♪♪ >> CATHY: HERE WITH MORE ON THE BUDGET AND THE LEGISLATIVE SESSION AHEAD, GOVERNOR TIM WALZ.

IT'S BEEN A WHILE.

GOOD TO SEE YOU.

>> YEAH, SLOW NEWS DAY.

>> Cathy: YEAH, NOT MUCH HAPPENING, I GUESS.

>> GOOD TO BE WITH YOU.

>> Cathy: LET'S TALK A LITTLE BIT ABOUT THE BREAKING NEWS HERE, ON A FRIDAY NIGHT.

SO THE JUSTICES OF THE MINNESOTA SUPREME COURT, ALL OF THEM DFL APPOINTED, RULED IN FAVOR OF THE GOP IN SAYING THAT YOU PREMATURELY CALLED A SPECIAL ELECTION IN THE ROSEVILLE AREA THERE, 40B.

WHAT DO YOU MAKE OF THAT RULING?

>> WELL, CERTAINLY WE RESPECT THE RULINGS OF THE COURT.

AND THEY'RE RIGHT ABOUT THIS.

IT WAS UNPRECEDENTED IN THIS CASE.

AND, SO, WE'RE FOLLOWING PAST PRECEDENCE ON THESE WRITS, S THEY WERE ISSUED.

AND THE INTERPRETATION BOTH IN-HOUSE COUNSEL, SECRETARY OF STATE, ATTORNEY GENERAL AND OUTSIDE COUNSEL INTERPRETED IT THAT WE WOULD ISSUE THE WRIT IN THE SAME WAY WE DID ON ALL THE OTHER OPENINGS, THE SUPREME COURT SAID THAT'S NOT THE CASE, BASICALLY SAYING THAT THAT SEAT IS NOT VACATED.

THAT THE REPRESENTATIVE WHO WAS ELECTED AND THEN RESIGNED CAN'T DO THAT.

AND, SO, WE'LL GO BACK, ANALYZE IT.

WE'LL GET IT -- ISSUE THE WRIT.

GET THAT LECTION DONE.

LET THEM GET TO WORK.

WE NEED TO MAKE SURE THAT WE -- IT'S GOING TO END UP 67-67, AND THAT'S WHERE WE GO FROM THERE.

>> Eric: AS YOU'VE SAID, YOU'RE NOT A LAWYER, BUT WHEN DOES THE LEGISLATIVE SESSION START?

IS IT UNDERWAY NOW?

THAT STARTS THE CLOCK TICKING.

>> THIS IS THE QUESTION.

IT SURE APPEARS LIKE THE SUPREME COURT RULED TODAY ON THAT, THERE IS NOT A QUORUM.

THAT'S WHAT THIS SAID, THAT THERE'S NOT A QUORUM TO DO T. SO I THINK THAT QUESTION IS SETTLED.

AND, SO, THEY'LL HAVE TO GET TO THE 68, WHICH YOU'RE GOING TO, AS YOU GET PAST WHERE WE'RE AT RIGHT NOW, BUT I DON'T THINK IT CHANGES, OU'LL TALK TO YOUR LEGISLATIVE LEADERS, I HAVE TRUST IN THOSE FOUR TO FIGURE IT OUT, YOU'RE GOING TO END UP WITH 67-67 IN THE HOUSE AND WE'RE GOING TO HAVE TO COLLABORATE TOGETHER, HAVE A POWER-SHARING AGREEMENT.

I'M SURE THEY'RE WORKING ON THAT RIGHT NOW.

>> Cathy: I'M A LITTLE CONFUSED.

WILL NEW ATE BE SET FOR THIS ELECTION YET?

>> YES.

>> Cathy: HAVE YOU SET ONE YET?

>> NO.

THIS JUST CAME IN THIS AFTERNOON.

WE'LL FOLLOW THE WAY THE LAW IS WRITTEN ON THAT.

THE 30 DAYS PAST THE FIVE DAYS.

I THINK PROBABLY THE 5th OF MARCH.

