Divided Minnesota Legislature Intent on Working Down to the Wire

Lawmakers must find bipartisan agreement on $4 billion in tax cuts and $4 billion in supplemental spending by midnight Sunday

Judging by the absence of major bills sent to DFL Gov. Tim Walz this week, it’s hard to believe the politically divided Minnesota Legislature has an $8 billion spending agreement.

With about two days to finish their work, lawmakers had completed none of the big spending bills by Friday evening, when both the Senate and House adjourned for the day. Bipartisan committees were working through sticking points on everything from tax cuts to spending on public safety and health and human services.

Lawmakers announced the framework of a grand bargain Monday morning. They set midweek deadlines to finish the most complicated legislation, then blew past those deadlines.

Their only option now is round-the-clock sessions over the weekend to pass $4 billion in new spending and $4 billion in tax cuts before midnight Sunday. That money would come from the state’s record budget surplus and be spent over the next three years.

The session officially wraps Monday, but lawmakers cannot pass bills on the last day.

Publicly, both House Speaker Melissa Hortman, DFL-Brooklyn Park, and Senate Majority Leader Jeremy Miller, R-Winona, have tried to strike tones that are at once optimistic but resolute.

In separate statements to the media, each emphasized they remain committed to their grand bargain — but also to each party’s priorities, which often differ. Hortman on Friday said it’s essentially all or nothing; for example, even if there’s agreement on tax cuts, those won’t be passed if there’s no agreement on spending plans.

In one sense, there’s little risk if they can’t make it happen; the state currently is operating under a two-year, $52 billion budget approved last year, so there’s no risk of parts of the government shutting down if no additional legislation passes this year.

On the other hand, Walz and every seat in the Legislature will be on the ballot in November’s general election, and some lawmakers seeking re-election feel pressure to show voters they’ve accomplished something with what amounts to a state awash in excess tax revenues. The state has a projected budget surplus of $9.25 billion.

Here’s where the biggest bills stood Friday evening:

Taxes: Top lawmakers say agreement on $4 billion in tax reductions is close. It likely will focus on lowering the 5.35 percent tax rate for the lowest income bracket, with bigger credits for renters, seniors and low-income residents.

The tax bill has to originate in the House. Hortman on Friday said it’s leverage to get other things done and likely will be the last bill that chamber passes.

Health and human services: GOP lawmakers want to put most of the $1 billion in agreed upon spending towards raises for caregivers and long-term care workers. Industry advocates say dozens of nursing homes and care facilities will be forced to close without more state money.

Democrats also want to raise caregiver pay but hope to put some of the money into aid to help families pay for things like child care.

Education: Lawmakers are split over how much of the $1 billion in new spending should go towards reducing school districts’ special education costs versus other supports for students, such as mental health services. Senate Republicans also want to focus on improving student literacy.

Public safety: The House and Senate are struggling to agree on how to divide $450 million between preventing crime and fighting it. Republicans want to put most of the money into policing, while Democrats also want to fund community intervention efforts. Both sides agree more funding is needed for the state’s courts.

Infrastructure: There’s agreement to spend $1.5 billion on state infrastructure, but no specifics have been released. The deal on the so-called bonding bill would include $1.4 billion in borrowing and $150 million from the budget surplus. This is the one bill that could be approved even if everything else falls apart.

Other bills: Legislative leaders and Walz also want to spend about $1.3 billion on other supplemental budget items. Some less significant bills already have been agreed to by lawmakers, including $46 million in new spending on higher education, while others were still being debated.

Outside of spending bills, there are also policy updates making their way through both chambers, most notably changes to liquor laws to allow growlers and bottles to be sold by brewers and distillers.

Despite some smaller deals and a grand spending bargain, lawmakers will need a concerted push to get done by Sunday night. Walz has said he’s not interested in calling them back for an overtime session.

(Pioneer Press)


Related Technical Instruction and On-the Job Training Grants available

Dear apprenticeship sponsors and stakeholders,

As part of its ongoing Minnesota Registered Apprenticeship Expansion (MNRAE) efforts, Apprenticeship Minnesota at the Department of Labor and Industry announces the availability of $53,000 to support employers interested in forming a new registered apprenticeship program and support existing registered apprenticeship programs seeking to grow their current training programs.

The funding is to help off-set expenses for related technical training instruction, or on-the-job training that will successfully retain participants in registered apprenticeship programs. There are more than 11,500 apprentices actively training in great careers today.

As part of its ongoing Minnesota Registered Apprenticeship Expansion (MNRAE) efforts, Apprenticeship Minnesota at the Department of Labor and Industry announces the continued availability of funds to support employers interested in forming a new registered apprenticeship program, and support existing registered apprenticeship programs seeking to grow their current training programs. The funding is to help off-set expenses for on-the-job training or related technical training instruction that will successfully retain participants in registered apprenticeship programs.

Increase apprenticeship participation

Apprenticeship participation levels of Indigenous communities, people of color, people with disabilities, women, veterans and those who live in greater Minnesota continues to improve, but accounts for only a quarter of total active apprentices. We seek applications from Minnesota employers and registered apprenticeship sponsors that can inclusively serve these populations within their registered apprenticeship programs. Applicants may request up to $25,000, with priority given to groups who have not yet received funding from this U.S. Department of Labor grant.

Applications will be accepted on a continual basis through Aug. 31, 2022, or until all funds have been depleted. The grant period of performance will endure from the time of contract signing through Nov. 30, 2022, or until all obligations have been met, whichever comes first.

