Politics and Government

Revised Walz budget seeks lead pipe fixes, EV tax credit

A state official speaks at a podium
The focus on the budget is quickly shifting from what the governor wants to what lawmakers will agree to.
Ben Hovland | MPR News

Gov. Tim Walz tweaked his state budget proposal Thursday to add funding for a lead-line replacement push, local public safety expenses and a new tax credit to encourage electric-vehicle purchases.

The adjustments came after a revised economic forecast in late February predicted state leaders would have slightly more money to work with as they set the next two-year budget. Walz didn’t move away from key elements of the package he announced earlier in the year, which called for a nearly $4 billion tax rebate, substantial increases in education spending and big changes to climate and health policy.

Walz requested $250 million more be sent to local and tribal governments to use for public safety expenses, bringing the total increase he wants to $550 million. 

The DFL governor said it will leave a lot of decisions to local leaders on how to address specific public safety needs.

“Minnesotans’ expectations around public safety are high and need to remain high. Minnesota has traditionally and will continue to be one of the safest states in the country,” he said at a news conference. “But as we've seen upticks in crime, especially crimes on person, there's a need to make sure we're reinvesting.”

A newer feature in the Walz plan is $240 million for programs to replace lead service lines connected to drinking water supplies. The money would supplement newly authorized federal funds. The state dollars would go toward local grants where lead lines are being dug up, disposed of and replaced.

Lt. Gov. Peggy Flanagan said it’s imperative to keep lead from creeping into local drinking water supplies.

“We know that the risk of lead to human health especially for our children and young people are concerning,” she said. “But replacing lead infrastructure can be extremely costly.”

Prior state reports suggest replacing all lead lines could stretch into the billions of dollars and take decades to address. The prior Walz budget sought money to pay for studies to get a better inventory on lines that pose the most risk.

Walz made other modest changes across program areas. Among them is proposed a $2,500 tax credit for purchases of new electric vehicles, which dovetails with a federal credit three times the size.

“You can piggyback on that,” said Revenue Commissioner Paul Marquart. “So you could get a credit for $10,000 between the federal and the state credit and that would be on vehicles you would buy starting here in 2023.”

The credit would come when people file their income taxes in 2024. And there are qualifications that must be met around battery capacity, vehicle weight and assembly that would have to be done in North America. It would max out on vans, SUVs and trucks sold for $80,000 and cars that cost no more than $55,000. Buyers above a certain income wouldn’t be eligible.

The focus on the budget is quickly shifting from what the governor wants to what lawmakers will agree to. Broad frameworks of where House and Senate leaders are expected out as soon as next week.

The DFL-led Legislature is starting to build a new two-year budget that must be in place by July 1, although many of the majority party priorities line up with those of Walz.

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