Walz plan spends billions for businesses, workers and environment

A man in front of a sign speaking into a microphone
Gov. Tim Walz and Lt. Gov. Peggy Flanagan released more details of their budget proposal at a Daikin innovation and manufacturing hub in Plymouth, Minn. on Thursday.
Brian Bakst | MPR News

A sprawling economic development and climate action plan from Gov. Tim Walz would kickstart a paid family leave program, raise pay for health care aides, boost grants for business startups, incentivize clean power and help young farmers.

The proposal calling for $2.6 billion in new spending for the next two years — $4.1 billion over four years — covers several areas and is the latest in a slow-motion budget rollout from Walz. He will release his full 2024-25 plan on Tuesday.

All of it will be subject to legislative consideration. But the full DFL power structure at the Capitol gives Walz a leg up he didn’t have in his first four years. Governors tend to get a lot of their priorities when they have allies in the Legislature.

“I'm telling people who are betting against Minnesota that's a bad bet,” Walz said as he announced the spending plan at a Daikin innovation and manufacturing hub in Plymouth. “We're doubling down on our workforce. We're doubling down on the future. We're doubling down on science and innovation, and we're doubling down on our global partnerships that make a difference.”

A man in a suit shakes hands with workers
Gov. Tim Walz greets workers at a Daikin innovation and manufacturing hub in Plymouth, Minn. on Thursday.
Brian Bakst | MPR News

Several of the items are priorities he’s highlighted before, including:

  • Nearly $669 million to start a paid family and medical leave program that would allow several weeks of time off to tend to serious health problems or provide care to a relative, including a new child. 

  • New energy goals of going carbon-free by 2040, in part by building out electric vehicle infrastructure, encouraging solar power and helping people weatherize their homes. Some would be achieved by using state dollars to unlock federal infrastructure aid. The total cost of those initiatives would be nearly $458 million over the next two years.

  • Expanded access to high-speed internet by putting as much as $275 million into a border-to-border broadband program.

The family and medical leave program would eventually be funded by a payroll tax paid by workers and employers. Already DFL-backed plans to create a system are moving through legislative committees. Walz administration officials say it will take time before it’s up and running in its final form. 

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“We would be the first state, if this plan moves forward as we hope it does, to both collect taxes and deliver benefits at the same time. No state has tried to do that,” said Steve Grove, commissioner of the state Department of Employment and Economic Development. “We believe with the surplus, you can both begin tax collection and begin benefit payments simultaneously. That's a unique effort. We're still navigating the amount of time it will take to do this program. We think roughly three years.” 

There are other initiatives in the governor’s plan that aim to shore up wobbly sectors of the state’s economy. 

The long-term care and homecare health industries are finding it difficult to retain qualified workers. That’s due to pay that has struggled to keep pace with other jobs; the state sets rates and would bump those up under his plan. The Walz proposal would also dangle $1,000 recruiting and retention benefits for some high-strain areas. Those efforts total more than $300 million.

All told, workforce development accounts for nearly $682 million of what Walz announced Thursday.

To foster business growth, Walz is proposing a $150 million infusion into the Minnesota Forward Fund that would be used to dole out grants, loans and other sweeteners to businesses that are seeking to relocate to or expand in Minnesota. The focus would be on emerging industries.

Walz proposes nearly $64 million to improve the environment, including restoring more than 6,000 acres of grasslands and wetlands on public lands, supporting reforestation efforts and bolstering habitat for wildlife.  

His plans for farmers include grants to help farms start up or modernize. He also wants to do more to promote biofuels, including higher ethanol blends. And he aims some money at young farmers. Total ag spending in his budget tops $15.5 million. 

Republicans already said that the Walz plans bloat government’s size and scope. They contend businesses need to see meaningful tax reductions for the state economy to blossom, and that Walz is not proposing that. They also question whether the green power he’s betting on is reliable enough.

One business group welcomed Walz’s investment in the workforce and his plans to tap federal funds to help businesses but stopped short of endorsing the paid family and medical leave plan. 

“We hear from companies every day that are proud of the benefits they offer and they want to ensure that those aren’t replaced by a mandated program that could force them to provide less attractive benefits,” said Minneapolis Regional Chamber of Commerce President & CEO Jonathan Weinhagen. “We also recognize that the current patchwork of municipal mandates has been cumbersome for employers to navigate, but a statewide solution is only an improvement if it is workable for employers.”

Walz said Minnesota can’t be complacent.

“Yes, we have a high concentration of Fortune 500 companies. Yes, we had the lowest unemployment rate. We have the third-lowest poverty rates,” the governor said. “But if we don't look to the changing future, those aren't going to hold true. And it's going to be then we fall behind.”