Friends,
Last week, Governor Tim Walz released his budget proposal for the 2020-2021 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 2022-2023. 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, adding $1 billion to the cost of health care for Minnesotans over the next two years.
The proposed 70 percent increase in the gas tax is regressive and will hurt low and middle-income families the most – not just when filling up their cars, but it will also cause the costs of goods and services to increase as well. It also impacts us who don't live in the "urban core" more severely because we need to use our vehicles to get to where we are going, whereas in the core there is much more in the way of subsidized transit so their car needs are less. This is an additional burden on low income and middle-class, and those of us which must drive, and is not what most Minnesotans need.
In 2020-2021, 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 2022-2023, 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 (to total 4.68 Billion). It's also important to remember when new spending is put in place it compounds every year so as we go into the 22/23 biennium and beyond it appears to me we could very well be in a "structural deficit," which means total spending exceeds total revenue.
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. Instead of extending reinsurance, the governor has proposed a 20% premium subsidy only for those who do not receive federal tax credits under the Affordable Care Act. The cost in calendar year 2020 of the 20% rebate is approximately $106 million, which would only impact about half the market. The 20 percent subsidy is twice as expensive than the state cost in calendar year 2020 of extending reinsurance, which would only cost approximately $54 million. The Governor's proposal would do nothing to prevent rates from skyrocketing again (like they did a few years ago), and would very likely mean that the administration is proposing to pay twice as much so Minnesotans can ultimately pay higher premiums on the individual market.
Please Stay in Touch
Please continue to stay in touch to share your thoughts and ideas on issues important to you. You can schedule a time to meet with me in my office anytime by calling (651) 296-7065 or share your thoughts via email by emailing me at rep.bob.vogel@house.mn.
Have a great week,
Bob