Dear Neighbor,
Greetings as we put the wraps on another week in the 2019 legislative session. I submitted a legislative column to area newspapers this week and touched on my “less is more” approach to government, so please look for that in our local publications.
One of the biggest headlines from St. Paul this week came when Gov. Tim Walz put out is budget proposal for the next two-year cycle. The thing that jumps off the page for me is the governor is proposing a $3 billion in tax increases over the next two years alone, and $4.7 billion in tax increases for 2022-23. His plan would raise Minnesota’s gas tax by 20 cents per gallon, a 70-percent increase. That would push Minnesota’s gas tax from 28th nationally to the fourth most expensive.
When I look at those top-line numbers, my initial reaction is that the honeymoon sure didn’t last long for the Walz administration. The guy who rode a “One Minnesota” slogan to the governor’s office already is proposing a crushing blow to low- and middle-income earners and people of Greater Minnesota.
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.
Also, the governor proposes raising property taxes by $1 billion over the next 10 years , at a time affordable housing is becoming more and more scarce.
Let’s remember these tax increases are being proposed at a time that, as of the most recent full economic report early December, the state has a budget surplus of $1.5 billion. Revenue is not a problem and the state already has enough of our money, it just needs to be spent more wisely.
State spending is now 45.5 billion, an increase of more than $12 billion since the 2010-11 biennium. That kind of growth is unsustainable, especially if early signs that Mark Dayton’s tax increases are chasing high earners from Minnesota prove to be a damaging trend. The next full economic forecast is set to be issued later this month and that could provide more clues.
The House and Senate will put forward budget proposals of their own after that forecast is received, so look for budget work to kick into gear once that happens.
Have a good weekend,
Shane