ST. PAUL – Gov. Tim Walz released his budget proposal for the 2020-21 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 2022-23.
The governor’s proposal would raise Minnesota’s gas tax by 20 cents per gallon – a 70-percent increase – vaulting Minnesota’s gas tax to fourth-highest in the nation.
“I realize this is the governor’s first time through this budget process and he’s feeling his way through the dark, throwing some things at the wall to see what sticks,” said Rep. Ron Kresha, R-Little Falls. “The one big thing he’s going to have to reconcile in the next several weeks is that his idea of raising the gas tax by 20 cents per gallon is not plausible, creating a hole in his budget so big you could drive a truck through it – if you could afford the gas.
“But, if the governor truly wants to make our state’s gas tax one of the nation’s four most expensive, I’ll spend the next three weeks talking to people in our district, asking them if they are ready for a 70-percent gas tax increase. I’ll come back to St. Paul with their message and tell the governor what people in our area think about paying more at the pump, along with paying higher prices for any other goods and services impacted by transportation costs. It really does not make sense to even offer opinions on other parts of the governor’s budget plan until this unworkable part is reconciled.”
The governor’s plan 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, adding $1 billion to the cost of health care for Minnesotans over the next two years.
The governor’s plan also does not extend Minnesota’s reinsurance program, which could cause rates to skyrocket once again by 50 percent or more on the individual market. Instead of extending reinsurance, the governor has proposed a 20-percent premium subsidy only for those who do not receive federal tax credits under the Affordable Care Act.
In 2020-21, the governor’s budget raises general fund tax revenue by $1.2 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 $3.1 billion. In 2022-23, the tax increases balloon dramatically; the governor increases general fund tax revenue by $1.4 billion, with another $1.5 billion for the sick tax and $1.7 billion in transportation taxes.