>> Cathy: OKAY.

SAY, LET ME ASK YOU A LITTLE BIT HERE ABOUT THE BUDGET.

AND MARY MENTIONED THIS IN HER PIECE, IT KIND OF LOOKS ALMOST LIKE A GOP AGENDA, REINING IN FRAUD, CUTTING SALES TAXES.

DOES YOUR BUDGET REFLECT A CHANGING POLITICAL REALITY HERE IN MINNESOTA?

>> WELL, I HOPE THAT THE REPUBLICAN REPRESENTATIVES HERE TONIGHT AGREE WITH YOU ON THAT.

I THINK IT REFLECTS A REALITY THAT YOU'RE ALWAYS -- ALWAYS THE ENVIRONMENT CHANGES.

WE'RE IN A SOLID BLAISE.

WE'RE IN THE BLACK.

WE HAVE A $2 BILLION SURPLUS ON THE BOTTOM LINE.

THIS BUDGET LOOKS TOWARDS THE HORIZON, THERE'S COST RIVERS IN HERE EATING UP A BIGGER PART OF THE BUDGET.

IT DOESN'T COMPROMISE WHAT MINNESOTANS ARE ABLE TO DO, THE SERVICE THAT IS WE DELIVER.

BUT IT DOES IT IN A WAY THAT IS FISCALLY RESPONSIBLE.

SO BY THE TIME HE '28-'29 BUDGET YEAR IS OVER, THERE WILL BE HALF OF THAT STRUCTURAL IMBALANCE WILL BE REDUCED, AND THERE WILL STILL BE $300 MILLION ON THE BOTTOM LINE.

AND I THINK THAT'S WHAT PEOPLE ARE ASKING US TO DO.

WE STILL ARE GOING TO PROTECT THOSE PROGRAMS THAT MAKE A DIFFERENCE FOR PEOPLE FROM JOB TRAINING TO & D TAX SENIOR CITIZENS AND WE'RE MAKING OUR TAX SYSTEM FAIRER, REDUCING THE SALES TAX BUT BROADENING WHAT'S ON THERE.

>> Eric: $600 MILLION TAX INCREASE.

I GUESS YOU FIGURE IT'S FOR UPPER-INCOME FOLKS WHO USE LAWYER OR A BROKER.

>> IT'S BROADER.

AMERICANS, BUYING, HOW THEY SPEND THEIR MONEY HAS CHANGED, AND WE DEPEND ON THE STABILITY OF THE SALES TAX TO BE A PART OF THAT IN THE -- AND THE STATE ECONOMIST, Dr. BERKE TOLD US IN NOVEMBER, THAT NUMBER HAS CROSSED NOW, AND PEOPLE ARE SPENDING MORE ON SERVICES THAN THEY ARE ON GOODS.

AND, SO, WE'RE MAKING THE CASE, WHY SHOULD THE SERVICE OF TRIMMING YOUR TREES OR YOUR FUNERAL ESCORTS BE TAXED AND WHY SHOULDN'T GOING TO YOUR BROKER OR YOUR LAWYER BE A PART OF THAT?

AND, SO, WHAT YOU'RE DOING, YOU'RE SPREADING IT UT AMONGST MORE PEOPLE.

THE VAST MAJORITY OF MINNESOTANS WILL PAY LESS BECAUSE THEY'RE NOT USING MOST OF THOSE SERVICES, IT JUST MAKES IT FAIR.

>> Eric: DO YOU BELIEVE YOU KIND OF CAME LATE TO THE DANCE ON THE ANTI-FRAUD STUFF?

I MEAN, IT WAS FRAUD DE JURE FOR MANY MONTHS, THE ADMINISTRATION WAS PRETTY QUIET.

I WONDER IF ENOUGH WAS DONE EARLY ENOUGH.

>> I REJECT THAT.

THEY WERE THERE IN THE BEGINNING OF TURNING THINGS OVER TO THE FBI, THE THINGS WENT ON.

