Workforce committee advances budget bill with program cuts, shift to competitive grants

Charged with finding a $50 million reduction in its General Fund allocation for economic and labor programs, the House Workforce, Labor, and Economic Development Finance and Policy Committee approved its omnibus budget bill, as amended, Tuesday morning.

HF2441 is sponsored by Rep. Dave Pinto (DFL-St. Paul), a committee co-chair.

The House Ways and Means Committee incorporated the language into SF1832 with a delete-all amendment and sent it to the floor Tuesday afternoon.

Despite financial constraints imposed by a House budget resolution, the proposal reflects a commitment to youth, said Committee Co-chair Rep. Dave Baker (R-Willmar).

The bill would provide $161.02 million to the Department of Employment and Economic Development, which is a net decrease of $52.75 million from the February forecast base.

It would also provide $25.89 million to the Department of Labor and Industry. Much of the $3.9 million increase over base would be for teacher apprenticeship grants.

Moreover, the budget bill would also limit direct appropriations in favor of competitive grant programs. Pinto said this decision in no way indicates a lack of faith in nonprofits that have received grants in the past, but more a lack of faith in the legislative budget process.

[MORE: View the DEED spreadsheet, labor spreadsheet]

What’s in the bill

The bill would eliminate the Minnesota Investment Fund and the Job Creation Fund for a savings of $40.74 million over the 2026-27 biennium. It would also eliminate the Explore Minnesota Film Office for savings of $1.65 million.

Other cuts would include:

• $8.4 million from the Job Skills Partnership Program;
• $2.5 million from the Greater Minnesota Infrastructure Fund;
• $2 million from Redevelopment Grant Program; and
• $1.5 million from contaminated site cleanup fund — about one-fourth its $6.4 million budget.

The bill would add $5 million to Vocational Rehabilitation Services, which provides services and extended employment opportunities to people with severe disabilities or mental illnesses. However, this would be insufficient funding for the division and layoffs are likely, said Sydney Spreck, political affairs coordinator for the Minnesota Association of Professional Employees.  

The bill would appropriate $26.62 million per year for employment and training services. Of this, $15.25 million would come from the Workforce Development Fund and the rest from the General Fund. Among the appropriations would be:

• $10 million for the Pathways to Prosperity competitive grant program. Past recipients have included Summit Academy in Minneapolis, White Earth Tribal and Community College in Mahnomen and Faribault Public Schools; 
• $4.8 million to the youth-at-work competitive grant program;
• $1.28 million for transformative career pathways workforce grants; and
• $450,000 per year to the Minnesota STEM Ecosystem to “ensure strategic alignment of STEM initiatives across? the state.”

Policy proposals

Among the policy provisions in the bill is one that would allow noncompete clauses for people working in research and development who have a salary greater than $200,000 and all those making $500,000 or more. Minnesota banned noncompete clauses in 2023.

An amendment offered by Rep. Emma Greenman (DFL-Mpls) to delete that provision failed on a party-line vote.

Other provisions in the bill would:

• fund an online professional childhood educator program;
• remove a requirement that two trained broadband installers be on site during directional digging and delay a metro-area deadline from July 1, 2025, to Jan. 1, 2026; and
• require and fund a misclassification fraud report.

Concerns expressed

Multiple testifiers said legislators are being short-sighted and cutting programs that expand the economy and tax base.

DEED Deputy Commissioner Evan Rowe cautioned against heavy-handed cuts to highly successful programs that create jobs and leverage private investment.

Explore Minnesota Executive Director Lauren Bennett McGinty said film and television production contributes millions of dollars directly to the state’s economy with work for actors, directors, writers and film technicians. The industry’s indirect impact is even greater, with a marketing reach exponentially greater than the tourism office could provide on its own.

Labor and Industry Commissioner Nicole Blissenbach was among several who requested the state increase its construction code and licensing inspection fees, which have not gone up in nearly 20 years. No changes would likely mean staff reductions and delays for construction projects, perhaps by 15 weeks in the case of plumbing, she said.

Additionally, many advocated for direct appropriations, saying they provide agility, equitability, flexibility and responsiveness that can be absent from department grants.

[MORE: Read plenty of public response]

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The following are selected bills incorporated in part or in full in the omnibus workforce budget and policy bill:

• HF263 (Igo)
• HF1152 (P. Johnson)
• HF1272 (Agbaje)
• HF1671 (Pinto)
• HF1768 (Niska)
• HF1847 (Bakeberg)
• HF2146 (Greenman)
• HF2251 (Baker)
• HF2440 (Pinto)
• HF2441 (Pinto)
• HF2565 (K. Lee)
• HF2582 (K. Lee)
• HF2872 (Zeleznikar)
• HF3079 (Gomez)