ST. PAUL, MN—Governor Tim Walz released his budget proposal for the FY20-21 biennium on Tuesday, highlighted by more than $3 billion in tax increases over the next two years alone, and $4.7 billion in tax increases for FY22-23. His proposal would raise Minnesota's gas tax by twenty cents—a massive 70 percent increase—vaulting Minnesota's gas tax to 4th highest in the nation. It also includes increases to tab fees, the motor vehicle sales tax, the Metro Area sales tax, business taxes, and reinstatement of the sick tax, which is set to expire at the end of the year and would add $1 billion to the cost of healthcare for Minnesotans over the next two years.
Following the announcement, Rep. John Heinrich (R-Anoka) issued the following statement.
“The tax hikes in the governor’s budget proposal would hurt Minnesota families and businesses and are completely unnecessary,” said. Rep. Heinrich. “When our state has a $1.5 billion surplus, there is no need to consider raising taxes by over $3 billion. These tax increases will take more money out of Minnesotans’ pockets and will result in higher gas prices. Minnesotans are already paying enough in taxes, especially at the pump. The governor’s budget would raise the gas tax by over 70 percent and would give Minnesota the 4th highest gas tax rate in the country. We must fund our transportation priorities, but we’ve done so without increasing the gas tax in the past, and with such a healthy surplus we can certainly do it again this year.”
In FY20-21, the Governor's budget raises general fund tax revenue by $1.224 billion. The extension of the sick tax adds an additional $947 million, with transportation-related taxes adding $907 million for a total tax increase of $3.078 billion. In FY22-23, the tax increases balloon dramatically; the governor increases general fund tax revenue by $1.43 billion, with another $1.52 billion for the sick tax and $1.73 billion in transportation taxes.
Governor Walz's plan also fails to extend reinsurance, which could cause rates to skyrocket once again by 50% or more on the individual market.
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