “But for the additional funds the Legislature has authorized for Metro Transit two years ago, we would not be able to sustain a reduction in general fund support for rail operations.”

While Zelle said the council will be able to absorb the reduction in state support in the short term without impacting rail or transit service, that pledge isn’t as clear in the longer term.

“It will certainly impact in the long term the funds that would be helpful as we want to expand additional (arterial bus rapid transit) or transitways or frequency of our service, but in the near term we believe it does not have a negative impact on our operations or our aspirations.”

The 2023 bill called for revenue from the 0.75% tax collected in the seven metro counties to be shared. The Met Council would get 83% of it for transit and “active transportation,” which includes biking, walking and rolling. The seven counties would get 17% for wider transportation needs decided by each county.

The Met Council’s 83% share of the tax raised about $417 million in 2024 and is projected to be $474 million by 2028. It is being used to both build new transit lines and increase service and frequency on existing lines. The increase ended the Met Council funding gaps for transit that had been resolved temporarily by special appropriations from the state and from federal pandemic relief money.

Metro Transit is set to open three new bus-based transit projects this year, the Gold Line, the B Line and the E line. Each will require operations subsidies, but Zelle said the council has enough to cover those costs.

• The Gold Line is a 10-mile line that will run along I-94 from St. Paul to Woodbury with connections in Maplewood, Landfall and Oakdale that will start service in March. 
• The B-line is an arterial bus rapid transit line from France Street in Minneapolis to downtown St. Paul along Lake Street, Marshall Avenue and Selby Avenue that will start service in June. 
• The E-Line is an arterial rapid transit line from Westgate Station on University Avenue to the Southdale Transit Center connecting the University of Minnesota, downtown Minneapolis, Uptown and France Avenue that will start service in December.

Senate Transportation Committee Chair Scott Dibble, D-Minneapolis, said he has not decided whether to support the reduction and understands the budgetary pressures on Walz. He was the co-author along with then-House Transportation Committee Chair Frank Hornstein of the sweeping transportation bill that included the regional transportation sales tax as well as other revenue sources such as the delivery fee — the so-called Amazon fee — and creating automatic gas tax increases tied to inflation.

But both the makeup of the Legislature and the state’s overall budget outlook has changed significantly since that transportation bill passed under a DFL state government trifecta. While Walz remains in office and the DFL maintains a one-vote majority in the Senate, the Minnesota House is expected to be tied.

Meanwhile, the state budget needs to be tightened, and the transportation budget has its own pressures. There are already 70 bills referred to the transportation committee, and half call for new spending, Dibble said.

“We’ll really need to sharpen our pencils,” Dibble said. But he added that he is concerned with putting too many burdens on the regional sales tax and worries that the cut in state support could create problems later.

Sen. John Jasinski, the Faribault Republican who has been co-chair of the transportation committee while the Senate has been tied 33-33, said ending state support for light rail has been a GOP position, and the Walz proposal syncs up with that. But he said his preference would be to devote the $32 million savings to statewide transportation needs, not general state spending.

“With the 0.75% sales tax they’re flush with cash,” said Jasinski, who described himself as a “rural guy.” “My thing is they’re overtaxing metro residents, but if they’re gonna use it on their stuff, I guess that’s positive for me.”

Peter Wagenius, legislative and policy director for the Sierra Club North Star Chapter that co-signed the letter, said the Walz administration was not initially supportive of the 0.75% metro sales tax, proposing instead a one-eighth of one percent tax. That, Wagenius said, wouldn’t have barely covered the Metro Transit funding deficit and left nothing to expand transit and non-motorized services.

“We know it was the Legislature that led on climate action, including on this bill,” he said. “The administration did not propose a transportation bill anywhere near as robust as what the Legislature passed.”

Wagenius said the proposal to zero out state support for rail operations “reflects the governor’s priorities, and we need the Legislature to stand up for their priorities because they place a higher value on real climate action.”

State support for light rail operations was based on a principle that while the Twin Cities region should pay for a large share of light rail and regional buses, the state has a role as well, Dibble said, comparing it to the state support for state, regional and local roads and bridges.

The state contribution for light rail operations is part of a funding arrangement that goes back two decades to the opening of the first rail line, the Blue Line between downtown Minneapolis and the Mall of America. While federal transit money provided the largest share of construction costs, the annual operations subsidy was to be split between the region’s counties and the state. The 50-50 share to make up for the difference between fares and actual costs has remained, often against Republican opposition.

Initially, the local government share of operations was via the consortium called the Counties Transit Investment Board that spent money pitched in from the five largest Twin Cities counties using their own transportation tax collections. After CTIB was dissolved, operating costs shifted to Hennepin and Ramsey counties and the state, based on how much of each light rail line was in each county. The contribution from the counties ended with the passage of the regional sales tax in 2023, so the Met Council covers half the operating costs and would pick up 100% if the Walz proposal passes.

Correction: This story has been changed to correct an error in describing the current split of operating subsidies. Met Council began paying half of the operating costs with the passage of the 2023 metro-wide sales tax. The story originally stated that the counties continue to pay that share.

Peter Callaghan

Peter Callaghan covers state government for MinnPost. Follow him on Twitter @CallaghanPeter or email him at pcallaghan@minnpost.com.

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WASHINGTON – The Trump administration’s freeze on federal grants and aid to states, local governments and nonprofits will likely touch the lives of many Minnesotans as money for hundreds of programs – from road construction to  Meals on Wheels – has stopped or been rescinded.

It also threatens to upend attempts by state and local governments to implement planned budgets, as money they had counted on receiving from Washington, D.C., has suddenly disappeared.

“Minnesota will do what we can to keep the lights on, but we cannot fill the nearly $2 billion hole this will put in the state’s budget each month,” Gov. Tim Walz said. “This isn’t conservatism. This is amateur-hour cruelty.”

Minnesota on Tuesday joined 22 other Democratic states in immediately filing a lawsuit to stop the federal freeze, saying it was an unconstitutional violation of the Administrative Procedures Act, a federal law that governs how federal agencies create and enforce rules. And later Tuesday, a federal judge temporarily blocked the funding pause.

The freeze started in a two-page memo from the Office of Management and Budget saying a review of $3 trillion in federal spending was needed to bring a vast number of programs in line with President Trump’s priorities, citing a number of executive orders on immigration, diversity, equity and inclusion policies (DEI) and foreign aid.

The memo did not say how long this review would take or how long the freeze would last. It stops work on many state and local transportation projects and puts a halt to a slew of government programs, including food stamps, heating assistance, Head Start, policing grants and funding to the state’s tribal governments.

Medicaid funding, which represents the largest pot of money the state receives from the federal government, is also considered vulnerable. 

At a Tuesday afternoon press conference at the St. Paul Eastside YMCA’s child care center, Minnesota Commissioner of Management and Budget Erin Campbell said her office tried to draw down more than $400 million from the state’s federal Medicaid account and was unable to do so Tuesday morning. But Campbell said her agency was able to access the funds later in the day. Other states also reported trouble drawing down Medicaid funding on Tuesday. The larges portion of Walz’s $2 billion monthly figure is Medicaid, but also included is about $850 million for other federal programs.

