Gov. Tim Walz plans to push for $4.4 billion in tax cuts and pandemic worker awards in the upcoming session, including some that would go out as tax rebate checks to most households.
The proposal he laid out Thursday for directing a portion of Minnesota’s mammoth surplus and leftover federal aid would require legislative approval. He asked lawmakers to act quickly to get money out the door, but Republicans immediately pushed back on his plan as a “gimmick” as Walz gears up for a reelection push.
“COVID was incredibly hard and put financial and other hardships on families,” Walz said during an appearance at Minneapolis Community and Technical College Thursday. “We want to get checks out to people right away and put them in their hands. I would encourage the Legislature to do so as quickly as possible.”
The rebates would be $175 for single tax filers and $350 for married filers, but eligibility would be subject to an income cap. State officials estimated that 2.7 million households would qualify for a total of $700 million in one-time payments.
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The governor’s office dubbed them “Walz checks,” an echo of the “Jesse checks” that landed in mailboxes during the tenure of then-Gov. Jesse Ventura.
“Nobody out there gives one dang what they’re called,” Walz said when asked if that was untoward given that he’s about to face voters. “They just want them in their pockets. So we’ll get them there.”
Walz also proposed $1 billion toward hero pay awards for front-line workers and other groups who were affected disproportionately by the pandemic. A pot of money one-fourth the size was set aside when lawmakers approved the state budget last summer, but a special panel deadlocked over who should qualify.
A lot of the Walz initiatives would be one-time in nature, meaning they wouldn’t add permanent obligations that would be harder to satisfy if the economy sours. That includes $170 million he said should go into an expanded broadband internet network and $10 million toward agricultural relief programs for drought-stricken farmers.
Other aspects of the spending plan target relief toward small, family-owned businesses, immigrants and communities of Black, Indigenous and people of color, said Lt Gov. Peggy Flanagan.
“By pursuing strategic and equitable investments in our economic future, we’re not just recovering from the COVID-19 pandemic, we are coming back stronger than ever before,” she said.
Republicans reacted to the plan by expressing support for the fix to the unemployment fund that would head off business tax increases. That would divert as much as $2.7 billion of the surplus to repay a debt in the account and stock it to levels where an automatic tax increase is avoided. There is urgency because the next round of unemployment taxes are due this spring.
“With a $7.7 billion surplus, the money is there,” said House Minority Leader Kurt Daudt, R-Crown, who urged lawmakers to replenish the unemployment insurance fund during the first week of session “so we can give certainty to our businesses and prevent it from being held hostage for other unrelated issues," he said in a statement.
But GOP lawmakers criticized the governor’s call for rebate checks, describing it as an election-year public relations campaign.
"Instead of gimmicky checks designed to boost approval ratings, we need permanent and ongoing tax relief,” said Deputy House Minority Leader Rep. Anne Neu Brindley, R-North Branch. “Sending just a fraction of the surplus back to Minnesotans is unacceptable, especially with inflation at record levels."
Senate Majority Leader Jeremy Miller, R-Winona, said the so-called “Walz checks” barely cover the inflationary costs of everyday necessities.
Walz is set to release other parts of his supplemental budget next week. The Legislature returns on Jan. 31.
House Democrats also talked about economic issues Thursday, including the need for paid family leave. They have pushed paid family leave before, but Senate Republicans have opposed it. Still, DFL House Speaker Melissa Hortman is optimistic because this time lawmakers have a record-breaking budget surplus to work with.
“The existence of the surplus makes a huge difference in the practical reality of getting something like this proposal done,” Hortman said.
MPR News reporter Tim Pugmire contributed to this story.