No gas tax hike, provider tax stays under Minn. budget deal

Gov. Tim Walz and Minnesota legislative leaders struck a deal Sunday night over the state budget that includes no gas tax hike but continues the state’s tax on medical providers.

The agreement comes after nearly two weeks of negotiations, the last six days of which were conducted entirely in private between Walz, House Speaker Melissa Hortman and Senate Majority Leader Paul Gazelka. Questions remain about how legislative leaders will pass the deal: a special session is required, because the end of the legislative session looms Monday.

The proposal strips the 20-cent per gallon gas tax increase that Walz and House Democrats had sought. It maintains a 1.8 percent tax on medical providers, instead of an expiration of the tax as Republicans preferred. And it includes a 2 percent per-student increase for schools.

“We did something here that in 2019 is a big deal,” Walz told reporters during a news conference. “Divided government with vastly different visions and vastly different budgets that came together in a manner that was respectful.”

Walz and House Democrats have been at odds with Senate Republicans since the session started in January. They entered a so-called “cone of silence” since Tuesday, holding budget negotiations in private without telling the public – or rank-and-file lawmakers – what they were discussing.

The two-year budget agreement will cost more than $48 billion, Gazelka said.

Top lawmakers said they planned to get the budget bills through committees Monday, when the state Constitution requires the session to end. Then, Walz would call lawmakers back for a one-day special session Thursday.

I think you’ll see a breakneck pace of work being done, and as much of it in the open conference committees as possible,” Hortman said.

But it’s far from a done deal.

A short special session requires votes from some minority members of the Legislature, and House Republicans plan to oppose it over their opposition to the continuance of the medical provider tax.

“I will be very nice to say, this is not a good product for Minnesotans,” House Republican Leader Kurt Daudt said after the budget deal was announced.

Earlier Sunday, a 90-minute negotiating session in the governor’s office ended with Gazelka and Hortman each leaving through back doors, avoiding reporters gathered outside.

In an unprecedented move, the Senate sergeant-at-arms had a Capitol police officer remove four reporters, including FOX 9’s Theo Keith, from a hallway near Gazelka’s office.

The sergeant-at-arms, Sven Lundquist, threatened to cut off the press badges of members of the Capitol press corps.

Lundquist told another reporter to “Get rid of Theo, and then we’ll talk.” Lundquist later said he was directed to remove all four reporters.

Gazelka later apologized.

“Sorry I kicked you out of the hallway there. It was all that trying to get done at the end,” he said.

The secretive talks between Walz and legislative leaders were much different than the transparent process that each promised earlier in the session. They also pledged to meet a self-imposed deadline to come up with a deal, but it came and went without an agreement.

During the past week, legislative leaders and Walz would make only two- and three-word comments to reporters in Capitol hallways, such as “we’re working.” Gazelka once said the talks were too “sensitive” to explain what was being negotiated.

“I agree that the process piece of this, there’s things we need to look at. The product, we’re really proud of,” Walz said Sunday evening.

At times over the past week, a deal appeared imminent. At other times, it seemed Walz and lawmakers were retreating to their separate corners.

On Saturday, Walz told teachers union members in the Capitol rotunda that Senate Republicans’ policies would make Minnesota like “Mississippi and Alabama,” urging union members to “roar” their disapproval.

That same day, Senate Republicans on a 35-31 party-line vote passed a bill to keep the lights on at state agencies if Minnesota government shuts down July 1 because of a budget stalemate. Democrats decried the move, saying Republicans were throwing in the towel on negotiations with Walz.