The Walz Administration’s proposed $52.4 billion two-year budget focuses on education and small business recovery during the pandemic. To do that, it takes $1 billion from the rainy day fund, while raising taxes on corporations and the wealthiest Minnesotans.
After Governor Walz released his COVID-19 recovery budget, the Minnesota GOP responds.
Posted by WCCO Radio on Tuesday, January 26, 2021
$745 million is earmarked for new education funding as well as $150 million for businesses hurt by riots last summer in Minneapolis and St. Paul and $50 million in forgivable loans for small business. It adds $1.64 billion in new taxes, starting with the creation of a fifth-tier tax bracket for $1 million filing jointly and $500,000 single -- the top .7 percent of earners -- plus increases on capital gains, corporate franchise taxes to 11.25 percent, and vaping and cigarettes.
“This isn’t about trying to divide us,” Gov. Tim Walz said. “This is about a progressive taxation system that says much is required to much that’s given for some folks.”
In addition to the increased taxes and rainy day fund it pulls from carryover dollars from the current budget year, and dips into the stadium reserve fund.
“The Walz Administration is committed to managing the budget while investing to rebuild our economy and build a better future,” Office of Minnesota Management and Budget Commissioner Jim Schowalter said. “This is in contrast to cutting to the bone and refusing to ensure that the wealthy and profitable corporations pay their fair share.”
Within the $745 million for education, $300 million will go to increasing per pupil funding and $25 million will go to districts trying to recover from disenrollment. It increases K through 12 funding 1 percent in the first year and 2.5 percent in the second year to fund things like summer programs to help kids catch up from the pandemic.
$50 million is going to rural broadband development.
“We’re going to have to make sure that where those disparities were felt in schools, and what we did yesterday is unveiling a plan to go hand-in-hand in that, of making sure we give those opportunities for students to pull back up and stay at grade level and move forward while we transform and make sure every students learns in Minnesota.”
Republicans assert the best way forward is to lean on reserves and cuts to agency spending, not increasing taxes anywhere. Walz’s budget proposal includes $150 million dollars in cuts, but Republican House Minority Leader Kurt Daudt said it’s not enough.
“We don’t want to tax profits any more right now and make it more difficult for corporations, big and small -- and the small ones are the ones I care about -- we don’t need to make it more difficult for small companies to hire and really help us grow out of this economic recession,” Daudt said.
There was more strong reaction to the budget. The Minnesota Chamber of Commerce said in a statement the tax increases “will knock Minnesota out of competitive rankings and threaten our economic recovery.”
Minnesota Business Partnership Executive Director Charlie Weaver said the hikes would put the state at a “competitive disadvantage” and “threaten the state’s recovery.”
Walz will revise the budget based on the February forecast numbers. The last one in December predicted a $1.3 billion deficit. Then the legislature will debate before a new balanced budget required by state law must be approved by June 30.
“I’m optimistic,” Republican Senate Majority Leader Paul Gazelka said. “We did the police accountability bill, we did the bonding bill, we did the budget two years ago. These were big, complicated issues that we did get done. So I’m optimistic. I wish we weren’t so far apart on these things. I think if we focused on the things we mentioned -- getting kids back in school, getting businesses running, getting the vaccines out -- if we all focused on that and passed a balanced budget, we’ll be fine.”
