Minnesota lawmakers are set to return to Saint Paul for the second year of the legislative biennium on February 12, 2024. The first year of the biennium saw a flurry of action on a wide range of issues. This was made possible because the Democrat Farm Labor (“DFL”) party controls all three chambers of state government for the first time in a decade. Having control and effectively utilizing that control to enact policy and spending changes are very different things, but even critics were impressed by the amount of legislation passed in 2023.
The new majority – usually referred to as the “trifecta” – utilized nearly all of the state’s record $17.5 billion surplus and passed policies that have long been on the party’s wish list. Some of those included codifying abortion rights in state law, enacting and funding a paid family and medical leave program, legalizing adult use of cannabis, enacting modest gun regulations, providing property tax relief, and much more.
With the two-year budget set the focus this year will be on assembling a bonding bill aimed at maintaining and improving the state’s publicly owned assets and infrastructure. Passage of a bonding bill is the typical focus of the second year of the biennium, and that looks to be the case in 2024 despite the fact that the Legislature did pass a bonding bill last session. That bill was intended to get the state back on track after failing to pass any infrastructure funding package during the previous two-year budget cycle.
In order for a project to be eligible for this form of state funding, it must be publicly owned, be of state or regional significance, and be a capital project. To fund these projects the state sells general obligation bonds on the bond market and pays the debt service over time, unlike the general fund which is funded via state taxes and fees. Both House and Senate Capital Investment Committees have been on extensive tours across each region of the state to see projects that have applied for state funding. These tours allow Capital Investment Committee members to get a first-hand look at projects and ask questions of stakeholders in a way that just can’t be done with the limited time in a committee hearing. In addition to the House and Senate tours, Governor Walz and administration officials have also been on the road examining the projects allowing local officials and stakeholders multiple opportunities to present their projects to state lawmakers.
As has been the case in recent funding cycles, there is no shortage of requests for capital projects from across the state. It will be up to the Capital Investment Committees in each body to sort through the mountain of requests and assemble a bill that can get the requisite 60% majority to pass, a process that will be highly anticipated and scrutinized by stakeholders and advocates across the state. Because of this supermajority needed to pass bonding bills off the House and Senate floors, the minority party has significant power to influence the bonding process in a way they are not able to do when it comes to budget or policy bills that require a simple majority vote. This dynamic was on full display last session when the DFL majority attempted to pass a bonding bill early in the legislative session. Republican members in the state Senate did not support the process or the timing of bringing that bill for a vote, and so did not provide any votes for the bill, which then failed on Senate floor. This kicked off a lengthy behind the scenes process to reassemble a bill that could win the necessary Republican votes to get to 60% – something that was finally accomplished on the final weekend before lawmakers adjourned. Given their limited power to influence changes on spending and policy bills, expect Republican lawmakers to focused on bonding priorities and to flex their legislative muscle where they are able.
And while the budget is already set, there may be work on assembling a supplemental budget if the state economic forecast continues to project a surplus. Since lawmakers gaveled out of session back in May, sales tax receipts have been coming in higher than projected. If this trend continues, lawmakers are likely to have a modest surplus. While this is certainly welcome news, even under the rosiest of economic outlooks lawmakers will not be dealing with a surplus anywhere near the record $17.5 billion they had to work with last session. Minnesota Management and Budget will provide an updated budget forecast in November and then another one in February. The second budget forecast will provide the final budget parameters for the session.
Even though lawmakers start the session a little later than usual, they still need to be done with their work by late May. This means the action will start right away with bills needing to get through committee stops in order to be in the mix for final passage. If the pace from 2023 is any indication, we’re in for another wild ride in 2024.
Samuel Richie is an attorney with Fryberger, Buchanan, Smith & Frederick, P.A., practicing primarily in the government relations and legislation areas and also administrative law.
