Walz says tax rebates will help with back to school shopping
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Watch your bank account or your mailbox. A Minnesota tax rebate is on its way as the back-and-forth over the way it is structured and the amount still stirs in political circles.
When the Legislature earmarked more than $1 billion for a tax rebate in May, DFL Gov. Tim Walz’s administration projected an early fall timeline for getting the money out the door. But internally, there was pressure from Walz himself to make the gears spin a bit faster.
“Pretty ambitious, I said I’d like these to go out before school starts,” Walz said at a news conference Wednesday, standing next to a poster promoting the up to $1,300 giveback per family. “That’s when it makes a bigger difference. And that was the goal.”
Revenue Commissioner Paul Marquart said agency staff spent the last few months verifying information and setting up a secure delivery process, knowing accuracy was just as important as expediency.
“We want to make sure that the right payment with the right amount goes to the right person,” he said.
At least 200,000 rebates landed in bank accounts before Walz and Marquart stood before reporters at the Capitol. By the end of the week, at least half of the rebates will have been delivered. And the remaining payments being made through paper checks won’t be far behind.
For some recipients, the timing is ideal.
“This comes at the best time possible,” said Ebonie McMillan, a mother of three who joined Walz at his news conference. She said she’ll use her rebate on children’s clothes and other supplies ahead of the new school year.
“It’s like a good boost to start the school year out for the kids,” McMillan said. “Then they can go to school and feel happy and content like everyone else should feel.”
But the extra money isn’t putting a smile on everyone’s face. Across social media, some are complaining that the rebates of $260 per person aren’t big enough, given Minnesota’s giant surplus.
Republican lawmakers say the rebates are a letdown compared with what Walz proposed amid his re-election campaign last year. House Minority Leader Lisa Demuth, R-Cold Spring, considers it a broken promise.
“Voters were being promised up to $2,000 checks — taxpayers were being promised that when it was campaign season looking for votes,” Demuth said. “Paltry? Yeah, $260 is very paltry.”
Senate Minority Leader Mark Johnson, R-East Grand Forks, said the rebates will get washed out by added taxes and fees on gas, vehicle registration and general sales taxes.
“The discussion of today’s small refund simply pales in comparison to the higher tax burden Minnesotans will face in the years to come,” Johnson said.
Senate Tax Chair Ann Rest, DFL-New Hope, said the criticism overlooks other cost breaks approved by the Legislature, including reductions in Social Security taxes for some retirees to a move to make school lunches free for all students regardless of family income.
She said the rebates were part of a complex puzzle of making sure various populations shared in the surplus.
“What’s so great about the rebates is that it’s right now,” Rest said, noting that some other tax reductions will take time to settle in.
Rebates are limited to couples with adjusted gross income under $150,000 in 2021; singles had to make less than $75,000 that year. And payments for dependents are capped at three.
Walz defended the income threshold and check size as a compromise. He noted that Republicans walked away from a more-generous tax package when they were in charge of the state Senate.
“Certainly, I wanted a little bit more. But we compromised together,” Walz said “We worked from their zero up to this $1,300 per these families that we got to. But once again, if that’s their point, they’re certainly not going to be able to take any credit for this, because they could have had more had they agreed back in 2022.”
But swing district DFL lawmakers are hearing the frustration, too. First-term Sen. Grant Hauschild of Hermantown said in an interview last week that some constituents have brought up the rebate during his post-session swing through his northeastern district.
“There’s some folks that feel like we could have done more in the rebates, and I actually do agree with that,” Hauschild said. “I was one of the people pushing for more rebates, like the governor was calling for. That was something that wasn’t necessarily supported by the rest of the caucus.”
Hauschild said he’d be interested in exploring another round of rebates if a budget forecast this fall shows another surplus. Walz said it’s too soon to commit to more rebates, but he didn’t rule it out either.
For now, the focus is on getting this set of payments out smoothly.
Commissioner Marquart said the department saw about 5,000 bounce backs in the electronic payments on the first day. That’s mostly due to a closed bank account. He said paper checks will be issued to those taxpayers instead.
“Probably mid-September, if they have not received a check, contact the Department of Revenue and we can figure that out,” Marquart said.
By then, the expectation is that many rebates will have already been spent and recirculated in the state’s economy.