Updated Minnesota state budget and surplus plan unveiled by Walz Thursday
Gov. Tim Walz speaks in front of supporters of the trans refuge bill at the Minnesota State Capitol in St. Paul on March 8.
Ben Hovland | MPR News
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Gov. Tim Walz is releasing an update to his state budget plan Thursday. It's a revision based on the latest state budget forecast that still showed the state with a huge projected surplus, topping $17 billion.
MPR News politics editor Mike Mulcahy joined guest host Tim Nelson to talk about what the governor is proposing and where things stand with the surplus and the next two-year state budget.
Use the audio player above to listen to the full conversation.
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Audio transcript
[MUSIC PLAYING] TIM NELSON: This is Minnesota Now. I'm Tim Nelson in for Cathy Wurzer. Governor Tim Walz is releasing an update to his state budget plan this hour. It's a revision based on the latest state budget forecast that still showed Minnesota with a huge projected budget surplus topping $17 billion. Joining me now to talk more about what the governor's proposing and his next two-year state budget is MPR News politics editor Mike Mulcahy. Mike, I imagine he's just wrapping up there at the Capitol. What did Governor Walz have to say?
MIKE MULCAHY: Well, Tim, he's adding about $1.2 billion in spending to the $65 billion two-year plan he proposed earlier. Some of this money comes for public safety. He had originally proposed spending about $300 million and sending that to local communities to decide how to spend it to improve public safety.
He's going to up that to about a half a billion dollars. So that's one big proposal. He's also giving more money to local governments in the form of local government aid and county program aid. That's for a total of about $40 million for each of those programs for each of the next two years.
And he's also proposing spending money to remove lead pipes, $240 million. And that's a proposal that the lieutenant governor is backing as well. And then, Tim, finally, what he wants to do is add a $2,500 tax credit for people who buy electric vehicles. So that would be on top of the federal tax credit that the Biden administration put back in for doing that.
TIM NELSON: So these sound like kind of tweaks to the main things he proposed back in January, kind of staying the course here.
MIKE MULCAHY: Yeah, that's right. The governor has to do this when there's the revised budget forecast that comes out. The original one comes out in November or early December, and then there's another one in February. And that just happened a couple of weeks ago. So this is just revising that initial budget.
And you might remember his initial budget really spends a lot of money on education and child care. There's a child tax credit and his tax rebate plan. That's where he spends a lot of the money. So those are still his main priorities, and those are still what he's going to be pushing for as the legislature begins to wrestle with a new budget.
TIM NELSON: I know Jeremy Miller backed that rebate idea this week. What about the rest of the legislature? Are they going to give him what he wants?
MIKE MULCAHY: Well, that's a good question. And that's really what the next eight or nine weeks will determine. It's tough to wrestle anybody, any group of people, into what you want to do. But the conventional wisdom is the governor usually gets what he wants.
I think the big sticking point between the DFL majorities and the DFL governor may be on those tax rebates that he's proposed. In the legislature, they've never been too excited about those. And plus it eats up a big chunk of the surplus. $4 billion is what the governor has proposed for those rebates.
So I imagine there will be quite a bit of negotiation there as to exactly how that's structured, exactly what those look like, if they get folded into these tax credits for families and children that the DFL majorities in the legislature seem more interested in.
TIM NELSON: And that rebate was with that income limit, right?
MIKE MULCAHY: Yes. It's within certain income. It could be $1,000 per person or $2,000 per family. But it's within income limits. We'll see if the governor gets that at all.
TIM NELSON: Got about a minute left here-- what are the Republicans saying about this? I saw the Senate Minority Leader, Jeremy Miller, proposed an automatic rebate this week. Are they going to have a role here?
MIKE MULCAHY: Well, that's a good question. Now, of course, Jeremy Miller is not the minority leader anymore.
TIM NELSON: That's right, yeah.
MIKE MULCAHY: That's Mark Johnson. But anyway, they're trying to get a say in this. But they haven't been having much luck.