The lawsuit Minnesota joined against the Trump administration also alleges the OMB has violated the separation of powers doctrine and Congress’ authority over the federal budget. Filed in federal court in California, the lawsuit seeks an immediate temporary court injunction on the funding freeze.

“And it’s putting vulnerable people at risk,” Minnesota Attorney General Keith Ellison said at the press conference at the YMCA. “Messing around with federal funding is a very big deal.”

“I do not sit around looking for ways to sue Donald Trump,” Ellison added. “But in the eight days he’s been in office he’s forced me to figure out ways to sue him almost every day.”

Walz said he had not received any kind of guidance from OMB on how the freeze would impact the state and called it an “illegal power grab.” He also said it would be difficult to “backfill” with state funding all of the programs that will lose federal funds. 

The governor said if Medicaid was included in the freeze, the state would lose $1.9 billion a month, and more than $800 million a month if Medicaid funding was continued.

Democratic Sen. Tina Smith said reports of the freeze had an immediate effect.

“I’ve heard from community health centers in Minnesota who are already looking at layoffs by the end of the day.  May not be able to make payroll at the end of the week,” Smith posted on Bluesky. “Republicans need to grow a spine here. This isn’t a game, it’s people’s lives.”

Smith added in an emailed statement that “the impact of this funding freeze is so massive it’s impossible to comprehend.”

“We are talking about programs that really, really matter to people. Programs that are life or death for Minnesotans. Anyone who relies on LIHEAP to heat their homes in the winter, or anyone who gets dialysis through Medicaid — this puts their lives and well-being at risk. And that’s just the tip of the iceberg,” Smith said.

In a post on X, Rep. Angie Craig said she had heard from two cities in  her district that  they had been notified their Justice Department grants to local law enforcement agencies had been put on hold.

“Withholding critical funding approved by Congress to hire police officers makes #MN2 communities less safe,” Craig said. 

Republicans on Tuesday defended Trump’s actions and said “worthy” projects would be spared cuts or elimination.

“We are 36 trillion dollars in debt, largely because of wasteful spending in Washington on things we don’t want and can’t afford,” said Rep. Pete Stauber, R- 8^th District, in a post on X. “Rest assured, this pause on federal funding will be lifted on worthy projects, many of which I fought for in the Northland. This is good governance and what the American people voted for!”

Rep. Tom Emmer, R-6^th District, who like most House Republicans is attending a retreat at Trump’s south Florida Doral Golf Club, told reporters the president was “doing exactly what he was elected to do,” and that was to  “shake up the status quo.”

But Democrats angrily denounced Trump’s move to impound federal funds.

“This unprecedented and unconstitutional move is causing chaos and jeopardizing critical support for everything from pediatric cancer research to equipment for our first responders,” Sen. Amy Klobuchar said in a statement.

Rep. Betty McCollum, D-4^th District, a senior member of the House Appropriations Committee, said the phones in her Capitol Hill and St. Paul offices were “ringing off the hook” with calls from hospital administrators, community health centers, nonprofits, and “Minnesotans who are scared that they will not have the federal assistance they rely on.”

The uncertainty prompted by the unexpected federal action led Senate Majority Leader Erin Murphy, DFL-St. Paul, to say “this extreme executive order throws our existing and future budgets into jeopardy.”

“The short-term effect throws states, communities, schools, hospitals and households into uncertainty and fear,” Murphy added in her statement. “Long term, if cuts of even a fraction of this magnitude were implemented, the costs to individuals and families would be devastating.”

Meanwhile, state Senate Finance Committee co-chair Eric Pratt, R-Prior Lake, downplayed the impact of the OMB’s action.

“I expect we will get more clarity and guidance to help the state fulfill the request on today’s memo. We also need to be sure that vital programs are uninterrupted, and this should be a fairly easy task to meet within the timeline given,” Pratt said in a statement. It’s unclear what timeline he was referring to.

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So the Minnesota Supreme Court settled the ugly partisan dispute over math on Friday. Does that mean the state Legislature can get back to normal, convene the House and Senate and officially convene the 2025 session?

You’re not from here, are you?

The House remained where it was on Jan. 14, a body that Secretary of State Steve Simon says does not have enough members present to organize itself and do anything except adjourn. And as though it was jealous of all the public and media attention the House was enjoying, the previously placid Senate launched into a reprise of the fights last year over a member charged with a felony.

Both bodies continue to lack clear constitutional majorities to do much of anything — although the Senate is at least properly convened and at least has an end of turmoil in sight. Tuesday’s special election in the overwhelmingly DFL 60th Senate District will return the DFL to a 34-33 majority sometime next week.

The House? Not so much. The soonest a special election can be held to return the House to a 67-67 tie is mid-March — seven weeks.  

The Senate began the day with Republican leaders passing the word that they would try to expel DFL Sen. Nicole Mitchell of Woodbury. It was similar to motions made last year but the Senate GOP and DFL are in the midst of a bit of a love fest after agreeing to temporarily share power while the body is temporarily tied 33-33. As if to model good behavior for the House, the Senate caucuses take turns, alternating which side presides over the Senate floor and which party holds the gavel in committee meetings.

While that will end when a new person is elected to replace the late Sen. Kari Dziedzic in the Minneapolis-based 60th Senate District, the amity has been almost unsettling given 21st century politics and the end of the 2024 session. That was when DFLers passed much of the work of the session via a single 1,400 page bill with no debate allowed.

The two-week era of good feelings is what made the Monday motion to expel Mitchell seem like both the ghost of session’s past and the ghost of session’s future simultaneously.

Mitchell’s trial for felony burglary was to have begun in Becker County Monday. But she belatedly invoked the privilege given members of the Legislature to not face trials during session. It won’t start now until June. Mitchell was arrested April 22 in the basement of her estranged stepmother’s house in Detroit Lakes. She has said she entered the house to retrieve belongings of her deceased father, but her stepmother called police when she stepped on someone in her bedroom.

Sen. Jordan Rasmusson, R-Fergus Falls, said it was both the alleged crime and the use of her Senate privilege that led him to move to expel her Monday.

“Today the trial was supposed to start up in Becker County and she used her privilege to delay that proceeding,” Rasmusson said. “She just continues to play the process off against itself.”

The odds were long, as it would take a two-thirds vote. Sure, some fellow DFLers aren’t happy with Mitchell but they might not go as far as to vote to expel her. And then those odds got longer when the DFL avoided the vote by moving that the motion was out of order. Senate rules require an investigation and hearing, and those have not yet been completed, having been halted until the trial concludes.

“This debate today is about fundamental principles,” said Senate DFL leader Erin Murphy, DFL-St. Paul. “The rule of law. Due process. Representation. And your ability to have a trial by jurors, by your peers.” Murphy has said Mitchell should make the decision on whether to resign or not until a trial is concluded, leaving open the chances of her forced removal should she be convicted.

That DFL leadership turned the up-or-down vote on Mitchell’s worthiness to serve into a procedural vote is significant. By unwritten rules of legislative bodies, members are allegedly free to vote their conscience on bills and issues. But they commit to vote with their caucus leaders on procedural votes. Even Mitchell voted to uphold a ruling by DFL Senate President Bobby Joe Champion that the expulsion motion was out of order, a ruling that was upheld on a tie vote of 33-33.

