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MEMO <br />TO: Chris Volkers and Steve Larson <br />FROM: Andrew G. Pomroy <br />DATE: May 21, 2019 <br />SUBJECT: End of Regular Session F-M Diversion, legislative update 5-21-19 <br /> <br /> The Minnesota legislature adjourned its 2019 Regular Session last night with much of the work on the two-year budget left to be finished. While legislative leaders and Governor Walz agreed to a budget framework, including budget targets for each area and some specific items that needed <br />to be included in the various budget bills, they ran out of time to negotiate the details before the <br />constitutionally required adjournment at midnight. In the end, just the budget for Higher Education passed both House and Senate floors before adjournment. The Senate passed the Agriculture, Housing, and Broadband bill, but the House ran out of time on that one. No other subject area had a bicameral agreement as of last night and no new significant progress has taken <br />place as of the writing of this report. The goal was to have the details wrapped up this week and <br />for the Governor to call a one or two day special session to pass the remaining parts of the budget, but there is lingering doubt as to whether or not that will be possible. The budget deal, should it be finalized and passed by the legislature could lead to some positive <br />outcomes for the Fargo-Moorhead Diversion project, namely in capital investments. The <br />agreement signed by Governor Walz, Speaker Hortman, and Majority Leader Gazelka calls for a $440 million bill. As you may recall, the rolling average on an odd-year bonding bill in Minnesota is more like $250 million, while Governor Walz had initially proposed an over $1 billion bill and the House topped that at roughly $1.5 billion (including $10 million in <br />unearmarked flood hazard mitigation funding and $1.3 million for the Redpath impoundment <br />project in the Bois de Sioux Watershed). The Senate capital investment committee never met this session, despite leadership in that chamber calling for a bill in the scale of that rolling average. While this agreement should be seen as a positive and necessary step to get an appropriation for the DNR’s flood hazard mitigation program, the Minority Leaders in the House and Senate have <br />yet to confirm their support for a bonding bill, or one of that size. Senate Minority Leader Tom <br />Bakk and several of his DFL colleagues we have discussed the bill with are known to be seeking a larger bill, while Minority Leader Kurt Daudt said that Republicans in the House will be unwilling to support the budget deal due to an unrelated health care tax item. That opposition jeopardizes the deal, at least for a bonding bill, as that bill is required to pass with 60% support <br />in each chamber, meaning minority and majority votes are necessary. <br /> Also relevant to the Diversion project is the Environment budget. The Governor and House each proposed a $32 million increase. The Senate, meanwhile, proposed a $57 million reduction in general fund spending offset somewhat by using other dedicated funds such as lottery revenue <br />and Legacy sales tax revenue to offset some of those general fund cuts. In the end, leaders agreed <br />to a $14 million increase. While possible, it is unlikely that committee chairs will opt to use any