No gas tax deal as Walz, legislative leaders meet with deadline looming

Gov. Tim Walz and top legislative leaders met three separate times Monday in hopes of striking a deal on state spending, but a 20-cent per gallon gas tax increase has been a roadblock to any deal.

The urgency of negotiations was heightened because of a self-imposed Monday night deadline to agree on how much the state should spend over the next two years. Republican and Democratic negotiators said the meetings were cordial despite divided government, but had not produced any agreements.

Walz and House Democrats have proposed a 20-cent gas tax increase to fund road and bridge projects, while Senate Republicans don’t want any increase. GOP leaders left the first negotiating session declaring their line in the sand.

“The gas tax is not going to happen,” said Senate Majority Leader Paul Gazelka, R-Nisswa. “We’ve made it very clear that that’s not where we need to be.”

Minutes after Gazelka spoke to reporters, Walz emerged from the governor’s suite in the Capitol to respond.

“’No’ is not a plan,” Walz said. “No scenario that they put out keeps pace with what Minnesota needs to do to keep a high-quality, safe transportation system.”

Walz, Gazelka, and House Speaker Melissa Hortman agreed earlier in the session on Monday’s deadline to come up with spending targets. They could blow through it with no consequences, but face a constitutionally imposed May 20 deadline to finish the legislative session. All sides have said in recent days that they are optimistic to reach a final budget deal by then and avoid a special session.

“We’re all still very hopeful, and we’ll be working hard through the day,” Hortman told reporters upon leaving the day’s first negotiating session. They met twice again in the afternoon and were scheduled to come back in the evening.

Without a deal on the gas tax, other parts of the budget are a house of cards. Walz has proposed redirecting the state’s sales tax on auto parts – which Republicans themselves redirected toward transportation projects in 2017 – back to general fund priorities, like education. 

Seven cents of Walz’s 20-cent gas tax proposal would backfill the hole created by shifting the auto parts tax revenue.

Opioid negotiations

Beyond the budget negotiations, there’s no deal on other priority bills. That includes lawmakers’ plan to raise $20 million for treatment and prevention of opioid addiction.

The House, Senate and governor agree on the $20 million figure, but there’s disagreement on how to structure a fee on drug companies that would pay for it. The Senate has proposed dramatically cutting back the new fee if Minnesota gets a multimillion dollar settlement with one of the drug companies it is suing over the opioid crisis. The House wants to keep the fees in place, regardless of a settlement.

State Sen. Julie Rosen and state Rep. Liz Olson, the lead negotiators on the opioid conference committee, said Monday they had not reached an agreement over that sticking point or others.

Meanwhile, Attorney General Keith Ellison provided lawmakers with limited updates on the state’s lawsuits against the drug companies. 

Ellison said he was bound by a gag order not to discuss settlement negotiations, timing or amounts. But when Rosen asked if he was hopeful, Ellison responded, “absolutely.”