But that’s legislative process and parliamentary procedure. Beyond that, the motion yet again showed the awkward box Mitchell has placed her DFL colleagues in. Murphy has said she wanted the trial to begin this week in order to resolve the charges once and for all. Absent that, Mitchell continues to be banned from committee membership and remains disinvited from DFL caucus meetings.

Later in the day, the House switched places with the Senate when it became the more-tranquil chambers. Not tranquil exactly, but more so than the Senate.

In an abbreviated repeat of the first day of session way back on Jan. 14, Simon convened the House. After a prayer, a moment of silence for Holocaust Remembrance Day and a taking of the roll on the electronic voting machine, he adjourned because it lacked a quorum. While there were 67 Republicans in their seats, Simon acted on a Friday ruling of the state Supreme Court that it takes 68 votes for a quorum to be present. With House DFLers continuing their boycott of the House, that number wasn’t reached and won’t be reached until they return.

Related: After calling Minnesota House ‘dysfunctional,’ Supreme Court rules in DFL’s favor

Simon did not entertain motions from the GOP that would have had them decide when the House will reconvene and then order the missing members be docked their pay and per diem until they return. Simon has said no action can be taken minus a quorum. The GOP pointed to constitutional provisions that allow less-than-a-quorum to approve adjournment and to direct missing members to be compelled to attend.

Rep. Harry Niska, the No. 2 leader among House Republicans, said Simon should have taken the motions and suggested the issue of how much power the secretary of state should have might call for a return to the court.

“The state Supreme Court helped contribute to this mess. They may have to clean it up,” the Rogers Republican said.

House GOP Leader Lisa Demuth has returned to her seat on the floor two weeks after being elected the first Republican woman speaker and the first person of color of either party to hold the job. That is just one of the actions taken by the GOP since Jan. 14 that was nullified by the court. After the brief session Monday, the Cold Spring lawmaker repeated her calls for DFL members to attend.

“House Republicans, now on week three, are here to do the work that we were elected to do by the people of Minnesota,” she said. “We will continue doing that. We are hearing from across the state that the best thing that could happen is that Democrats show up for work, get to work with their Republican colleagues and find a pathway through.”

There have been negotiations between DFL leader Melissa Hortman and Demuth but they have not been successful. If a quorum is achieved, Republicans will have a 67-66 majority, at least until a special election is held in Roseville to fill a seat won by the DFL but to be voided because the winner did not live in the district.

Until then, Demuth could be elected speaker and keep that job for the two-year term of this Legislature. That would remain even when the DFL regains a 67-67 tie. And Republicans could try to unseat a DFL election winner from Shakopee over their concerns about election irregularities, even after the tie is reestablished

But Rep. Brad Tabke won on election night by 14 votes, prevailed in a recount and won a court review of the election. DFLers have said they won’t show up until Demuth agrees to let Tabke serve unthreatened by being removed by the GOP. They also want Demuth to agree to a co-speakership once the Roseville election is resolved.

Related: Is Minnesota House GOP ignoring the courts in dispute over Tabke’s seat? Not really

Hortman was mostly matter of fact late Monday afternoon, providing a moment of Zen on the day legislative chaos became bicameral. The Brooklyn Park DFLer who had been the House speaker from 2019 through 2023 said talks with Demuth continue and she was optimistic an agreement could be reached.

Might this daily adjournment by Simon be a seven-week tradition? Hortman said she didn’t think so.

“The Minnesota Supreme Court decision clarified things for both Democrats and Republicans,” Hortman said. “We know where the white lines are spray painted on the field. Hopefully with three days behind us and three days in front of us maybe we can get to an agreement.

“My hope would be for sure by the end of the week if not tomorrow,” Hortman said.

Editor’s note: This story has been updated to correct the spelling of Sen. Mitchell’s first name.

Peter Callaghan

Peter Callaghan covers state government for MinnPost. Follow him on Twitter @CallaghanPeter or email him at pcallaghan@minnpost.com.

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Before they launch a war on fraud, Minnesota’s political leaders first have to wage a war over fraud.

Perhaps by the end of the 2025 session, that is if the session ever really begins, Gov. Tim Walz and the Legislature will agree on how to take on the theft of government money meant for food, housing, child care, autism and other social programs. But because fraud was such a loud and potent political issue through the last two election cycles, it is proving hard for partisans to give it up.

Walz, Republicans charge, has either been asleep at the switch or indifferent to fraud in social programs. Waste, fraud and abuse has been a popular accusation and also a response to the current financial pressure to reduce, or at least control, state spending.

Walz and Democrats have condemned the hundreds of millions in theft by organized rings posing as providers. But they are protective of the programs aimed at low-income residents and until recently have combined those sentiments with condemnations that are aimed at thieves and not the government agencies.

“They are so damaging,” Walz said earlier this month of the scandals. “They undermine people’s faith in government, they undermine the very programs that improve people’s lives. This is fraud against the taxpayers of Minnesota, but the crime is perpetrated upon children.

“I want us to take that attitude seriously,” Walz said.

Both Walz and legislative Republicans have introduced packages of proposals such as stiffening penalties, making state bureaucrats more skeptical of applicants and recipients and even using AI to spot patterns before thefts can occur.

Walz struck first with his package just after the New Year. Standing with state law enforcement, budget and IT leaders, the DFL governor said that while there is no evidence that state workers profited from thefts of child care assistance, children’s feeding programs and now autism services, they need to be more suspicious.

“I think there’s a culture of generosity. I think it is a culture of being a little too trusting on this,” Walz said of those who oversee grant programs. “I don’t think those are bad character traits. But I don’t think they are necessarily effective at a time when we’re seeing fraud increase.”

That reflects a conclusion reached by Judy Randall, the head of the Office of Legislative Auditor, after releasing her findings in the Feeding Our Future scandal that involved charges against 70 people for the theft of $250 million meant to feed children. The OLA found that while some state Education Department employees were suspicious and that the case was eventually turned over to federal law enforcement, state managers didn’t do enough to interrupt the fraud.

Agencies often speak of working “with” beneficiaries of programs because they have a passion for the benefits that often result,” she told the Legislative Audit Commission. The education department referred to the organizations that received child feeding money as “clients” and “patrons” rather than applicants or grantees. 

“Not that that’s wrong, but you can’t just trust everybody,” Randall said of the message the terminology sends. “I wish we could but clearly we can’t.”

Related: Why everyone around state government is talking about OLA: the small office that looks for fraud, missteps … and gets headlines

Walz said he will create, via executive order, a fraud investigation unit that will combine current efforts by the Bureau of Criminal Apprehension and the state Department of Commerce.  

He then asked the Legislature to:

• Add staff to the attorney general’s Medicaid fraud unit
• Make clear that state agencies can stop payments to grant recipients suspected or charged with fraud
• Use artificial intelligence programs to spot patterns that suggest fraud in Medicaid programs
• Create a new “Theft of Public Funds” statute that increases criminal penalties by 20% compared to the existing “Theft” statute
• Make providing kickbacks a state crime that the Attorney General would have power to investigate and prosecute

His budget plan called for an additional $45 million in spending to pay for the new efforts.

