Legislative leaders are deadlocked on the unemployment insurance issue, causing an automatic tax increase on employers statewide after lawmakers missed a March 15 deadline. Walz implored the joint session of the Legislature to find common ground in the last weeks of the session and provide relief for those workers and businesses.

“We have the resources to do it and we can move Minnesota forward in a bipartisan matter so I would ask, if we’re getting close to a compromise on this, let’s finish this deal and let’s finish it now,” Walz said. “We have an opportunity to get money back in people’s pockets. We can compromise on how we do that.”

Senate Republicans want to use $2.7 billion to refill the trust fund. But House Democrats have tied that to a $1 billion proposal to give $1,500 checks to frontline workers who braved the pandemic, up from $250 million agreed to by both sides last year that wasn’t doled out.

Democratic House Speaker Melissa Hortman told reporters after the address that negotiations between legislative leaders have been more productive in recent weeks and she remains optimistic they can reach a deal by April 30, which is when tax payments are due for employers.

The Democratic governor said the state is “strong and moving forward” after a challenging two years, thanking ICU nurses, long-term care staff, first responders and teachers, among other groups, for getting the state through the worst of the pandemic.

Walz also highlighted portions of his proposed supplemental budget plan, which includes direct payments of $500 to single filers and $1,000 to joint filers that he’s dubbed “Walz checks.” His proposal also includes a $2.7 billion infrastructure package, in addition to tax cuts for lower- and middle-class taxpayers, paid family and medical leave and increases in education and public safety spending.

Walz’s annual address was the last before he faces a stiff challenge from Republicans in the November election and his first in the House chamber since the pandemic started. In 2020, Walz taped a shortened version from the governor’s mansion in St. Paul, and he delivered last year’s address from a classroom at Mankato West High School, where he taught before he was elected to the U.S. House.

During the final stretch of the legislative session, which adjourns May 23, lawmakers will have to figure out how to use the state’s $9.25 billion budget surplus and more than $1 billion in federal pandemic funds. The divided chambers remain far apart on spending and policy items. The GOP-controlled Senate is pushing for permanent income tax cuts, while House Democrats are seeking targeted tax credits and increases in spending.

In a video earlier Sunday, Republican Senate Majority Leader Jeremy Miller, of Winona, reiterated the GOP’s priorities heading into the end of the session, which include public safety proposals to hire more police officers, “Parents Bill of Rights” education legislation and cuts to taxes on income and Social Security benefits.

GOP House Minority Leader Kurt Daudt, of Crown, said the governor’s proposal would give back a “miniscule” one-time payment back to taxpayers, urging permanent, ongoing tax relief.

“I would challenge the governor to be more ambitious because I think with the resources we have we can invest back in Minnesotans who grow our economy and we can then grow our state in a meaningful way,” he told reporters.