This week at the Capitol—Introduction of the governor’s budget
By Toby Pearson | January 27, 2023 | All members
The big news this week was the introduction of the governor’s budget. With a record $17.6 billion surplus, which is a mix of one-time and ongoing money, the governor had plenty of money to go around. Check out his budget documents
here. For the detailed look at spending in long-term care, you can check the related article by Todd Bergstrom, but for a couple of highlights:
On the positive side:
- Elderly Waiver increase listed, not sure if customized living included and the total amount of phase in
- Critical access nursing facilities about $2 million more in money
On the negative side:
- Nursing Home Workforce Standards Board (SEIU proposal from last year)
Following the release, many of the committees began holding hearings on the budget, where the administration will walk through the budget in a step-by-step fashion and answer lawmaker questions.
It is important to note, this is the beginning of the budget process. The next official action in the process will be the February forecast, which is forecast that the legislature uses to balance the budget. As one legislator said, “the governor proposes, and the legislature disposes. This is his proposal and now we start passing out budgets and demonstrating our priorities and they aren’t always the same as the governor.”
Other budget items of note
Gov. Tim Walz unveiled his full budget and tax proposal Tuesday, calling for direct payments to more than 2.5 million households and a tax reduction on Social Security benefits. The two-year budget proposal is a starting point for negotiations with lawmakers in the DFL-controlled House and Senate, where measures such as abortion, marijuana legalization, and establishing paid family and medical leave have already gained traction.
"Today, we lay out the full picture of how this budget will lower costs, cut taxes, and improve lives for Minnesotans,” Walz stated Tuesday. “With the largest tax cut in state history, the One Minnesota Budget invests directly in the people that made our state strong in the first place."
According to Walz, the complete budget package includes measures that could give as much as $10,000 back to a middle-class family-of-four. "We are delivering a transformational budget for Minnesotans, and I look forward to getting this done," he stated.
Tax cuts and direct payments
Under the proposed budget, $4 billion of the state's surplus would be sent back to Minnesotans in the form of direct checks. Around 2.5 million households would receive a check, according to the Walz administration. The direct payments would be structured as an advanced income tax credit equal to $2,000 for families with income below $150,000 and $1,000 for single filers making less than $75,000, plus $200 per dependent up to $600.
A proposal for $8 billion in tax cuts for seniors and working families includes a $219 million plan to reduce state taxes on Social Security benefits. That cut would impact an estimated 350,000 households.
Marijuana legalization
The budget proposal unveiled Tuesday also recommends funding for the legalization of adult-use, recreational marijuana.
The plan includes the creation of the Office of Cannabis Management for regulatory oversight, grants for entrepreneurs, additional resources for substance-use disorder treatment, and expungement of certain cannabis-related criminal offenses.
Clean transportation
Proposed one-time expenses include $29.2 million to purchase up to 30 electric buses with charging infrastructure to help transition away from diesel buses.
Education investments (announced last week)
Gov. Tim Walz unveiled a $12 billion proposal that would provide the largest public education investment in state history and lower the cost of childcare for many Minnesotans. The series of spending proposals announced Tuesday aim to "make Minnesota the best state in the country for kids," according to the governor's office. “For a middle-class family with young kids, this budget would cut the cost of childcare by thousands," Walz said in a statement. "For kids across the state, it will reduce their chances of living in poverty. And for our students, it will provide the single-largest infusion of state funding in history, allowing them to provide every student, in every neighborhood, a world-class education.”
An expansion of the state's child and dependent care tax to include qualifying childcare expenses is among the proposals included in the plan. According to the Walz administration, the measure would reduce childcare costs for more than 100,000 additional households. A family earning less than $200,000 with two children, for example, could receive up to $8,000 back for qualifying expenses. The plan also proposes a child tax credit, which would give lower-income families $1,000 per child, up to $3,000. The credit would be available to families with a household income of less than $50,000.
For Minnesota schools, Walz is calling for a 4% increase to the general education funding formula next year and 2% increase the following year. Those increases to the state aid formula would amount to a $717 million investment in 2024-2025 and a $1.48 billion investment in 2026-2027. An $800 million plan to provide free school meals for all students and $158 million for mental health services are among Walz's education spending proposals.
Walz's education budget also proposes to reduce the special education cross subsidy by 50%, which would greatly help school districts cover the rising costs associated with the services, and free up funding for day-to-day school costs.
Also in the spending proposal is a pitch to create a new state agency, which would be called the Department of Children, Youth and Family. The new agency would begin operations in 2024 and oversee a wide variety of supports for Minnesota kids and families.
Toby Pearson | Vice President of Advocacy |
tpearson@careproviders.org | 952-851-2480