Legislative Republicans so far are reluctant to give Walz much credit for the plans, calling them too little, too late. They are also unwilling to give up such politically valuable criticism of the 14 years of DFL administrations, which included a series of financial scandals under both Gov. Mark Dayton and Gov. Tim Walz. They include the misuse of funds under the Child Care Assistance Program during the Dayton administration and most recently with accusations of fraud under an autism treatment program.

“It has been shocking for me to come back the last few years and see what has happened in state government,” said Rep. Patti Anderson, R-Dellwood, who was state auditor from 2003 to 2007 before being named commissioner of Department of Employee Relations under Gov. Tim Pawlenty. “Minnesota was a good government state.”

Citing Biden-appointed U.S. Attorney Andrew Luger’s prosecutions of Feeding Our Future cases and his statement that no other state had similar scandals in the feeding program, Anderson suggested Walz’s proposed spending controls in the disability waiver program in long-term care wouldn’t be needed if fraud was contained.

“Why?” she asked. “You have half a billion dollars that we know of already and those dollars should go to serve citizens who need services.”

The dollar amounts — fraud losses and Walz’s proposal for slowing the growth of senior citizen long-term care — aren’t comparable, however. Walz’s proposal to slow the growth in spending on what are called disability waivers says that without it, spending on the program will grow from a little less than $2 billion a year in 2022 to more than $5 billion by 2029.

And DFLers object to GOP assertions that they have not acted in the face of scandals like Feeding Our Future and do not agree that GOP administrations were scandal-free. In an op-ed late last year, Senate Taxes Committee Chair Ann Rest, DFL-New Hope, described a hearing in which the Office of the Legislative Auditor was noting the lack of transparency and accountability over $4.7 billion paid to nonprofits, including $1 billion the state or counties had handed out in the form of grants.

The year was 2007 and Pawlenty was governor.

“Since 2023, the DFL majorities and the governor have acted in dozens of ways to increase transparency and accountability in the spending of public money,” Rest wrote. “Chief among them was 10 pages of new law and funding for the Office of Grants Management.”

House Republicans are proposing their own batch of bills and created a new committee focused on fraud investigations that will be chaired by Rep. Kristin Robbins, R-Maple Grove, (though Friday’s Supreme Court ruling means neither are official). Among the bills are a new matrix that will measure and publicize how state agencies respond to negative findings in Office of Legislative Auditor reports, mandating that state employees who see or suspect fraud to report it to investigative agencies and the Legislature and creating a new Office of Inspector General. The latter proposal by Anderson would create a sister agency to the legislative auditor that would report to the same bipartisan Legislative Audit Commission that she serves on.

That new office would absorb existing inspector generals that are housed in the departments of human services, education and corrections into an agency independent of governor-appointees. It would have power to investigate both agencies that distribute funds and those who receive money. It would have subpoena power and be able to order suspension of payments. While it would not have the authority to prosecute crimes, it would work with state and local prosecutors. Some of the inspectors would be embedded within agencies but report only to the independent inspector general.

The first proposal for an independent Office of Inspector General for this legislative session came from Sen. Heather Gustafson, a DFLer from Vadnais Heights. A draft of her proposal would create an independent inspector general with oversight from a new commission made up of people appointed by the four partisan caucuses of the Legislature as well as someone from the Bureau of Criminal Apprehension.

Gustafson said she heard a lot from voters about the Feeding Our Future scandal when running for the first time in 2022 and wanted to see if there was a better way to prevent fraud and punish wrongdoers.

“What I think people are looking for, at least what I hear in my district, is something genuinely independent of all the branches that will work to really identify any fraud, waste and abuse in any entity public or private that takes taxpayer dollars,” Gustafson said.

Her proposal would require the inspector general to meet specific standards including at least 10 years experience in auditing, investigations or law enforcement and be certified by the national organization of inspectors general.

To the criticism that a separate IG would not have the depth of knowledge about agencies and their programs that in-house IG’s now have, Gustafson said the IG can hire inspectors with that knowledge.

“They would just report to the IG instead of the agency heads,” she said. “An independent office is meeting the moment that needs to be met right now. What’s happening and what has happened the last few years is just unacceptable.”

Walz has said he is lukewarm to an independent office, thinking its inspectors wouldn’t have the depth of expertise that an inspector general within an agency would have. His example is the federal Department of Veterans Affairs, whose IGs not only knew the details of the agency and its programs but had veterans top of mind.

Randall was asked over the summer if her audit team should grow and be given new duties to investigate fraud and prosecute fraudsters. She suggested it would not be a good fit for her office, which has its hands full with its work auditing state agencies. But Randall said last week that the legislative auditor could work closely with an inspector general if that is what the Legislature proposes.

Randall noted that her office is charged with auditing the existing inspectors general in some state agencies and the office even found concerns with how an inspector general at the Department of Human Services performed when fraud was discovered in the Child Care Assistance Program in 2019. Lawmakers this session should include some way of having independent auditing of an independent inspector general.

Randall said she sees benefits with both an independent inspector general and having IGs embedded in agencies under commissioners appointed by governors.

“I don’t think the embedded structure is inherently flawed,” she said, though enforceable protections for that person are needed to ensure their independence. “I don’t think being embedded in and of itself is a show stopper.” The federal model uses embedded IGs and they are well-respected and considered to be free to find problems in their agencies, she said.

But the Friday mass firing by President Trump of 17 agency-based IGs suggests added protections would be needed in Minnesota. Both the Gustafson and Anderson bills have set terms for the IG and removal only for cause.

Unlike the federal model, Minnesota IGs could be appointed to a term and only removed for cause in a public hearing, similar to the independence protections the legislative auditor has, Randall said.

The benefit, Randall said, is they develop deep knowledge of complex systems and programs, knowledge needed to be able to see problems as they are developing. Inspectors general look at both the agency running programs and distributing money and those who receive the money.

“You need subject-matter expertise. You need to understand the rules, how they are licensed, who the licensees are, you need access to their data systems. It’s intense and targeted and focused work,” Randall said.

An independent inspector, however, could serve as the center of a hub and spoke model that facilitates data sharing and standards centrally but has inspectors embedded in the agencies. They would physically be within the agencies they inspect but work for the independent inspector general. That is a model envisioned in Anderson’s GOP bill which would place assistant inspectors general in seven agencies, including Human Services, Education and Children, Youth and Families.

Walz, who also included new funding for his fraud plan in his 2025-26 budget rollout last week, said that as with that budget, he is open to legislative ideas on fraud. 

“We want them to help us if they have good ideas,” Walz said of Republicans in the Legislature. “You don’t need to find a fight when there’s none available. We agree with you. There’s certainly no upside to have fraud in state government.”

Peter Callaghan

Peter Callaghan covers state government for MinnPost. Follow him on Twitter @CallaghanPeter or email him at pcallaghan@minnpost.com.

The post Walz, lawmakers search for the right solution to prevent fraud in state government appeared first on MinnPost.