ONE OF THE BIGGEST THINGS I'M ASKING, I DO THINK -- >> Cathy: WERE YOU PRETTY SURPRISED ABOUT THE AUTISM CENTERS, THAT WHOLE -- >> CANDIDLY, NO, THOSE WERE BEING INVESTIGATED AND TURNED OVER, TOO, THAT WE SEE THEM.

I THINK YOU SAW IT, WHETHER IT'S IN THE PRIVATE SECTOR, 1, WHAT, 20 BILLION DOLLARS IN SHOPLIFTING OVER THE YEARS.

YOU'RE ALWAYS GOING TO SEE CRIME IN THIS.

THE ONE THING, THE STATE FOLKS HAVE BEEN ON IT.

WE HAVE TO HAVE THE TOOLS NECESSARY.

WHAT I'M FRUSTRATED ABOUT IS, IF WE KNOW THERE'S AN ORGANIZATION THAT DID SOMETHING WITH THE MEALS, DEPADEPARTMENT OF EDUCATION, WHE ARE THEY ALLOWED TO BE PAID BY THE DEPARTMENT OF HUMAN SERVICES, SHOULD THEY BE ON SOME LIST THAT SAYS THEY CAN'T BE THERE RIGHT NOW WE CAN'T DO THAT.

I'M AS FRUSTRATED AS ANYBODY, THIS IS THEFT, THEY'RE STEALING, THEY'RE THE CRIMINALS, THESE FOLKS ARE GOING TO JAIL, GOING TO PRISON.

I THINK WE NEED TO BE SKEPTICAL AGAINST THEM, BUT I THINK THE TOOLS ARE THERE.

I'M GOING TO ASK THE LEGISLATURE TO STIFFEN THESE PENALTIES ON THESE.

THIS IS NOT WHITE-COLLAR CRIME, THEY'RE STEALING FROM THE TAXPAYERS, BUT THEY'RE REALLY STEALING FROM KIDS.

>> Cathy: GETTING BACK TO THE BUDGET FOR JUST A MOMENT, PLEASE.

GOSH, THE ST STATE DEMOGRAPHER FOR DECADES HAS BEEN ALKING ABOUT MINNESOTA BEING A RAPIDLY AGING STATE.

AND OU'RE TALKING, THOUGH, ABOUT CURBING GROWTH IN SPENDING FOR SUBSIDIES THAT HELP OLDER AND DISABLED FOLKS STAY IN THEIR HOMES.

WHY IS IT A WISE MOVE?

>> WELL, FIRST OF ALL, PEOPLE SAID, WHY ARE YOU GOING TO THESE AREAS?

BECAUSE THOSE ARE THE BIGGEST AREAS OF EXPENDITURE.

NOBODY'S TALKING ABOUT CUTTING THOSE SERVICES.

WHEN YOU LOOK AT THIS, MINNESOTA, FAR AND AWAY, THE MEDIUM SPENDING ON DISABILITY, SENIOR DISABILITIES, $25,000, MINNESOTA S AT 53,000.

THE NEXT NEAREST STATE IS AT 40,000.

WE'RE NOT ASKING TO REDUCE SERVICES.

38 STATES PUT CAPS ON IT.

WE'RE NOT ASKING ABOUT PUTTING CAPS ON IT.

WE WILL STILL BY FAR THE MOST GENEROUS STATE.

WHAT I'M ASKING TO DO, WHY ARE THE PROGRAMS ON AUTOPILOT?

WHY ARE WE MAKING 6% INFLATIONARY COST WHEN INFLATION IS AT 6-- 2.7%.

I THINK IT'S A REPUBLICAN PHILOSOPHY ON THIS, COMPETITION WILL DRIVE SOME OF THE COSTS DOWN, WE'RE JUST ASKING, ARE THERE BETTER WAYS THAT WE CAN DELIVER THESE SERVICES?

>> Cathy: SO YOU WOULD SAY TO FOLKS WATCHING, WHO MIGHT BE OLDER, HAVE A DISABILITY, BE A LITTLE GET A SHOWER, SAFELY, ERRANDS -- >> MOST CERTAINLY.

