Governor Tim Walz is proposing an income tax increase on the wealthiest Minnesotans and on what he terms “large, profitable companies.”
Walz said, “a million Minnesota families will see cuts to their income tax. We’re gonna ask the top point-seven percent to pay a little bit more.”
Walz is calling for $1.3 billion in what he calls “new investments,” including $300 million in funding for K-12 education over two years, $50 million in forgivable loans to struggling businesses, and expanding the Working Family Tax Credit for over 300,000 households.
These adjustments in tax brackets would expand the lowest tier to include more households, and would increase the tax rate for the state’s top earners.
Senate GOP Majority Leader Paul Gazelka opposes any tax increases and says the state’s “rainy day” reserve fund can be used to balance the budget.
“We need to grow our way out of this recession; unfortunately this budget would devastate job growth and hamper our economic recovery by taking money out of the economy to protect government budgets,” said House Minority Leader Kurt Daudt in a release.
“Putting Minnesota into the top 3 for income and business tax rates without asking government to share in the sacrifice would be a disaster but fortunately has no chance of becoming law this year.”
Some of the education items proposed in Walz’s budget could help hurting area school districts such as Bemidji.
Bemidji Area Schools are looking to trim millions from its budget in the coming months to restore its fund balance and prevent statutory operating deficit.
Walz’s state budget plans include increasing the general funding formula by one percent during the first year of the biennium and two-and-a-half-percent in the second.
This per-pupil formula is the basis for other ways schools receive money, which Walz says would multiply the financial impact for these students.
Walz is also proposing $22.5 million for schools that experienced a decline in enrollment due to the pandemic.
Bemidji Area Schools, for example, lost $2.8 million in revenue from 280 students not enrolling in the 2020-21 school year.
“Walz’s budget includes a total new state investment in e-12 education of $745 million, in addition to the recent federal investments of $649 million for COVID education recovery,” said the Minnesota School Boards Association in a tweet.