ST. PAUL – Gov. Tim Walz released his budget proposal for the 2020-21 biennium on Tuesday, highlighted by more than $3 billion in tax increases over the next two years alone, and $4.7 billion in tax increases for 2022-23.
The governor’s proposal would raise Minnesota’s gas tax by 20 cents per gallon – a 70-percent increase – vaulting Minnesota’s gas tax to fourth-highest in the nation.
“The governor’s budget proposal pulled back the curtain on his priorities for Minnesota and let’s just say it doesn’t look good, especially for those of us outside the Twin Cities,” said Rep. Chris Swedzinski, R-Ghent. “This regressive increase to the gas tax would be very damaging to people in Greater Minnesota, especially seniors, lower earners and the agricultural industry in general. The burden of the governor’s tax increase certainly would be felt at the pump, but it also would drive up the prices on goods and services we purchase every day. It’s hard to see widespread support for the governor’s tax increases, especially since the state has a substantial budget surplus.”
The governor’s plan also includes increases to tab fees, the motor vehicle sales tax, the metro area sales tax, business taxes, and reinstatement of the sick tax, which is set to expire at the end of the year, adding $1 billion to the cost of health care for Minnesotans over the next two years.
Walz’s proposal also does not extend Minnesota’s reinsurance program, which could cause rates to rise once again by 50 percent or more on the individual market. Instead of extending reinsurance, the governor has proposed a 20-percent premium subsidy only for those who do not receive federal tax credits under the Affordable Care Act.
In 2020-21, the governor’s budget raises general fund tax revenue by $1.2 billion. The extension of the sick tax adds an additional $947 million, with transportation-related taxes adding $907 million for a total tax increase of $3.1 billion. In 2022-23, the tax increases balloon dramatically; the governor increases general fund tax revenue by $1.4 billion, with another $1.5 billion for the sick tax and $1.7 billion in transportation taxes.
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