>> Cathy: GET THEIR MEDS.

>> THERE'S NO STATE THAT WILL COME CLOSE TO US.

MINNESOTA WILL STILL BE THE NUMBER ONE STATE, THE OUTLIER, AND AS AARP SAYS, THE TOP STATE FOR AGING IN.

IF WE DON'T CONTROL THESE COSTS, THERE'S NO MONEY FOR ALL THE OTHER PROGRAMS THAT THEY DO.

BY 2029, THAT PROGRAM ALONE WILL BE 1/8 OF THE ENTIRE BUDGET.

78% OF THE DEFICIENCIES ARE BETWEEN THAT AND SOME OF THE TRANSPORTATION ON SPED COSTS.

>> Eric: THERE WERE LIKE -- SPECIAL ED COSTS.

>> Eric: THERE WERE 30 PROGRESSIVE BILLS THAT THE DEMOCRATS WANTED TO DO DURING THE TRIFECTA, I THINK YOU GOT ALL 30.

ARE YOU GOING TO BE ABLE TO SAVE THOSE?

>> A LOT OF THOSE ARE GROWING THE ECONOMY.

WHAT YOU'RE SEEING HERE, MAKING SURE THE PAID FAMILY MEDICAL LEAVE PROGRAM GETS KICKED OFF OR THE SCHOOL MEALS THAT IS WILDLY POPULAR OR SOME OF THE THINGS THAT WE'VE DONE TO EXPAND AND WE'RE SEEING GROWTH IN EXPORTS AT A RECORD PACE IN JOB TRAINING, SOME OF THOSE THINGS, WE WANT TO MAKE SURE WE'RE PROACTING THOSE -- PROTECTING THOSE PROGRAMS, WHEN WE'RE TALKING ABOUT THIS, NO ONE'S TALKING ABOUT CUTTING OR NOT, WE'RE STILL GOING TO BE ADDING MONEY TO THOSE PROGRAMS, WE'RE JUST CURBING GROWTH.

IN AN AGING POPULATION, WE NEED TO BE SMART ABOUT WHERE WE END UP.

>> Eric: HAVE YOU GIVEN A PHONE CALL TO THE PREMIER OF ONTARIO ABOUT THE TARIFF, CANADA IS OUR LARGEST TRADING PARTNER.

>> THEY ARE.

PREMIER FORD IS A FRIEND OF MINE, WE TOSSED A FOOTBALL AROUND WHEN WE WERE YOU WERE IN TORONTO.

I SAW SOMEBODY DAY, THEY DONNED A BASEBALL CAP, TRYING TO BE LIKE ME.

CANADA AND MEXICO ARE OUR BIGGEST TRADING PARTNERS.

UNIVERSAL TARIFFS, WHERE THEY'RE NOT TARGETED, ARE A REALLY BAD IDEA.

WE'RE TALKING ABOUT THAT.

THAT'S ONE OF THE REASONS I'M LOOKING AT THE SPLAIX TO MAKE SURE THAT THAT DOESN'T GET HIT.

LOOKING AT THE SALES TAX.

ANTAGONIZING OUR ALLIES OUR CLOSEST TRADING PARTNERS DOESN'T MAKE ANY SENSE.

THESE TRADE MISSIONS WE TAKE OUR FOLKS ON ARE REALLY PAYING OFF.

WE'LL BE IN AMSTERDAM EARLY THIS YEAR.

WE HAVE PHILLIPS THAT IS OPENING THE NEW FACILITY, FIRST TIME CREATING 150 JOBS, THOSE FOLKS ARE INVESTING HERE.

NO MATTER WHAT WE DO FEDERALLY, STATE OF MINNESOTA NEEDS THESE EXPORT MARKETS, BOTH MEDICAL TECHNOLOGY, AGRICULTURE, SOME OF THOSE THINGS.

WE NEED TO STILL SAY -- STAY ON THE WORLD MARKET.