UPDATE 4:06 p.m., Friday, Jan. 24, 2025: Just one day after hearing oral arguments in the dispute between DFLers and Republicans in the state House, the Minnesota Supreme Court Friday found in favor of the DFL: A quorum to conduct any business in the House is 68 seats.

That could drive a negotiated solution to a two-week long standoff that saw Republicans organize the House with their 67 seats and the DFL boycotting the sessions to deny their partisan rivals a quorum. Any actions taken by the House are voided, and in a statement calling for end to the boycott, House GOP Leader Lisa Demuth was described again as “speaker designate” not speaker.

But the ruling, issued Friday at 3:30 p.m. with a promise of a more-detailed decision to follow, doesn’t by itself end the stalemate. While Republicans cannot convene sessions of the House, DFLers can continue to stay away to wring concessions including a promise not to try to unseat Rep Brad Tabke.

The debate was one of math and constitution. While the state constitution says a quorum of the House — the number needed to conduct any business — is “a majority of each house,” with one seat vacant because a DFL election winner was not a legal resident of the district, the House was 67-66 in favor of the GOP. Republicans asserted that a majority is more than half of the filled 133 seats or 67 votes; DFLers argued the vacancy didn’t matter and the needed number was half of the possible 134 seats or 68. The court ruled that Secretary of State Steve Simon acted legally when he adjourned the House on the first day because a quorum was not present.

“… under Article IV, Section 13, of the Minnesota Constitution, which requires that “[a] majority of each house constitutes a quorum to transact business,” a quorum requires a majority of the total number of seats of each house,” the court wrote in the three-page order.

“Vacancies do not reduce the number required for a majority of each house to constitute a quorum.  By statute, the total number of seats in the Minnesota House of Representatives is 134 seats … Accordingly, in the Minnesota House of Representatives, a quorum for purposes of Article IV, Section 13, of the Minnesota Constitution, based on the current total number of seats prescribed by law, is 68.”

 “We assume that the parties will now conform to this opinion without the necessity of issuing a formal writ,” the order states.

Both sides have said they will follow an order from the Supreme Court.

Thursday’s story on oral arguments:

In the opening minutes of a pretty darned historic hearing before the Minnesota Supreme Court Thursday, the chief justice called into question the belief by partisans that their arguments are so obvious that they will prevail with ease.

Republican attorneys argued during the hearing and with briefs filed over the last week that the constitution and laws are clear that only 67 House members consist of a majority when a seat is vacant and only that number is needed to organize the House. Half of 133 filled seats is 67 and the GOP currently has a 67-66 majority.

Related: Unforced errors put DFL House in worse-than-a-tie position, but GOP’s high hopes for a majority could end in court

That math will remain valid until a vacant DFL seat in Roseville that awaits a special election is filled.

Attorneys for Secretary of State Steve Simon and DFL House leaders have said their position — 68 votes for both a quorum and to pass bills — is a slam dunk. Whether a seat is vacant or not doesn’t matter, the denominator remains 134 and half of 134 is 68.

Chief Justice Natalie Hudson Thursday seemed to agree … with both of them.

“Counsel, it seems to me your interpretation is a reasonable one,” Hudson told assistant attorney general Liz Kramer. “But it also seems to me that respondent’s interpretation is at least equally reasonable.”

But both can’t be right. For more than an hour, six of seven justices (Justice Karl Procaccini recused himself, presumably because he had served as DFL Gov. Tim Walz’s counsel) questioned attorneys in ways that at first seemed they agreed with the Republican position and then indicated they agreed with the DFL and Simon’s case.

Was it the Socratic Method in action? Or were the justices torn as to what the proper course of action should be? (Video of the oral arguments is here.) 

At one point Justice Gordon Moore asked, as GOP lawyers argued, whether the court was opening a can of worms by weighing in on a partisan dispute in another branch of government, “a can of worms that might not be able to be closed again.” Should the court just stay out of it?

“The court could be viewed by parties as a place to resolve political disputes,” Moore said.  

Later, Hudson said it isn’t only a dispute within the legislative branch but an interbranch conflict over the meaning of the constitution. That’s because Simon is part of the executive branch and was directed by a statute written by legislators to preside over the House until a quorum is present and a permanent speaker is elected. Simon was interpreting a constitutional definition of a quorum; House GOP leaders disagreed.

“We should be exercising judicial restraint when it comes to dabbling in the business of a co-equal branch,” Hudson said. “On the other hand, there are times … where the courts are required to step in. If this isn’t a case where there is an urgency to step in, what would be?” She said the current House is “completely dysfunctional.”

“If not the judicial branch, then who?” Hudson asked. “Who steps in to resolve that?”

Justice Theodora Karin Gaïtas put the question of whether the court should resolve a constitutional dispute between the other branches more plainly.

“Isn’t that our thing?” she asked Nicholas Nelson, the attorney for the House GOP leader. “Isn’t that what we do as the Supreme Court?” And Justice Paul Thissen, a former DFL House speaker, asked, “The court can’t interpret the constitution? You started your whole argument only focused on statutes, too, which I thought was weird.”

Nelson said: Of course the court should interpret the constitution, but he said this is a situation where power resides in a single branch of government and the court should not weigh in. The quorum issue could be resolved by the DFL ending its boycott and showing up on the House floor.

“The petitioners cannot and should not invoke this court’s extraordinary writ jurisdiction to address an alleged quorum problem that is of their own making,” Nelson said. 

Related: What does Minnesota law, state constitution say about legislative quorums?

At issue is whether Simon was correct Jan. 14 when he adjourned the opening session of the House when just 67 of 134 possible members were present, or whether Republicans are correct when they disregarded Simon’s gavel and proceeded to organize the House, elect a speaker and begin to do business.

“Petitioners ask this court to resolve the interpretation of five words in the constitution — ‘a majority of each house,’” said state solicitor general Kramer, representing Simon. “The question is whether a vacancy in either house reduces the number necessary for a quorum or whether the quorum number is static.

“A quorum does not change with vacancies in Minnesota,” Kramer said. While there are no previous state Supreme Court cases on this point exactly, Kramer cited cases where the court said the denominator to decide whether lawmakers reached a two-thirds majority to override a governor’s veto used the total number of possible seats, not the number seated.

Nelson said the court’s authority involves the interpretation of statutes, not reviewing how legislators organize themselves.

“That’s a legislative power which, by constitution, is in the Legislature — not in the judiciary,” Nelson said. “Yet that is the power that petitioners are asking the court to exercise here, which to our knowledge is unprecedented in history. The court cannot do so under our separation of powers.”

 Closely watching the case — from the front row of the chambers in the Judicial Center — were the named plaintiffs and respondents in one of two cases. House DFL leaders Melissa Hortman, Jamie Long and Athena Hollins and House GOP leaders Lisa Demuth and Harry Niska. Simon, who also filed a case with the court, was not present.

Hudson said a decision will come “in due order.” A related case on the timing of the special election in Roseville came about 50 hours after it was argued last week. 

The less understood fact of the case is that regardless of how the court rules, the stalemate in the House could remain. If the court stays out of it, the status quo of a GOP-run House remains, though they are shy of being able to pass bills. House Democrats have said they will continue their boycott of the House but would be left to watch from a distance if the House moves to unseat DFL Rep. Brad Tabke and order a new election in the Shakopee district.

