Politics and Government

Free tuition, school funding at issue as MN lawmakers iron out budget bills

Minnesota Senate Chamber
Minnesota lawmakers will start finalizing a package of more than $70 billion in budget bills this week. 
Matthew Alvarez

Minnesota lawmakers this week will start finalizing a package of more than $70 billion in budget bills. 

The Minnesota House and Senate have been busy passing massive budget bills over the last couple of weeks. And now conference committees will have to iron out differences between the bills and advance compromise proposals.

The individual budget provisions span hundreds of pages and determine how the state will spend tens of billions of dollars. 

House Ways and Means Chair Liz Olson, DFL-Duluth, connected the theme of the bills in an appearance on Politics Friday

“We're making sure that Minnesotans have what they need to live their lives,” Olson said. “We're investing in affordable childcare and education and we're making sure Minnesotans have money in their pockets through tax rebates and a whole number of measures that are really about making sure that Minnesota is the best place, the best state to raise a family and that is what we are doing through this budget.”

Republicans have assailed the plans as too big and too reliant on additional fees, taxes and regulations despite a projected budget surplus.

Rep. Jim Nash, R-Waconia, captured that sentiment on Friday during a committee review of the budget for health and social service programs.

“I think this might be more pages than War and Peace and Moby Dick put together,” Nash said, his hand on a copy of the 560-plus page bill. He said his side was preparing for long consideration when it reaches the House floor this week. “I look forward to a very healthy, very robust, bring-a-lot-of-coffee-to-the-floor discussion day.”

Before conference committees take up their work this week, here’s a look at some of the big items in some of the largest budget bills, along with areas of disagreement.

Taxes

The House is due to vote this week on a tax bill. Among other things it includes one-time rebates for up to 2.5 million Minnesotans.  Single filers who earned less than $75,000 in 2021 could claim a $275 refund; joint filers with twice that income could pull down $550. And there would be similar payments for up to three dependents. The rebate would amount to $1.25 billion, far lower than what DFL Gov. Tim Walz proposed.

The House bill reduces taxes on Social Security income, but it doesn’t eliminate them outright, as most Republicans and some Democrats have said they favor. Under the plan, couples earning less than $100,000 annually could count on a full exclusion, as would single filers with annual income below $78,000. 

Two people stand near a microphone
House Taxes Committee Chair Aisha Gomez, DFL-Minneapolis, discussed a broad tax package at the Minnesota Capitol on April 17.
Brian Bakst | MPR News

The DFL-backed House bill also puts money toward a new working family tax credit of up to $1,175 per child, although that is also subject to income eligibility limits. The credit could cost $700 million or more in the next budget. 

And the House bill would raise income taxes for the state’s top earners. Earnings above $600,000 for single filers or $1 million for joint filers would be subject to a rate of 10.85 percent. Corporations would have to pay on more income earned overseas. Combined, those two taxes would generate nearly $1 billion for the next budget. 

Senate Democrats have not yet released their tax bill but are expected to do so soon. It’s unclear whether a partial Social Security tax exemption or a higher income tax for top earners will be part of their plan. 

Walz initially proposed bigger rebates and a higher tax on capital gains. 

Education

The House passed a $23.2 billion bill last week to fund public schools over the next two years, a $2.2 billion increase over the current budget. The bill raises the basic per-pupil funding formula by 4 percent in fiscal year 2024 and 2 percent in fiscal year 2025,  and ties future increases to inflation, subject to a 3 percent cap. It also spends to expand preschool, hire and train more staff to help support students’ mental health, increase literacy education and cover more of the cost of special education. A separate bill covers early education programs.

A man with a children's book
Gov. Tim Walz, Lt. Gov. Peggy Flanagan (left) and Gwen Walz read to students at Adams Spanish Immersion School in St. Paul on Jan. 17 before Walz announced the education portion of his 2023 budget proposal.
Brian Bakst | MPR News

The Senate is set to vote this week on a differing education plan. It would bump up basic classroom funding by 4 percent beginning this summer and 5 percent the next. But it doesn’t include the link to inflation. That $24.2 billion bill also has more money for special education, English language programs and literacy efforts.

Republicans say there are too many strings tied to the money, including a requirement that school districts offer unemployment benefits to support staff during summer breaks. And some have taken issue with proposed requirements around ethnic studies courses.

Health

Both bills include provisions that would create a public option for Minnesotans to buy into MinnesotaCare, Minnesota’s health insurance program for low-income individuals, require hospitals to set up committees that include health care providers to establish safe staffing levels and create a Health Care Affordability Board to monitor prescription drug prices.

One big difference between the proposals is the inclusion of a proposal to repeal a number of existing restrictions on abortion in state law, including mandatory reporting of certain information about those who terminate a pregnancy in Minnesota. The House included the measure in its bill while the Senate did not. The bill’s authors said they were still discussing the best way to move the measure forward.

Human services

Both chambers would boost pay and benefits for personal care attendants, put additional funding toward nursing homes and increase the amount the state spends for grants aimed at bringing more people into the caregiving workforce.

The House and Senate have split on the amounts they allocate for different nursing home and long-term care programs and will have to resolve those differences in conference committee.

Higher Education

Both the House and Senate have passed higher education budget bills that would put more than $4 billion toward colleges and universities in the next two years. And each offers a tuition relief provision but they vary on the best way to do that.

The Senate approved a program that would offer free tuition at the state’s public colleges and universities for students whose families make less than $80,000 a year. The bill’s authors said that could help boost enrollment and offer students from lower-income families a pathway out of poverty. The change could impact about 40,000 people.

Cheerleaders perform at a basketball game
A University of Minnesota cheerleader performs during the Women's Big Ten Tournament game between the Minnesota Golden Gophers and Penn State at the Target Center on March 1.
Kerem Yücel | MPR News

Meanwhile, the House bill would freeze tuition for Minnesota State College and University schools and bring down a proposed tuition hike at the University of Minnesota. The bill’s authors said the move could help students afford their education.

Transportation

The House on Wednesday passed a $8.1 billion transportation budget bill that would put up funding to unlock federal Infrastructure Investment and Jobs Act funds for infrastructure projects, funds road and bridge repair work around the state, fund the construction of a new passenger rail line between Duluth and Minneapolis and implement new electric vehicle infrastructure.

It would also put in place a new 0.75 percent metro area sales tax, raises various auto repair and parts sales taxes, raises the motor vehicle sales tax and adds a 75 cent delivery fee on packages and food orders. The new funds would be directed to repair and maintain state roadways.

The Senate has not yet released its transportation bill. But leaders on the transportation committee have said that they will not include a delivery fee and will propose a lower metro area sales tax than the House put forward.

Environment, Energy and Climate

Both chambers advanced new initiatives to remove PFAs from the environment, create a Minnesota Climate Finance Authority to leverage private funding for clean energy projects and boost funding for outdoor recreation initiatives.

The House and Senate split over proposed fee increases and a provision that would codify an agreement between Xcel Energy and the Prairie Island Indian Community about payments for storing nuclear waste.

Public safety

The biggest difference between House and Senate public safety budgets is a pair of gun control proposals. The Minnesota House included measures that would require universal background checks to buy a firearm and allow someone’s firearms to be removed if they pose a risk to themselves or others. The Senate did not include the proposals in its public safety omnibus but did put up funding for the policies, if they passed separately.

The $2.2 billion bills from each chamber target more funding to violence prevention initiatives and local law enforcement agencies and programs that help people reintegrate into society after they’re released from prison.