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Gov. Tim Walz said Tuesday that he has no plan to opt the state into a federal policy creating a new $1,700 tax credit for donations to scholarship-granting organizations.

He offered a sharp rebuke to Republican lawmakers who threatened to hold up other education policies until Walz moves to change the tax code to enable scholarships that could help pay private-school tuition or other add-on costs like tutoring.

“Well, then they can go home today. They can shut the whole session down,” the second-term DFLer told reporters at the Capitol. “That is never going to happen. Since I've been here in seven years, I've never said it about anything more forcefully than that. We are not doing it.”

A provision of the federal tax and spending plan that Republicans dubbed the “One Big Beautiful Bill” makes taxpayers in states that opt in eligible to get a tax credit for up to $1,700 for donations they make to authorized scholarship-granting organizations.

Nonprofit groups that offer 10 or more scholarships to eligible students that don’t all attend the same schools would be able to receive and send out the funds. The bulk of those group’s spending — 90 percent — needs to fund tuition scholarships and educational expenses, such as tutoring, school supplies, transportation or services for students with special needs. That could go to services or scholarships for public, private or charter schools.

Those groups would then be able to provide the scholarships to eligible students whose families meet income limits and who could enroll in K-12 public schools. In the Twin Cities metro area the income cutoff would be about $397,200, according to data from fiscal year 2025.

Some Democrats, teachers and Minnesota Department of Education officials said it could encourage enrollment in private schools over public schools, which lawmakers have a responsibility to support.

States that opt in would have to give the federal government a list of organizations in the state that match the criteria. If Minnesota doesn’t opt in, taxpayers here could send donations to scholarship-granting organizations in other states.

Minnesota legislative Republicans have said it’s a top priority. Rep. Ron Kresha, the House co-chair of the education finance committee, said he’d put a hold on other education-related issues until Walz agreed to opt in.

“Unless the governor is willing to opt in, I'm not willing to work with him on any of his budget items, which would be special education, compensatory (aid) and all the funding things,”  Kresha, R-Little Falls, said earlier this month.

Kresha told MPR News that he’ll continue urging Walz to change his mind and opt into the tax credit program. He raised concerns about proposed cuts to special education funding in Walz’s 

alz’s plan also proposes to repeal nonpublic pupil aid and nonpublic transportation aid if the state opts into the tax credit program.

The money would then be redirected to voluntary prekindergarten. 

“What I would say to the governor is, ‘Governor, why don't you revise your budget, opt in, you can take that off the table, allow parents educational generosity to go to public and non-public schools, and then we can solve some of the other issues,” Kresha said Tuesday, “but simply cutting another $50 million in special ed and not letting people use their own funds, that just seems disingenuous.”

Whether on his own or in signing a bill into law, Walz would have to agree to the opt in.

Rep. Cheryl Youakim, DFL-Hopkins, co-chairs the Education Finance Committee. She said she worried about education funding discussions at the Capitol coming off the rails.

“It is disappointing that people are drawing lines in the sand, especially Co-Chair Kresha who said that he won't talk about any education policy or funding unless the governor does opt in,” Youakim said. “What people have to understand and what's missing in this discussion is this isn't money to kids or schools. This is money to scholarship-granting organizations that we would have very little oversight over, which is very concerning.”

The proposal stalled in the House Education Finance Committee Tuesday on a tied vote but could be considered again later.

There is a 2027 deadline for states to opt in. So far, many Republican and some Democratic-led states have adopted the provision.

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The DFL governor and former public school teacher said he wouldn’t opt into the education tax credit and offered a sharp rebuke to Republicans at the Capitol.

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‘Never going to happen’: Walz says he won’t opt Minn. into federal tax change

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