A shout-out to start today’s newsletter goes to Mrs. Kemper’s fifth-grade class at Paynesville Area Schools for graduating from the DARE program. Nice job and congratulations!
Gov. Walz issues budget proposal
At the Capitol this week, Gov. Tim Walz issued his state budget proposal for the two-year cycle starting this July 1. It includes a $1.7 billion tax increase, including a 10% income tax hike and a 15% hike to Minnesota's business tax. This would make Minnesota’s rates the nation’s second highest on business taxes and the third highest for income taxes.
It is concerning to see the governor wants to significantly raise taxes on Minnesota workers who already are facing great economic uncertainty. Especially since, at the same time, the governor proposes just .3% in state spending reductions ($150 million) in a budget of more than $52 billion.
This is a time when our state should be providing relief and security as we work toward safely re-opening our state and revitalizing our post-pandemic economy. This proposal goes the other direction and also lacks any ideas for how our state can achieve meaningful savings and share the burden taxpayers are carrying.
The governor has been pitching his proposal with catch phrases such as make the “rich pay their fair share” but, in reality, these taxes go far beyond our top earners. Out of the Governor’s $1.7 billion in tax increases, $941 million are regressive taxes that will impact Minnesotans of every income level. Minnesota Management & Budget estimates (based on previous similar proposals) show that corporate, sales, and tobacco tax increases disproportionately impact low-income Minnesotans harder than wealthy taxpayers.
One interesting side note from the governor’s press conference to unveil his budget plan this week: He said the state’s tax code can be used to model behavior, a reason to justify raising taxes on tobacco: If you raise taxes on cigarettes, more people quit smoking. So what happens when we apply the same logic to business taxes? If you raise taxes on people who create jobs, more people quit creating jobs. Just something to think about.
The silver lining in this is the governor’s budget proposal simply marks the very beginning of our budget process. The February economic forecast will provide an updated, official set of figures to guide the House and Senate in drafting their own separate proposals. Then, over the course of the next few months, we will work to find areas of agreement, bridge gaps toward compromise elsewhere and assemble a finished product worthy of bipartisan support before the Legislature adjourns in late May.
I look forward to the House beginning budget talks in earnest and will continue focusing on ways we can help families and businesses grow instead of raising their taxes.
On a separate topic, there have been more twists and turns this week in our state’s COVID-19 vaccine rollout. I mentioned in last week’s update that high demand from people looking to book appointments at pilot sites (including the one in St. Cloud) caused system failures.
The Minnesota Department of Health has implemented a lottery process in an attempt to smooth out those problems. The headaches caused by a first-come, first-served system should be eliminated because there is no rush to get to the front of the line and everyone has a chance to be randomly selected. A 226,000-person waiting list was created during Tuesday’s registration window and MDH indicates it will use that information to connect seniors with vaccine sites near them.
Please visit the Find My Vaccine link for the latest details.
Have a good weekend and, as always, let me know how I may help.