ST. PAUL, MN—Governor 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. His proposal would raise Minnesota's gas tax by twenty cents—a massive 70 percent increase—vaulting Minnesota's gas tax to 4th highest in the nation. It 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.
"With a $1.5 billion budget surplus, we should be looking at tax relief for Minnesotan families, not saddling them with more than $4 billion in tax increases as Governor Walz has proposed," said Rep. Kristin Robbins, R-Maple Grove. "The 70 percent gas tax increase is particularly egregious; this increase will give Minnesota the 4th highest gas tax rate in the country."
In FY20-21, the Governor's budget raises general fund tax revenue by $1.224 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 $3.078 billion. In FY22-23, the tax increases balloon dramatically; the governor increases general fund tax revenue by $1.43 billion, with another $1.52 billion for the sick tax and $1.73 billion in transportation taxes.
Governor Walz's plan also fails to extend reinsurance in the individual healthcare market, which could cause premium rates to skyrocket once again by 50% or more. Instead of continuing reinsurance to stabilize the market, the governor has proposed a 20% premium subsidy only for those who do not receive federal tax credits under the Affordable Care Act. The 20% rebate would cost about $106 million, but would only impact about half the market. This is twice as expensive in 2020 as just continuing the reinsurance, which would only cost approximately $54 million. The Governor's proposal would do nothing to prevent rates from skyrocketing, and would very likely mean that the state would pay twice as much to cover half as many people, while Minnesotans ultimately pay higher premiums on the individual market.
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