What they really want is tax cuts. They're trying to do that again right now on the Senate floor as the DFLers bring up a bonding bill. The Republicans really want to cut that Social Security tax, eliminate it altogether. And they're trying to get a voice, but they've been very frustrated so far.
TIM NELSON: And what's on Politics Friday tomorrow?
MIKE MULCAHY: We're going to talk about that bill to legalize marijuana, and we're going to talk about that plan to provide universal school meals. So it'll be a good program tomorrow at noon.
TIM NELSON: Thanks so much. That's MPR News senior political editor Mike Mulcahy.
MIKE MULCAHY: Well, Tim, he's adding about $1.2 billion in spending to the $65 billion two-year plan he proposed earlier. Some of this money comes for public safety. He had originally proposed spending about $300 million and sending that to local communities to decide how to spend it to improve public safety.
He's going to up that to about a half a billion dollars. So that's one big proposal. He's also giving more money to local governments in the form of local government aid and county program aid. That's for a total of about $40 million for each of those programs for each of the next two years.
And he's also proposing spending money to remove lead pipes, $240 million. And that's a proposal that the lieutenant governor is backing as well. And then, Tim, finally, what he wants to do is add a $2,500 tax credit for people who buy electric vehicles. So that would be on top of the federal tax credit that the Biden administration put back in for doing that.
TIM NELSON: So these sound like kind of tweaks to the main things he proposed back in January, kind of staying the course here.
MIKE MULCAHY: Yeah, that's right. The governor has to do this when there's the revised budget forecast that comes out. The original one comes out in November or early December, and then there's another one in February. And that just happened a couple of weeks ago. So this is just revising that initial budget.
And you might remember his initial budget really spends a lot of money on education and child care. There's a child tax credit and his tax rebate plan. That's where he spends a lot of the money. So those are still his main priorities, and those are still what he's going to be pushing for as the legislature begins to wrestle with a new budget.
TIM NELSON: I know Jeremy Miller backed that rebate idea this week. What about the rest of the legislature? Are they going to give him what he wants?
MIKE MULCAHY: Well, that's a good question. And that's really what the next eight or nine weeks will determine. It's tough to wrestle anybody, any group of people, into what you want to do. But the conventional wisdom is the governor usually gets what he wants.
I think the big sticking point between the DFL majorities and the DFL governor may be on those tax rebates that he's proposed. In the legislature, they've never been too excited about those. And plus it eats up a big chunk of the surplus. $4 billion is what the governor has proposed for those rebates.
So I imagine there will be quite a bit of negotiation there as to exactly how that's structured, exactly what those look like, if they get folded into these tax credits for families and children that the DFL majorities in the legislature seem more interested in.
TIM NELSON: And that rebate was with that income limit, right?
MIKE MULCAHY: Yes. It's within certain income. It could be $1,000 per person or $2,000 per family. But it's within income limits. We'll see if the governor gets that at all.
TIM NELSON: Got about a minute left here-- what are the Republicans saying about this? I saw the Senate Minority Leader, Jeremy Miller, proposed an automatic rebate this week. Are they going to have a role here?
MIKE MULCAHY: Well, that's a good question. Now, of course, Jeremy Miller is not the minority leader anymore.
TIM NELSON: That's right, yeah.
MIKE MULCAHY: That's Mark Johnson. But anyway, they're trying to get a say in this. But they haven't been having much luck.
What they really want is tax cuts. They're trying to do that again right now on the Senate floor as the DFLers bring up a bonding bill. The Republicans really want to cut that Social Security tax, eliminate it altogether. And they're trying to get a voice, but they've been very frustrated so far.
TIM NELSON: And what's on Politics Friday tomorrow?
MIKE MULCAHY: We're going to talk about that bill to legalize marijuana, and we're going to talk about that plan to provide universal school meals. So it'll be a good program tomorrow at noon.
TIM NELSON: Thanks so much. That's MPR News senior political editor Mike Mulcahy.
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