Agreement reached on $1.4 billion jobs, economic development spending package

Senate President Bobby Joe Champion (DFL-Mpls) had “exciting things to announce” Friday evening.

He was referring to $1.37 billion in state spending to rev up Minnesota’s economic engine, bolster workforce development, and enhance workplace safety across numerous industries.

That is what the conference committee for the jobs, economic development, labor, and industry finance bill settled on, along with scores of accompanying policy changes. Following the adoption of a delete-everything amendment, the committee approved its report on HF3028/SF3035*. It now heads back for approval from both chambers.

[MORE: Workforce and economic development spreadsheet, labor and industry spreadsheet]

The 274-page agreement covers much ground, but we’ll start with a planned $500 million investment to jumpstart Minnesota’s economic competitiveness: the Minnesota Forward Fund.

The final addition to the spending package, the fund would consolidate several proposed appropriations into one bucket in the hopes of facilitating substantial private investment, including:

• $250 million to match federal funds for microelectronic manufacturing;
• $100 million to match federal funds for bioindustrial manufacturing;
• $75 million for the state competitiveness fund;
• $50 million for businesses to match federal funds for nonspecific federal programs; and
• $25 million for the Climate Innovation Finance Authority.

Next up is a $693 million appropriation to the Department of Employment and Economic Development designed to rev up Minnesota’s economic engine, address the workforce shortage, and reduce economic disparities.  

Conferees had to decide between competing proposals for geographically targeted economic recovery – the empowering enterprise program and the PROMISE Act, hailing from the House and Senate, respectively.

They chose the PROMISE Act, which would give the department $125.3 million for making grants and loans to businesses and partner organizations “in communities that have been adversely affected by structural racial discrimination, civil unrest, lack of access to capital, loss of population or an aging population, or lack of regional economic diversification.” The House plan was laser focused on the Twin Cities and the damaging effects of the 2020 civil unrest.

The committee also set aside $5 million for northern Minnesota counties economically harmed by the closure of the Canadian border during the COVID-19 pandemic.

Five new programs are to be established for supporting small businesses and entrepreneurs:

• $12.9 million for the Small Business Assistance Partnerships Program;
• $10 million for the Minnesota Expanding Opportunity Fund Program;
• $5 million for Launch Minnesota, to spur innovation and grow technology start-ups; and
• $5 million for the emerging developer fund program; and
• $3 million for the community wealth building grant program.

An additional House initiative — the creation of small business navigators — did not make the cut.

Meanwhile, workforce development is due for a large infusion of cash:

• $50 million in targeted populations workforce grants for organizations that provide job skills training and businesses that hire and retain people of color;
• $20 million for the Drive for Five Initiative;
• $14.3 million in additional funding for the Pathways to Prosperity competitive grant program;
• $2 million to establish the Getting to Work grant program; and
• $1.5 million to establish the Office of New Americans for helping immigrants economically integrate into Minnesota.

Other divisions due to receive budget increases include:

• $91.4 million for Vocational Rehabilitation Services;
• $26.1 million for General Support Services; and
• $20.9 million for State Services for the Blind.

Conferees also plan to distribute $21 million for various child care initiatives, including the establishment of the Office of Child Care Community Partnerships, and send $5 million to Bloomington as the city prepares its bid to host the 2027 World’s Expo.

Left out in the cold, in regards to policy, was a provision for the department to recommend how to lessen or eliminate penalties for receiving unintentional unemployment overpayment.

Non-DEED appropriations

Supporters of Explore Minnesota Tourism will be happy to hear the agreement aims to more than double its budget to $62.3 million in the coming biennium. It’s mission and structure would also be greatly refined.

In contrast, a proposed House allotment of $7 million to the Department of Corrections to provide increased educational opportunities and expand the work release program for state prisoners is absent from the agreement.

Labor and industry

Labor appropriations found in the agreement total $108.6 million. There was substantial overlap between conferees regarding the distribution of this money at the outset of conference, with the competing funding priorities mainly differing in the low six-figures.