Information and apply



U.S. DOT Delays New Buy America Requirements for Construction Materials

The U.S. DOT has officially delayed expanded Buy America requirements to construction materials, but confusion remains as the Administration pushes to implement requirements without fully establishing the rules first.

On May 19, the U.S. Department of Transportation (U.S. DOT) announced a 180-day delay of the new Buy America requirements for construction materials included in the Bipartisan Infrastructure Law. The delay is effective May 14 through November 10.  During this time period, U.S. DOT expects states, industry, and other partners to begin developing procedures to document compliance.

However, it is AGC’s understanding that the requirement for manufactured products to be made in the United States (of which the cost of the components of the manufactured product are mined, produced or manufactured in the U.S. is greater than 55 percent of the total cost of the manufactured product) will move forward and could be waived on a case-by-case, or through a general applicability waiver basis.

For example, Buy America requirements did not previously apply to manufactured products under federal funding through the Federal Highway Administration (unless there was iron or steel within any manufactured product components which would then have to meet Buy America requirements for iron and steel).

How exactly this works and its impacts on other modes (e.g., Federal Transit Administration, Federal Aviation Administration and Federal Rail Administration) is something the association is still working to determine. What makes this even more confusing is that there is little clarity as to what the difference between a manufactured product and a construction material is under the new requirements. This is something, among many unclear items within these new requirements, the White House Office of Management and Budget is seeking information from the public on via RFI, on which AGC will provide comment.

AGC previously reported that U.S. DOT was considering this move and AGC of America voiced support of such move. When transportation contractors are still facing historic disruptions to the material supply chain, it is self-evident that more time and collaboration among industry partners is needed to meet these new requirements.

Here’s what to know:

  • On April 22, the White House Office of Management and Budget issued a memo directing all federal agencies to ensure that all “funds made available for a Federal financial assistance program for infrastructure” are covered by the new infrastructure law’s “Build America, Buy America” provisions by no later than May 14, 2022.
  • In order to comply with this requirement, U.S. DOT has announced a transitional waiver which gives the department up to 180 days after May 14 to develop enforcement and compliance guidance on the new provisions.
  • The Department states this waiver is “intended to… provide for strengthened enforcement over time” and “expect[s] states, industry, and other partners to begin the compliance process.”
  • This new measure will expand the domestic preference law to include materials such as non-ferrous metals, plastic and polymer-based products (including polyvinylchloride, composite building materials, and polymers used in fiber optic cables), glass (including optic glass), lumber, and more.
  • During negotiations of the infrastructure legislation, AGC of America secured exemptions for concrete, asphalt, and aggregates from the definition of “construction materials.”



Here’s How the SBA Will Approach Delinquent PPP Loans, EIDL Defaults

The Small Business Administration is ready to handle any potential wave of Paycheck Protection Program loan delinquencies or Covid-19 EIDL bankruptcies, its top administrator said.

SBA Administrator Isabel Guzman said in an exclusive interview with The Playbook that, while she did not know exactly how many PPP loans the agency will end up having to purchase from lenders if businesses don’t make payments, the agency was ready to handle them.

Some lenders have expressed concern as PPP forgiveness drags on that a sizable chunk will eventually end up delinquent.

“I have met businesses as I have traveled across the country that expect to keep it as a loan,” Guzman said, stressing that not every PPP loan will either be forgiven or be delinquent. Others will be held as a 1% loan that business owners will pay back.

Will PPP loans end up delinquent?

Guzman said she could not say how many loans the agency expects will end up as delinquent loans that lenders will seek to have SBA purchase as part of its statutory requirement to hold lenders harmless.

The SBA said earlier this year it had received 36,500 requests for guaranteed purchase of delinquent PPP loans so far — and that 97% of those requests have been processed so far.

“I am not certain yet what those numbers will look like and continue to support small businesses.” Guzman said.

How many PPP loans have been forgiven?

Overall, the SBA made about 11.4 million PPP loans over 2020 and 2021 and has received more than 10 million forgiveness applications — or roughly 88% of total loans — with a total payout of $725 billion, according to SBA data as of May 9. That number has not budged much over the last several weeks.

The same confidence holds true for the 3.9 million loans made by the SBA’s Covid-19 EIDL program, which the agency said ran out of funding on May 5. Guzman said recently in a Congressional hearing that the SBA was shifting toward servicing those EIDL loans instead of making them.

What happens if borrowers default on SBA loans?

A big wave of defaults on those loans from stressed small businesses could mean the SBA is left as a lien holder on thousands of small businesses. But Guzman said the agency has been handling direct loans for decades through its disaster loan program and that it was positioning itself to ensure it can handle any issues.

She said the agency had scaled up to meet the challenges of the PPP loan program and the Restaurant Revitalization Fund, and this was no different.

“We are going to see some defaults and businesses that aren’t around anymore,” Guzman said. “As we assess that, we are ready for that moment and feel prepared within our systems to be able to manage that flow.”

The Covid-19 EIDL program had officially been closed to new applications as of the end of 2021. But small businesses that had appealed previous denials or were working their way through the reconsideration process were still eligible for loans, as well as businesses that had previously received an EIDL but wanted to increase the amount.

The SBA had originally informed small businesses in the weeks leading up to the closure that they could request additional funds by May 6, but The Playbook confirmed in an exclusive interview that the program had run out of funding by May 5.

If the legislation passes both houses, the two chambers would either need to agree on compromise legislation or one chamber would have to pass the other’s bill in order to send it to President Biden for his signature. However, a number of obstacles remain before that legislation could become law.