Related: Is Minnesota House GOP ignoring the courts in dispute over Tabke’s seat? Not really

If the court says 68 members are needed to do anything at all, it invalidates the convening of the House and the election of Rep. Lisa Demuth as the speaker of the body but doesn’t end the dispute. It would keep the entire House shuttered and preserve Tabke’s position, for now. Once Roseville voters fill the open seat, the House returns to a 67-67 tie and perhaps gives both parties incentive to return to a power-sharing agreement reached before the Roseville election was invalidated.

Hudson asked what happens next if the DFL side prevails. When told Simon would again try to convene the House and adjourn each day until 68 members were present, she asked: “That could go on day after day after day, is that right?” 

“Yes,” answered attorney for the House DFL leaders David Zoll. 

As to what the House could do if the court lets the current situation remain, Nelson said the House could meet, hold hearings, discuss bills and even complete two of the three readings of bills on the floor required before passage. It could even move to compel the attendance of the absent members. It just couldn’t conduct that third reading and pass bills.

Said Thissen: “What is the House if you’re wrong? There is no House.” 

The post After calling Minnesota House ‘dysfunctional,’ Supreme Court rules in DFL’s favor appeared first on MinnPost.

Lobbyists and lobbying organizations spent $18.9 million to influence Minnesota politics in 2023. Of that, $1.4 million or 7.5% percent came from lobbyists from Xcel Energy, the largest amount spent by a single organization that year. The utility is one of 15 top-spending companies that made up over half of all lobbying spending that year, along with other lobbyist organizations representing the education, pharmaceutical, and health care industries, among others.

Minnesota’s state government tracks lobbying through its Campaign Finance Board, which requires lobbyists and the businesses they represent to regularly report their lobbying activities. Recent changes to the state’s lobbying laws resulted in more stringent rules for lobbyist registration but laxer ones for reporting: More lobbyists are required as of 2024 to register with the state and report what issues they worked on, but they don’t have to report how much they spend in the process. That responsibility is now placed on the companies they work for, which are required to report the total amount spent in March of each year. While we don’t have access to spending totals for 2024 yet, CFB lobbyist filings do give us details on which issues lobbyists represented.

Looking at the Minnesota CFB’s lobbying report databases from 2023 and 2024, MinnPost analyzed which companies have spent the most lobbying state legislators and administrators and what bills, issues, and procedures they put their lobbyists to work on. Our totals for 2023 represent the sum of lobbying disbursements from all individual lobbyists working on behalf of a given company that year, including both employed and contracted lobbyists:

Xcel Energy's lobbyists spent $1.4 million throughout 2023. Most of that went toward cases before the Minnesota Public Utilities Commission. The state's PUC is where energy companies participate in the years-long process of setting future energy rates and pricing structures. Xcel had an active presence in committee proceedings throughout 2023 and 2024 (for details, see PUC docket numbers 23-413, 24-320, and 24-321), assigning 20-30 of its 90 registered lobbyists to focus on rate setting procedures each year. CenterPoint Energy MN (32 registered lobbyists) and NextEra Energy Resources (nine registered lobbyists) — two other top-spending lobbying organizations in 2023 — also assigned the bulk of their lobbying workforce to influence rate setting proceedings in both 2023 and 2024.

Recent Xcel filings with the PUC show the company's accountants have been keeping an eye on the development of new electronic infrastructure across the state. This includes an expected need to meet a 500-megawatt increase in capacity — enough to power 438,000 average U.S. homes — to supply new data centers including those planned near the company's Sherco coal plant, currently slated to be shut down and replaced.

The second largest lobbyist spend was by Education Minnesota, a union group representing educators in the state with 29 registered lobbyists. The entirety of the organization's $1.1 million lobbying efforts were focused on a handful of bills passing through the Minnesota Legislature concerning teacher pensions, state tax allocations and education funding.

One of the organization's standout filings concerned HF 3567, an assistive reproductive rights bill clarifying parentage and the role of gamete donors in surrogate pregnancies. When MinnPost reached out to clarify Education Minnesota's interest in the bill, a spokesperson said this was an error. The lobbying group intended to file that activity under SF 3567, a education omnibus bill. The accuracy of lobbyist filings rests entirely on the filer, as the CFB does not regularly audit lobbyist reports. The group has since confirmed that they have filed an amendment to that activity to correct the error, but this sort of correction is not a regular outcome.

Another top spender throughout 2023 was FairVote MN (12 registered lobbyists), a political advocacy group pushing for ranked-choice voting in the state. The organization's filings concerned lobbying activity in Minnetonka and Bloomington, two cities that adopted the new voting practice in 2020 and 2021 respectively. Initiatives to repeal ranked-choice voting were voted down the two Twin Cities suburbs in 2023 and 2024. FairVote did not indicate individual legislative or municipal actions in their lobbying reports to the state, though the firm did push for statewide laws switching elections to ranked-choice voting and filed the majority of their lobbying disbursements directed toward the state Legislature.

DoorDash (six registered lobbyists), the gig work food delivery app, was the 9th largest Minnesota lobbying group in 2023. The company was a target of proposed delivery taxes in 2023, levied to fund in-state transportation projects. Food delivery apps including DoorDash and other platforms like UberEats were exempt from separate legislation establishing minimum wages for delivery workers.

The post Xcel Energy leads Minnesota in lobbying spending appeared first on MinnPost.

If the Minnesota House was a tennis match, what has happened to the once-majority DFL caucus would be described as unforced errors.

It was the voters in a handful of districts that turned their four-seat majority into a 67-67 seat tie with Republicans. But since then, the 2025 session has been knocked on its head by a pair of missteps that the DFL House and a pair of DFL elected officials can’t blame on anyone else.

The tie is gone, for now, because a DFL candidate in Roseville didn’t live in his district when he filed for office — or perhaps ever. The 40B DFL caucus and the House DFL campaign committee should have known rather than taking Curtis Johnson’s word for it.

Now a special election to potentially regain that tie is in limbo because the legal declaration signed by Gov. Tim Walz upon the advice of Secretary of State Steve Simon was ruled illegal by the state Supreme Court. Lawyers in both the secretary of state’s office and the governor’s office relied on the wrong section of state law in deciding how soon the election can be held. An election first set for next Tuesday now could be delayed until mid-March.

Walz cited legal interpretations by his counsel, Simon’s counsel, the attorney general’s office and outside lawyers for why he called the election for Jan. 28. Now his office states that he can’t issue the election order until Feb. 5.

That same Supreme Court could partially bail the DFL out, or it could not. It will hear cases Thursday filed by the House DFL and Simon challenging the GOP’s organization of the House. If it agrees with the challengers that 68 votes, not 67, are required to meet the constitutional definition of a quorum, then all that the House GOP has done so far will be voided as well.

But even a court ruling won’t resolve everything. That would be too easy. If the court decides the House needs 68 people present to be a legal quorum to begin the session, the House can’t get to that number unless the House DFL ends its boycott. And that boycott won’t end until the GOP agrees it won’t try to unseat Rep. Brad Tabke of Shakopee, House DFL leaders have repeatedly said.

