Special session looms as deals on police, taxes elude Minnesota lawmakers

Top Minnesota lawmakers acknowledged for the first time Wednesday that they will need a special session to finish the state budget.

Deals have been elusive on several key issues, including police restrictions, taxes, Gov. Tim Walz's emergency powers, and how to spend $2.8 billion in federal COVID-19 aid. Lawmakers must adjourn by May 17 with or without a budget in place.

"It will be very difficult to finish on time given the logistics involved in putting the bills together," House Speaker Melissa Hortman, DFL-Brooklyn Park, told reporters.

Lawmakers are likely to be called back for a special session on June 14 because of Walz's COVID emergency declaration and could pass a budget then if there's an agreement in place. If the Legislature doesn't pass a spending deal by June 30, state government shuts down.

Wednesday, the two parties aired their differences over key issues in separate news conferences.

Walz joined faith leaders and lawmakers of color to press for additional restrictions on police in the wake of Derek Chauvin's murder conviction and the police killing of Daunte Wright. Democrats have proposed a dozen changes, including restrictions on no-knock warrants, traffic stops and crowd control tactics.

"We stand here at this moment because we need change," Rev. Alfred Babington-Johnson said. "The Legislature is in a position to take meaningful action."

Walz asked why Minnesota lawmakers would not want to "seize the moment" to impose police changings following the recent killings.

The issue has gone nowhere. Senate Republicans have not committed to passing any of the DFL-backed legislation and did not convene the public safety conference committee Wednesday when they had control over the calendar.

"We think some of the police measures they want to do are anti-police, that they aren't good for keeping our streets safe and keeping enough police officers out there," Senate Majority Leader Paul Gazelka, R-East Gull Lake, told reporters.

Lawmakers are also about to blow through the May 17 tax filing deadline, leaving hundreds of thousands of filers in limbo.

Minnesota is one of a handful of states that is taxing business Paycheck Protection Program loans and 2020 unemployment benefits. Congress has forgiven both from federal tax liability, and Minnesota learned this week that it could use federal stimulus money to cover the cost of a state tax break.

House GOP Leader Kurt Daudt accused Democrats of misplaced priorities by waiting on tax breaks while planning a Thursday vote on marijuana legalization.

"A lot of Minnesotans...are going to be hurt unnecessarily, and what Democrats are doing at the state Capitol is rolling a doobie," Daudt, R-Crown, said at a news conference. "That's the reality."

When told about Daudt's comments, House Majority Leader Ryan Winkler quipped to reporters, "I've never rolled a doobie." Winkler is the lead author of the marijuana bill.

House Democrats downplayed the importance of Monday's deadline, saying that Minnesota could quickly issue refunds if lawmakers ultimately pass the tax breaks.

"As a practical matter, the Monday tax deadline is not the deadline it would seem to be," Hortman said.

Fully exempting PPP loans would cost about $440 million. House Democrats and Walz have proposed a tax break on just the first $350,000 of loans, while Senate Republicans favor a full exemption.

Forgiving the first $10,200 of 2020 unemployment benefits would cost about $160 million. Democrats and House Republicans support doing so, while Senate Republicans have approved an exemption only for the first 18 percent.

Walz said he and lawmakers had "momentum" toward a deal but acknowledged the sides remain far apart philosophically. Gazelka, the Legislature's top Republican, hedged when asked about Monday's deadline.

"It's possible we get done on time," he said. "There's also some major roadblocks that we have to navigate through."

Senate DFL Leader Susan Kent was asked if she was making plans for June yet.

"I've been here long enough to never make plans for early June," said Kent, DFL-Woodbury. "I make the analogy, sleep when the baby sleeps."