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Walz pushes to keep medical provider tax as budget talks begin

Minnesota Gov. Tim Walz on Thursday, May 2, 2019, held a news conference with hospital CEOs from around the state to advocate in support of retaining a 2% tax on medical providers. Dana Ferguson / Forum News Service1 / 3
Senate Majority Leader Paul Gazelka, R-Nisswa, spoke with reporters outside the Minnesota Senate on Thursday, May 2, 2019. He said Republicans would continue to oppose tax increases in state budget negotiations. Dana Ferguson / Forum News Service2 / 3
Minnesota House Speaker Melissa Hortman, DFL-Brooklyn Park, advocated in favor of retaining a 2% tax on medical providers as part of the state's two-year budget on Thursday, May 2, 2019. The tax is set to expire at the end of the year. Dana Ferguson / Forum News Service3 / 3

ST. PAUL -- Minnesota legislative leaders and Gov. Tim Walz prepared to enter initial budget talks Thursday, May 2, and the split in the nation's only divided Legislature was in clear view.

Hours before the conversation about how much the state should spend over the next two years, Walz renewed his pitch to continue a 2% tax on medical providers that funds health care for low-income people. That tax is slated to expire at year's end. And Republicans would like to see it sunset.

Flanked by hospital CEOs who supported the bid to keep the tax for which they foot the bill, the DFL governor said Senate Republicans should agree to keep the tax as they enter budget negotiations. And they should so quickly.

“We have two and a half weeks left in this session and we can’t go forward and begin negotiating with this big question mark. Is this funding stream going to continue or not?" Department of Human Services Commissioner Tony Lourey said. "It needs to continue, we need to understand that and we need to get over this hurdle and get on with making the negotiations be more productive.”

It's one of many disagreements that Walz, House Speaker Melissa Hortman, DFL-Brooklyn Park, and Senate Majority Leader Paul Gazelka, R-Nisswa, will have to navigate in the 18 days left in the legislative session.

If they can find common ground, the state will have a two-year plan to fund priorities like education, roads and safety net programs. If they can't, lawmakers could be asked to return to the Capitol for a special session or spur a state government shutdown.

Before them is a $2 billion split between Senate Republicans' and House Democrats' plans. Each would be an increase over current spending levels.

Democrats and Walz have pitched tax increases and the continuation of a medical provider tax that would help fund proposed boosts to schools, health care programs and community prosperity efforts. But Republicans argue Minnesotans face tough enough taxes already and shouldn't be asked to pay more.

“We’re simply saying, ‘Let’s pass the two-year budget with the resources we have,'" Gazelka said. "We have a billion dollars in surplus, and we can absolutely do it."

Gazelka in recent days has urged Democrats to moderate their expectations ahead of the budget talks if they want to find common ground. And he has said he won't agree to Democrats' proposal to hike the tax on gasoline to fund repairs to roads and bridges.

“I’m just asking that the governor and the Democrat-controlled House lower their expectations," Gazelka said. "They have huge ideas that cost a lot of money that a lot of people don’t want when they think about the price tag to them."

Hortman said GOP lawmakers also need to adjust their expectations as they come to the table to negotiate a deal.

"Senate Republicans have to be realistic that when Minnesotans pay college tuition or when they pay for child care or when they pay for car repair, that is money out of their pockets too," Hortman said. "So as state policymakers we can control how we impact middle-class families’ lives both by investments and by tax policy."

Conference committees were set to begin meeting Friday and through the weekend to iron out differences between House and Senate spending bills. And legislative leaders along with Walz said they were ready to get to bank long hours through Saturday and Sunday to reach spending targets before their self-imposed Monday deadline.

Republican members of at least one conference committee said they wouldn't attend a meeting Friday as they received late notice and had other events planned in their districts.