Tabke was found by election officials and a district court judge to have won reelection in District 54A by 14 votes. But that opinion released more than a week ago isn’t enough for the House GOP leaders to resolve the standoff. They have said they will likely stand in judgement of the judge and could decide to call a new election based on their own reading of the facts presented in court. That is within their constitutional authority, but removing an elected member who prevailed in a court review has never happened.

Won’t a DFL victory in the Roseville special election settle things? Won’t that restore the 67-67 tie and force the DFL and GOP to work cooperatively as was agreed to before Johnson lost his residency challenge?

Again, too easy. Even if that special election in a dominantly DFL Roseville district restores a tied House, the GOP can move to not seat Tabke anyway. That’s because he would be prevented from voting on the matter and the GOP could prevail with a majority of all members because unlike a bill that needs 68 votes, a motion to not seat Tabke only needs a majority of those present.

Without an agreement between House GOP leader Lisa Demuth — speaker of the House in the eyes of the GOP members — and former DFL House Speaker Melissa Hortman, the boycott likely will not end, despite a DFL victory in court or at the ballot in Roseville.

There are two different sections of state law that determine when Walz can call a new election. The section of law that Walz should have followed, according to that unanimous Supreme Court ruling, says in the case of a vacancy created by a successful election contest, the governor must wait 22 days from the start of a legislative session to sign the writ. Once signed, state law dictates how many days must pass before an election can be held.

That is likely March 11.

The same section of law creates a short cut: If the House passes a resolution stating it does not plan to review the court’s decision, governors can sign the election writ within five days of passage. The House did pass such a resolution on its first day. But was it a legitimate first day of session in the House? The GOP obviously think so:

“The Minnesota House passed a resolution on January 14 which allows the Governor to take action within 5 days — his failure to do so would prevent the writ from being issued until February 5, leaving voters in 40B without representation until March at the earliest,” said House GOP Leader Harry Niska on Friday.

But the timing of Walz’s actions are wrapped up in the same House battle as everything else, because Walz doesn’t recognize the legitimacy of the GOP-only quorum. A top aide rebuffed the usually ceremonial committee of the House sent on the first day to inform Walz that they were ready to begin work. Members of his administration have not responded to requests to appear before House committees. He has publicly sided with the House DFL and Simon’s interpretation of the constitution and statutes that 68 members must be present to even gavel in the House on its first day. Deciding now that the resolution declaring a vacancy in Roseville is legitimate is therefore unlikely.

Related: Here’s what happened when Republican House members carried out legislative tradition to tell governor the house is organized

In the meantime, Johnson could well be a duly elected member of the House. That is because in siding with GOP challengers of Walz’s first writ, the Supreme Court also invalidated his declaration that the seat is vacant. The House resolution did the same thing but at least until the Supreme Court rules after Thursday’s oral arguments, that resolution is in question.

Besides, if DFLers show up with Johnson in tow and he with a certificate of election in hand, the House GOP could quickly move to not seat him as a sort of practice run for a later Tabke unseating. And just like that, the House would be back to a 67-66 GOP advantage.

The difference, however, would be that the DFL members could no longer boycott as a way of denying the House a quorum to organize because they’d given up that bargaining chip by showing up at all.

The Supreme Court has issued a pair of rulings recently that sided with GOP claims against DFL positions: Friday’s ruling on the special election and a complaint about how GOP election judges are appointed in October. And GOP leaders have said they think the current court will be fair and will abide by its ruling. That doesn’t change the fact that the seven-member top court is made up of justices first appointed by DFL governors. One of the most-recent — Justice Karl Procaccini — had been Walz’s chief counsel and has recused himself from this case.

The rhetoric has been heightened by the stakes. House DFL Leader Jamie Long calls the House GOP’s organization of the House a coup and compares it to the Jan. 6, 2021, storming of the U.S. Capitol. Lawyers for House GOP leaders this week termed the DFL position on the quorum and Simon’s legal authority to have that determination “a separation-of-powers nightmare” and an “attempt at a hostile takeover of the House.”

Both the House and Senate leadership have said they will follow the court’s interpretation of the constitution and laws implementing the constitution. But as already shown, that is unlikely to resolve the conflict.

Tuesday, Hortman said she didn’t know if the House boycott of the chambers will last until the Roseville election is settled. A DFL win at the Supreme Court would change the bargaining positions of the two parties — Demuth, for example, would not yet be speaker and her chamber no longer open for business. But Hortman said she thinks a negotiated agreement is a better path to a solution than the courts.

“Both of us have huge downsides, and those are uncertainties that you can control through a settlement agreement,” Hortman said. “If you go to court you have no idea what will happen.”

Peter Callaghan

Peter Callaghan covers state government for MinnPost. Follow him on Twitter @CallaghanPeter or email him at pcallaghan@minnpost.com.

The post Unforced errors put DFL House in worse-than-a-tie position, but GOP’s high hopes for a majority could end in court appeared first on MinnPost.

When is a tax cut not a tax cut? When it is both a tax cut and a tax increase at the same time.

Gov. Tim Walz on Thursday proposed a budget outline for the next two years that includes moves to cap the growth in some of the state’s fastest growing areas and to offer what he termed the first sales tax cut in history.

By reducing the state portion of the sales tax from 6.875% to 6.8%, the state would receive $95 million less a year in a state budget that spends about $33 billion a year. Walz called it historic and a response to concerns about inflation. The DFL governor also said it would be a buffer against any Trump Administration tariffs on some imported goods that could lead to increased consumer prices.

But the same plan would further a DFL policy pillar that the wealthy don’t pay their fair share of taxes despite national assessments that Minnesota’s tax system is among the most progressive, meaning those able to pay more are taxed at higher rates. In addition, many lower-income residents pay no income tax and benefit from generous refundable tax credits. Walz proposes collecting the state sales tax on a set of services not currently taxed that way — financial services, stock brokers, banking and accounting.

Related: Minnesota’s ‘most progressive’ tax state designation explained 

Walz called it a fairness issue, that services purchased by low- and middle-income Minnesotans like health clubs, lawn maintenance, dry cleaning, alarm services, towing and parking are subject to the sales tax but financial services more common among wealthy residents are not. 

“Why would you pay sales tax on your tires when you wouldn’t pay it on adjusting your trust fund?” he said.

State Revenue Commissioner Paul Marquart said the change would also be a response to different spending patterns by Minnesotans where less is being spent on goods like appliances and home improvements and more on services.

That change would increase state tax collections by $203 million a year. So between decreasing the tax rate and expanding the purchases subject to the tax, the proposal would increase state tax collections by $108 million a year.

Walz also proposed raising money by increasing a surcharge on health maintenance organizations. That would raise about $90 million a year and was also described as a way to get insurance companies to pay their fair share.

Republicans in the Legislature, who will have a veto of any legislation regardless of how the current quorum battle in the state House turns out, were not supportive.

“Any tax increases are off the table,” said Rep. Lisa Demuth, the Cold Spring Republican who was elected House Speaker in a disputed session Tuesday.

