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Minnesota to get $200M more than expected in federal aid

MINNEAPOLIS — Minnesota’s state government will get about $200 million more than it was expecting under President Joe Biden’s coronavirus relief package, and Democratic Gov. Tim Walz expressed hope Monday that new guidelines over how states can spend the aid might help speed up the slow pace of negotiations over the state’s next budget.

The legislative session is due to adjourn next Monday, but the governor and leaders of the divided Legislature have yet to agree on target numbers for a dozen broad spending bills at the core of the state’s next two-year budget, which is expected to come in at around $50 million. Walz and the leaders of the Senate’s Republican and House’s Democratic majorities were still trading offers Monday after missing a self-imposed deadline of Friday for setting those targets.

Walz told reporters that at least they now know how Minnesota can and can’t spend its $2.8 billion in federal relief.

“The clarification from Treasury is huge,” he said. “That’s what we’ve been waiting on.”

But the governor gave no details of how the additional federal money might affect the negotiations. He spoke just two hours after the Treasury Department released the guidance. He said he and his team had not had the chance to study all of it. Although he said he’ll put some of the new federal money on the table, he expects Republicans to show some flexibility, too.

Republican leaders said the new federal guidance clears the way for Minnesota to exempt Paycheck Protection Program loans and extended unemployment insurance benefits from state taxes, which have been GOP priorities this session. Democrats have sought to cap the PPP exemption so that larger, profitable companies would pay taxes on forgiven loans.

Completing a budget when the sides have very different ideas is never easy, GOP Senate Majority Leader Paul Gazelka, of East Gull Lake, said on the Senate floor. But he added that he thinks they’re all “putting their best foot forward as we try to navigate through.”