The major winner on the House side is the Bureau of Mediation Services, which is due to receive $7.5 million, of which $1.5 million would be directed to the Public Employment Relations Board. In contrast, Senate conferees secured over $1 million for a newly established Nursing Home Workforce Standards Board, $400,000 more than the House had suggested.

Both sides had to compromise downwards, too. The House sought over $1 million in grant monies for Building Strong Communities, Inc. and over $200,000 for warehouse worker safety. The agreement would send only $450,000 to the former (funding its Helmets to Hardhats Minnesota Initiative) and nothing to the latter. However, the policy language of HF36 is included.

The Senate wished to send over $700,000 to the Office of the Attorney General for enforcement of workplace regulations and $84,000 to the Department of Revenue “to implement and administer the change to the state income tax subtraction.” None of that will happen and the policy proposed along with the latter is also absent from the amended bill (though the provision is still alive and kicking in the tax bill).

Though both chambers approved of them before conference, nearly $550,000 for outreach and enforcement related to updates of the Women’s Economic Security Act and over $300,000 to beef up workplace protections for agricultural and food processing workers were slashed from the budget. The former is now slated to receive $268,000; the latter won’t receive anything.

On the flipside, the Workers’ Compensation Fund and the Workers’ Compensation Court of Appeals are both on track to collect significant funding this biennium – $30.9 million and $5.1 million, respectively.

Other notable appropriations for the Department of Labor and Industry would include:

• $4.1 million for wage theft prevention;
• $3.2 million for prevailing wage enforcement;
• $3 million in grants for clean economy jobs;
• $2 million for the ergonomics safety program;
• $2 million for the labor education advancement grant program to foster the employment of people of color, Indigenous people, and women in apprenticeable trades;
• $497,000 for a novel regulatory framework of combative sports; and
• $394,000 to carry out the Safe Workplaces for Meat and Poultry Processing Workers Act.

Earned sick and safe time

Passed as a stand-alone bill by the House earlier in session, the agreement contains language that would guarantee paid sick days for nearly all Minnesota workers. Paid sick time would be accrued at one hour for every 30 hours worked, maxing out at 48 hours per year, effective Jan. 1, 2024.

And $3.7 million would be appropriated to the department for enforcement and other duties, while $600,000 would be distributed to community organizations for outreach and education regarding workers’ rights under the legislation.

Beyond the money

The agreement also comprises numerous policy provisions originating from both the finance and policy bills. With much alignment between the two chambers, conferees only had to find common ground on a few key issues:

• attempting to tackle wage theft in the construction industry by holding general contractors civilly liable for malfeasance committed by their hired subcontractors;
• rendering nearly all non-compete covenants void and unenforceable; and
• updating breastfeeding and pregnant worker protections. This provision matches HF1104, except the new regulations would take effect July 1, 2023, and there would be no need for workers to log 90 days on the job before requesting unpaid leave.

Meanwhile, the Public Employment Labor Relations Act, which governs collective bargaining and unionization rights in the public sector, is due for a major makeover. Generating heated debate throughout session, the proposed modifications include:

• requiring the dissemination of employee personnel data to public sector unions for several purposes;
• allowing payroll deduction for union dues and political fund contributions;
• enabling workplace unionization without going through the process of a formal election if over 50% of employees provide authorization for representation;
• permitting Tier 1 teachers to join a union; and
• placing “adult-to-student ratios in classrooms, student testing, and student-to-personnel ratios” under the “terms and conditions of employment” to be negotiated during collective bargaining.

Consensus had previously been reached on several regulatory changes and other notable policy provision found in the final agreement:

• updating the Packinghouse Workers Bill of Rights;
• creating a Nursing Home Workforce Standards Board;
• strengthening health and safety regulations at meat and poultry processing workplaces with 100 or more employees;
• banning restrictive franchise agreements;
• prohibiting employers from compelling employee attendance at meetings that discuss religious matters, political issues, or arguments against unionization; and
• establishing clear building and permitting standards for the construction of tiny homes by houses of worship to shelter the unhoused.