Said Senate GOP Leader Mark Johnson of East Grand Forks: “Republicans will stand firm against budgeting tricks that raise fees and taxes on regular Minnesotans.”

Related: Minnesota leads again: No other state has ever begun a legislative session without clear majorities

The proposed budget would spend $65.9 billion over two years. That compares to the current two-year plan that will spend $70.7 billion, a number driven partly by one-time spending from surpluses generated by pandemic relief funds and their impact on the economy. The previous budget covering 2022-2023 was $52 billion.

But Walz also proposed something that could be more controversial than the tax cut/tax hike: He wants to cap the growth in two areas of spending that have seen growth that far exceeds inflation. One is special education, and the other is long-term care for the disabled and elderly.

Walz would cap the annual growth of a program called disability waivers that allows people who might otherwise need nursing home care to get home or community services. Rather than allow it to grow by health care inflation rates, it would be capped at 2%.

“We are not changing that Minnesota is a generous state, Minnesota is a state that cares deeply that every individual should live the fullest quality of life that they can,” Walz said. “But this is the biggest driver. If we don’t make the move, by the end of the 2029 fiscal year this will be an eighth of the entire budget, projected to go up from there.

“This one has to be addressed,” Walz said.

Minnesota already pays the nation’s highest per person costs for Medicaid expenditures for people with disabilities — $53 billion in 2022 while the median cost for people in the program is $25,639. He insisted that no one would be turned away and that the state would not have a waiting list as some other states do. But the growth in costs would be tamped down.

For special education transportation, Walz would end the 100% state reimbursement to school districts and replace it with a 95% reimbursement.

Both changes would also spur negotiations by health care providers and efficiency moves by school districts, the governor said.

The proposed spending caps also drew complaints from GOP legislative leaders.

“Walz’s proposal today ignores Democrat’s runaway spending, does nothing to address the massive expansion of free benefits to illegals, and won’t address the long-term systemic issues with our disability and special education services,” Johnson said in a written statement. “True budgeting reform will protect those most in need as much as it protects the taxpayers’ investments.”

“House Republicans will push for a responsible budget that makes life more affordable for families, not one that raises their costs and hurts our seniors,” Demuth said. 

But Walz said his reductions will resolve a looming budget problem. While the upcoming two-year budget has enough revenue to cover expected costs, the next two-year budget starting in July 2027 would be in deficit.

The proposed 2026-2027 budget plan would end with a surplus of $2.1 billion rather than $1.5 billion. And it would reduce what is termed the “structural imbalance” in 2028-2029 from $3.5 billion to $1.7 billion. While a deficit is still projected for that future budget, Walz said it would reduce the work that would need to be done when that budget is prepared by the 2027 session of the Legislature.

Related: State economists project a modest budget surplus, but future deficits loom

All of the budget numbers Walz unveiled Thursday are conditional. That is because they are based on the November economic and revenue forecast, while the actual budget passed this year will be tied to the next forecast due in late February. As of this proposal, there are no significant program cuts projected and all of the major changes made by the DFL trifecta in the 2023 session would remain intact.

Peter Callaghan

Peter Callaghan covers state government for MinnPost. Follow him on Twitter @CallaghanPeter or email him at pcallaghan@minnpost.com.

The post How Walz’s proposed ‘tax cut’ would actually raise $108 million a year to help state budget appeared first on MinnPost.

The Minnesota Chamber of Commerce puts on an annual dinner the first week of the state legislative session that usually features a panel discussion among the four caucus leaders.

Also, by tradition, moderator Tom Hauser of KSTP includes a “lightning round” where he asks for one or two-word answers to a series of questions. Asking doesn’t mean that the politicians stick to the ground rules. Here is a transcript of that round with some editing to remove asides and an entire interaction about which character from the sitcom “The Office” each of the four felt represented them (that part was hard to follow if you weren’t there).

The February budget forecast, will it be better or worse than November? Better?

Senate DFL Leader Erin Murphy: Better.

Senate GOP Leader Mark Johnson: Depends. Legally trained, Tom!

House DFL Leader Melissa Hortman: I’m with the lawyer because it depends on whether Trump’s job killing tariffs have kicked in yet.

House GOP Leader Lisa Demuth: We know, either way it’s gonna show that impending deficit that we’re headed to because of the wasteful spending.

In the 2025 session…Tax increases, tax cuts or hold the line?

Demuth: Tax cuts. Minnesota overspends.

Hortman: Tax cuts.

Johnson: There you go, tax cuts.

Murphy: We’re going to balance the budget. 

Health care reinsurance? Yes or no?

(Health care reinsurance is a program that uses state money to cover extraordinary health insurance claims as a way to keep regular premiums for people who buy policies on the individual market.)

Murphy: Depends.

Johnson: Yes.

Hortman: Maybe.

Demuth: Yes.

Is the public option still an option or not gonna happen this year?

(Public option refers to proposals to allow Minnesotans who exceed the income limits to purchase policies via MNSure to insure themselves through that program.)

Demuth: No.

Hortman: Not this year.

Johnson: No.

Murphy: Nope.

Minnesota’s environmental permitting process. Is it onerous or appropriate?

Johnson: Onerous? Yes.

Murphy: The good news is we made permitting reform work last session. Thank you, Grant Hauschild and Nick Frentz.

Hortman: It takes too long.

Demuth: Still onerous.

Reforming it. Is that a short-term priority or a long-term priority?

Johnson: Short and long.

Murphy: Gonna take a long time, but we’re on it.

Hortman: It’d be a great session to do it. Short term.

Demuth: Very short term.

I believe Republicans have talked about eliminating the nuclear moratorium. No way, or new construction?

Demuth: Absolutely new construction.

Hortman: Only if negotiations with the Prairie Island Indian community favor it. OK.

Johnson: Yes, new construction.

Murphy: Same as Hortman.

Should Canada become another U.S. state?

Johnson: My colleagues always say that I’m the senator from Canada because I live in East Grand Forks and have a thick Canadian accent. But I think we should take them. They are our No. 1 trading partner in Minnesota. I think they should become part of Minnesota.

Murphy: Oh, sweet. Canada. Canada, Canada. We want them. We love them.

Hortman: No, we should respect their sovereignty.

Special session or sessions: No way. Or definitely?

Hortman: Unfortunately right now it looks like we might be headed that (way).

Demuth: No.

Johnson: Not because of us.

Murphy: No.

Give us a prediction on when the session will end? 

Hortman: The tie made us read about history so I just hope we’re not here in October.

Demuth: No special session. May 19th.

Murphy: May 19. We’re already underway.

Johnson: May 19. That’s already part of the negotiations.

Is anybody willing to put money on this?

Johnson: Oh, so you want to talk sports betting?

We’re gonna add just one more lightning round question. Sports betting: Is this the year? Yes or no? This is truly a yes or no question this year. Sports betting, yes or no? 

Johnson: Senator Miller says, yes. Senator Rasmussen says no. So we get that.

Murphy: I say, “Go Matt Klein!”

Hortman: I’d be surprised if it made it through the House.

Demuth: Not sure.

The post Legislative Leader Lightning Round: Tax cuts, nuclear moratorium, Canada appeared first on MinnPost.