Talking Points: The Looming Budget Battle

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MINNEAPOLIS (WCCO) — The Minnesota legislative session is already framing up as a battle over proposed spending cuts by Republicans and proposed tax increases by Gov. Tim Walz. While partisan politics will impact the outcome, so will factors that are now impossible to predict.

The governor and Republican leaders are already at opposite ends of a budget debate. Still, this is the year when the Legislature must pass a two-year budget. If no budget is passed by July, state government could shut down.

Walz’s $52.4 billion budget proposal calls for a 1.5% income tax increase on households earning a million dollars or more, as well as increases in capital gains taxes, estate taxes for estates over $2.7 million, and an increase in the corporate tax rate.

Republicans have said they are against all tax increases.

Complicating things, the governor and state Republicans are waiting on two big unknowns. One is a new budget forecast that will come out in February, and the other is the size of any new federal bailout plan from Washington.

Walz was a guest on WCCO Sunday Morning.

“We get budget numbers coming in February, we will redo the budget a little bit, but I think the numbers are pointing that way, Minnesota’s economy was strong going into this, our budget reserves were strong,” he said.

In most budget years, the big decisions aren’t made until the last week of session in May, but the governor admits two major spending proposals will need action and approval from the Republicans in the Senate much sooner than that.

They are $4.2 million in security for the trial of Derek Chauvin, the former Minneapolis police officer accused of murdering George Floyd, and millions for free summer school programs so that Minnesota kids can get caught up from months of distance learning.

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