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Serving Northern St. Louis County, Minnesota

Walz proposes $65.2 billion biennial state budget

David Colburn
Posted 2/2/23

REGIONAL- Gov. Tim Walz laid out his One Minnesota budget proposal for the new biennium last week, a record-high of $65.2 billion that would spend most of the state’s estimated $17.6 billion …

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Walz proposes $65.2 billion biennial state budget

Posted

REGIONAL- Gov. Tim Walz laid out his One Minnesota budget proposal for the new biennium last week, a record-high of $65.2 billion that would spend most of the state’s estimated $17.6 billion surplus and provide about $8 billion in tax cuts.
Portions of the budget were released across the week prior to Walz’s announcement on Jan. 24, but this was the first time Walz presented the entire package.
“Over the last week, we laid out our plan to make Minnesota the best state in the nation for children, invest in our economic future, combat climate change, and improve public safety across the state,” Walz said. “Today, we lay out the full picture of how this budget will lower costs, cut taxes, and improve lives for Minnesotans,” Walz said. “For a middle-class family of four, the One Minnesota Budget could put $10,000 back in their pocket. We are delivering a transformational budget for Minnesotans, and I look forward to getting this done.”
The proposed budget is about 25 percent larger than the state’s current budget, with much of it reflecting one-time spending linked to the budget surplus.
Refunds and taxes
The budget revives the “Walz checks” proposed last year by the governor, with some revisions.
Families with incomes below $150,000 would receive a $2,000 check, plus an extra $200 for up to three dependents, while single adults making less than $75,000 would qualify for $1,000 rebate checks. The income limits are stricter than those proposed last year and would cover about 2.5 million people. The plan would cost about $4 billion.
Walz targeted over $1 billion over four years for child care tax credits for families making less than $200,000. Additional tax credits provided for low-income families would result in tax cuts of $2.3 billion over two years.
Taxation of Social Security benefits has been a hot-button issue, with Republicans the loudest advocates for a complete repeal, but the Walz budget doesn’t go that far, reducing taxes on benefits for about 350,000 household while leaving in place the tax on wealthier recipients.
In holding with his longstanding support of a progressive tax system, Walz is proposing an increase in the capital gains tax, which is estimated to generate $660 million from Minnesotans who have enough money to make investments.
Priority areas
Numerous priorities focus on Walz’s stated intent to “to make Minnesota the best state in the nation for children” with this budget proposal.
Education would get an infusion of $2.8 billion, including a six percent increase in per-pupil funding. Districts would also receive additional funding to cover some of their costs in providing special education services and for those learning English.
Walz also proposed $389 million for universal coverage of school meals, which are now reimbursed according to income. Schools would receive additional money for mental health services and college readiness and workforce initiatives.
$1.5 billion has been earmarked for expanding access to affordable housing. An $860 million package for public safety would send $300 million to city, county, and tribal governments. There’s $134 million for increased probation and parole costs as well as funding for community outreach and crime prevention.
Startup costs for a proposed paid leave program that would provide up to 12 weeks of paid time off at a portion of a worker’s salary would cost about $688 million and would come from the surplus. Ongoing costs of the program would be covered by a seven-tenths percentage increase in payroll taxes. Walz believes this will make the state more competitive when it comes to attracting and retaining a high-quality workforce.
DNR funding
Walz has designated $287 million to the Department of Natural Resources to connect people to the outdoors, mitigate and adapt to climate change, manage natural resources proactively, and address operational need, including $3.1 million to modernize the online permit and reservation system.
The $118 million Get Out MORE initiative, to be funded equally through the general fund and capital investments, will revitalize camping and related infrastructure, modernize boat access, and improve visitor services at state parks and recreation areas. Climate change initiatives will include grasslands enhancement and protection and restoration of peatlands. Proactive management of resources includes $1.4 million for chronic wasting disease, $2.4 million for investments in fishing, and $1.7 million for protecting water resources.
Included in the capital budget proposal is a $14.4 million allocation for Lake Vermilion-Soudan Underground Mine State Park to construct a visitor center and design campground and trail additions.
Reactions
As expected, Walz’s proposal attracted support from DFL legislators and fostered dissent among Republicans.
“The Governor’s budget reflects the values of Minnesotans: we value great public schools, affordable health care, and an economy that works better for everyone. House DFLers share these goals and values,” House Speaker Melissa Hortman, DFL-Brooklyn Park, said. “I commend the Governor for proposing a bold budget with an inspirational vision for our future. I look forward to our continued partnership as we craft our budget.”
House Minority Leader Lisa Demuth, R-Cold Spring, criticized Walz’s use of the surplus.
“In a time there is a record surplus, $17.6 billion, Minnesotans are expecting to have that back,” she said. “Unfortunately, what we heard today is Minnesota is spending and it’s going to cost Minnesotans a little bit more to be here. That was a little bit surprising. If we can’t cut taxes now, when can we?”
Walz’s proposal is only the first step in the state’s budget-making process. After Minnesota Management and Budget releases its latest budget forecast next month, lawmakers will use those projections and Walz’s budget as starting points to create the state’s 2024-25 biennium budget.