Updated: March 18, 2021 06:39 PM
Created: March 18, 2021 03:50 PM
Governor Tim Walz released a revised version of his Minnesota budget proposal Thursday.
According to a release from the governor's office, the revised budget accounts for the updated economic forecast released in February that showed Minnesota swinging from a $1.3 billion deficit to a $1.6 billion surplus.
"Minnesotans have met the challenges of COVID-19 pandemic as they always do when faced with hardship—with grit and resiliency," Walz said. "But we know that our students, working families, and small businesses have borne the brunt of this pandemic. That is why, with the recent good news that Minnesota now projects a positive budget balance, we're recommending additional investments to support working families, ensure students catch up on learning, and help small businesses stay afloat while driving economic recovery. Our revised budget also maintains a full state savings account by restoring $491 million to the budget reserve, so we can be prepared for whatever lies ahead."
"Since the state now projects a budget surplus, we no longer need to use rainy day funds to balance the budget," Minnesota Management and Budget Commissioner Jim Schowalter said. "Our budget reserve gave us time to withstand dire projections created by the COVID-19 pandemic, gather information on real impacts, and respond without making unnecessary or drastic cuts. Maintaining a full budget reserve allows Minnesota to continue to govern in a fiscally responsible manner and be prepared for whatever surprises are still ahead."
Some of the largest changes in the budget revision include restoring the full budget reserve and increasing net investment by $310 million dollars. More information on the specifics of the budget can be found at the link here.
“We know that not every Minnesotan was equally affected by this pandemic. We’ve been intentional to center those Minnesotans who have been most impacted by the devastating losses of the pandemic,” said Lieutenant Governor Peggy Flanagan. “The additional tax relief in Minnesota’s Revised COVID-19 Recovery Budget helps children and families get by and delivers much-needed support those who deserve our help. We will not cut our way to prosperity. These investments ensure we don’t just get back to normal but get back to better for all Minnesotans.”
Senate Majority leader Paul Gazelka (R-East Gull Lake) responded to the budget proposal via video which can be found here. He says the Republican-controlled Senate will not agree to raise taxes. "Why raise taxes at all? We just don't need to do it," he told 5 Eyewitness News in an interview. "Now there's so much more money available why are we even thinking about raising taxes."
The governor's proposal includes a new 5th tier income tax bracket for the highest income Minnesotans that would raise $434 million along with an increase in the corporate franchise tax.
But DFL House Speaker Melissa Hortman says there is a need for more revenue.
"When you look at the projected surplus that we have the problem is many of it is one-time dollars," she said in an interview with 5 Eyewitness News. "So we cannot use that to finance ongoing commitments."
House Minority leader Kurt Daudt (R-Crown) opposes tax increases and any proposal to tax pandemic relief received by businesses. "Taking money from struggling businesses is indefensible when state government is flush with cash," he says.
Copyright 2021 - KSTP-TV, LLC A Hubbard Broadcasting Company