>> Cathy: SAY, I'M WONDERING HERE, VIEWERS, I'M SURE, MINNESOTANS ARE LOOKING AT WHAT'S HAPPENING IN THE STATE LEGISLATURE AND THEY'RE SEEING CONFUSION, IT'S CONFOUNDING, IT'S CHAOTIC.

YOU TAUGHT CIVICS IN HIGH SCHOOL.

>> YEAH.

>> Cathy: RIGHT?

AND IT PLAYS INTO ALL OF THE DISGUST THAT PEOPLE HAVE OVER POLITICS.

WHAT DO YOU SAY TO FOLKS WHEN THEY WATCH WHAT'S HAPPENING?

>> EAH, THIS HAS BEEN THE NORM, I THINK, FOR THE PAST TEN YEARS.

WE'VE SEEN THIS CHAOS.

I THINK WE'VE SEEN IT IN D.C., WE WALK RIGHT UP TO DEBT CEILING VOTES AND THINGS LIKE THAT.

I THINK THE LEGISLATURE HERE, THERE'S A LOT OF PASSION IN IT.

I THINK IT CAN BE AND WE PROVED IT IN THE 2019 SESSION, THAT YOU CAN FIND BIPARTISAN DECISIONS.

MINNESOTA IS STILL UNIQUE IN THAT E'RE PROBABLY ONE OF THE LAST, WHAT, MAYBE FOUR OR FIVE TRULY PURPLE STATES, WHERE WE HAVE THAT CAPACITY TO BE ABLE TO GET THAT DONE.

BUT YOU'VE GOT TO FOLLOW THE RULES.

WE CAN'T HAVE PEOPLE DISREGARDING WHAT AN ELECTION SAYS.

YOU CAN'T SAY, NO, WE DON'T LIKE WHAT THE JUDGE SAID, WE DON'T LIKE THIS.

LOOK, I DON'T NECESSARILY WANT THE DECISION THAT WAS MADE TODAY.

BUT IT'S INCUMBENT UPON US TO SAY, WE RESPECT THE JUDGE'S DECISION, WE'LL HONOR IT, MOVE FORWARD IN THERE.

WE'RE NOT SEEING THAT IN EVERY CASE.

I THINK IT'S IMPORTANT FOR US TO TELL THE PUBLIC, IT'S NOT ABOUT YOUR TEAM WINNING AT ALL COSTS.

IT'S ABOUT FOLLOWING THE RULE OF LAW AND FINDING WAYS THAT WE CAN GET THE DECISIONS MADE.

>> Cathy: IN THE PAST OTHER GOVERNORS HAVE KIND OF BROKERED PEACE IN THE LEGISLATIVE BRANCH.

AND YOU HAVEN'T REALLY SAID ANYTHING TO THIS POINT.

WHY?

>> WELL, I THINK ONE OF THE THINGS, WE'RE SEEING THIS DISCUSSION PLAY OUT IN REALTIME.

I'VE BEEN VERY CLEAR ABOUT THIS, WHEN THERE'S A DISCUSSION THAT WE'RE NOT GOING TO SEAT THE DULY ELECTED REPRESENTATIVE, I SAY I ABSOLUTELY DISAGREE WITH THAT.

I'VE BEEN CLEAR ABOUT THIS, FIND THE POWER-SHARING AGREEMENT, NOT FOR THE EXECUTIVE BRANCH, TELL THEM HOW TO DO IT.

WE'RE GOING TO END UP 6-67 IN THE HOUSE.

WE HAVE TWO INCREDIBLY LEADERS IN THE DEMOCRAT AND REPUBLICAN LEADERSHIP THAT WILL FILLING OUT HOW TO DO THAT.

THE SENATE FIGURED OUT A WAY TO DO THAT.

I THINK IT'S INCUMBENT UPON ME TO RECOGNIZE AND MODEL, WE'RE GOING TO FOLLOW THE RULE OF LAW, WE'LL HELP GET THIS DONE, WE'LL WORK TOGETHER.

>> Eric: KEEP IN TOUCH.