ST. PAUL, Minn. (WCCO) — On the final day of the 2021 session, top legislative leaders and Gov. Tim Walz finally reached an agreement on a $52 billion state budget for the next two years, cementing an upcoming special session for lawmakers to finish up their work.

“You’ve seen this movie before and you know how it ended. The sequel is pretty similar to the original,” House Speaker Melissa Hortman, DFL-Brooklyn Park, said. “Here we are at the end of session and we’re going to be going into a little bit of overtime.”

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Hortman, Walz and Senate Majority Leader Paul Gazelka struck a deal late Sunday into early Monday morning on the top line numbers, known as budget targets.

The broad deal for the two-year spending plan includes no tax increases and tax relief for small businesses that received Paycheck Protection Program loans and Minnesotans who got extra unemployment benefits from the federal government last year. It also makes “historic” investments in E-12 education and provides funds for summer learning programs

Money from the American Rescue Plan Act passed by Congress this spring helped ink the deal, House Speaker Melissa Hortman said Monday. Minnesota state government alone is set to receive $2.8 billion from the federal pandemic relief package. Other money will flow to more targeted programs and local governments to plug their revenue gaps.

“The American Rescue plan made this agreement possible today, where we were able to do pretty much everything everybody wanted with some compromises,” she said.

But everyone acknowledged that their work is far from over, despite the legislature’s adjournment on Monday. This preliminary agreement is just the first step to passing what will be upwards of 14 large bills funding state government and its programs for the next two years.

Perhaps the biggest hurdle that faces the GOP-controlled Senate and DFL-controlled House is agreeing on key policies that also are on this list of unfinished business.

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“This is the [budget] targets, which is the key thing to actually getting done. If we don’t have these, we never even get to those policy differences,” said Gazelka. “There’s a number of things we’re trying to work through but I do think we’ll work through.”

Among the differences between chambers are policing changes, an off ramp for the eviction moratorium and what’s next for the governor’s emergency powers.

Police reform has emerged as the top issue for the House DFL and Gov. Tim Walz, as they try to channel community activists’ calls for more accountability into action following the conviction of Derek Chauvin and Daunte Wright’s killing during a traffic stop in Brooklyn Center.

Gazelka said Monday he believes they can reach a deal on more law enforcement measures, but acknowledged they are still far apart from the sweeping changes Democrats would like to see, calling it a “thorny” issue.

“Depending on who you’re talking to, we’re either way apart or close,” he said. “There are some things we think we can do — but some people want a lot more and some people want less.”

The budget also agreement gives the legislature input on spending most of the COVID stimulus money Minnesota is receiving — roughly $2.4 billion out of it — instead of broad authority by the governor to allocate that money. There is about $500 million for the governor to spend on his own.

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Leaders said they want the numbers crunched by May 28 and bill language by June 4 in an effort to get most of the work done before a mid-June formal special session.

Caroline Cummings