Minnesota Senate Republicans counter Walz budget proposal

Senate Majority Leader Paul Gazelka
Senate Majority Leader Paul Gazelka, R-East Gull Lake, speaks during a press conference in July 2020 in St. Paul. On Tuesday, state Senate Republicans released a two-year budget proposal with no proposed tax increases to help balance the state’s budget.
Glenn Stubbe | Star Tribune via AP 2020

Minnesota Senate Republicans released a two-year budget proposal on Tuesday with no proposed tax increases to help balance the state's budget after Democratic Gov. Tim Walz announced a proposal in late January that includes tax hikes on the wealthiest Minnesotans and large companies.

The proposal — which comes out to around $51.9 billion — features $591 million in tax relief on Paycheck Protection Program loans and tax elimination for unemployment benefits, in addition to no proposed tax increases. Other measures include a 5 percent cut to government administrative costs, $100 million for unemployment due to the pandemic and $40 million in broadband, among others.

“We are focused on keeping the budget in control considering all the one-time money coming into the state from federal funds and stimulus checks," GOP Senate Majority Leader Paul Gazelka, of East Gull Lake, said in a statement. “We are helping our businesses recover and get the economy moving again after the prolonged closures to mitigate COVID. And, we are giving families the support they need to prosper in our state. ”

The budget targets do not factor in aid headed to the state from the federal stimulus package signed by President Joe Biden last week, which is expected be to about $2.6 billion.

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While the nearly $51.9 billion two-year proposal is not far off from Walz's $52.4 billion plan, the governor proposed raising taxes on the state's top 0.7 percent of earners and companies that have profited amid the pandemic to help fund spending on education and the state's pandemic recovery efforts. Senate Republicans pledged to balance the state's budget without raising taxes at the start of the legislative session in January.

Democratic House lawmakers in a statement Tuesday said the Senate GOP proposal benefits corporations and the wealthy over those struggling due to the pandemic, calling the proposal “woefully inadequate.”

“The Senate Republican budget is a slap in the face to the heroes of this pandemic — nurses, first responders, frontline workers, and school employees,” said House Majority Leader Rep. Ryan Winkler, of Golden Valley. “House Democrats are going to put our workers, families, and small businesses first, not corporations that have done extremely well during the pandemic.”

The Minnesota Management and Budget department last month released a renewed budget forecast that no longer anticipates a $1.28 billion shortfall for the upcoming two-year budget period, which begins July 1. The agency now projects a $1.57 billion surplus because of a higher revenue forecast, lower projected state spending and an increased surplus for the current fiscal year, which ends June 30.

The announcement, acknowledged by Republican lawmakers as a starting point, is the latest step in a series of negotiations at the Capitol that will continue into the end of the legislative session in mid-May. Walz, who released his proposed budget before the updated economic forecast, is expected to provide a revised proposal later this week.