Daily Reformer: Walz To Propose Tax Increase, Help For Schools, Small Business, Working Class

By J. Patrick Coolican, the Minnesota Reformer

January 25, 2021

Gov. Tim Walz will release his budget blueprint this week, and Minnesota’s newsletter writers (we’re a growing community) got some talking points from an administration source that leans hard on helping small businesses, working families and schools and students while fulfilling the constitutional obligation to balance the budget. Buried at the end is a bit about asking wealthy Minnesotans and corporations to pay their fair share.

An administration source confirmed this morning Walz will propose a tax increase for some Minnesotans. They’ll also tap reserves and propose some spending reductions to balance the budget. They have an education announcement today to address the disastrous learning loss likely being suffered by our neediest students. (See Rilyn Eischens reporting on learning loss here.)

Until we get the February state economic forecast, we don’t know how much they need to fill the budget hole. You have to suspect the second spike of COVID-19 in the fall and early winter has cut tax revenue while costing extra. There’s also the expectation that the federal government will offer help to states and local governments. And Minnesota’s budget is also structured in such a way that there are pots of money buried around our yard. It’s quite remarkable. Cc: Sen. Tom Bakk.

Which is to say Walz’s budget proposal this week won’t necessarily look much like the budget that gets passed in May. (God willing it’s in May; we all have summer plans already.)

But remember it’s a political statement of principles as much as anything. Walz is going into his first reelection cycle, and this is the last time he gets to put out a budget and command the megaphone like this before Election Day 2022. I don’t think it’s much of a concern, but you need to make sure your base is enthused and ready to roll.

Likewise, the Republican Senate majority, led by potential candidate for governor Sen. Paul Gazelka, put out its own political document last week, a 5% cut across the board to all agencies and no tax increases. (As Ricardo Lopez reported last week.)

Which in reality would be devastating because there’s a lot of spending that’s mandatory, and a lot of increase you can’t control. So, for instance, health care costs go up. It’s like the sun rising. So you can’t cut the Department of Human Services by 5% unless you reduce the number of people who can get Medical Assistance (our state’s version of Medicaid). Or, cut a bunch of other DHS programs. Programs that for the most part help people who can’t help themselves, like the disabled or mentally ill.

And all the money is in education and health and human services. So if you preserve those, then you’re talking much deeper cuts in other places, like universities or state parks.

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