Gov. Walz unveils a $65 billion two-year budget plan, including direct controls and major education investments

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ST. PAUL, Min. Gov. Tim Walz on Tuesday unveiled his $65 billion state budget blueprint for the next two years, a sweeping plan that would make significant investments in his key priorities and revive his request to send one-time checks to taxpayers.

It includes record funding for K-12 education and extra money for affordable housing, mental health, public safety, building electric vehicle charging infrastructure and much more.

“Those are the things that make sense for Minnesota at a time when we’re in budget surplus, when it’s time to invest, when it’s time to keep our reserves at the highest levels they’ve ever been. And at the same time, time, reducing the tax burden on working Minnesotans,” de Walz said. “I’m excited about this budget. I am proud of the people of Minnesota. I think it builds on a long tradition of progressive taxation and investing in things that matter.”

Walz has announced parts of his budget recommendations in recent days, but on Tuesday he and other government officials focused on a series of tax proposals they consider historic. Part of that includes his so-called “Walz checks,” an idea he first floated last year to pay back a portion of the colossal budget surplus — totaling $17.6 billion, according to the latest budget forecast — to the government. taxpayer.

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“People can make good decisions for themselves and part of their surplus should go back into their hands,” the governor said on Tuesday.

But the scope of those instant, one-off payments has changed over time. In his latest pitch, Walz lowered income limits to determine eligibility. If lawmakers sign them, a single petitioner earning $75,000 or less would receive $1,000. For families earning $150,000 or less, that check would double to $2,000, plus $200 per dependent to $2,600.

This would affect 2.5 million Minnesota homes, according to an estimate by the governor’s office. DFL leaders have previously rejected plans for discount checks.

The tax package also includes tax credits to help families pay the skyrocketing costs of childcare and extra credits for low-income Minnesotans in an effort to reduce child poverty. He also supports $219 million in tax cuts on Social Security benefits, which his office says will affect 350,000 households, though this plan fails to make all those benefits tax-free.

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These recommendations provide a starting point for the legislature, which will eventually write the state’s spending plan before the end of the session. Many of Walz’s priorities mirror those of DFL legislators in power in the capital, creating a more conducive environment for passing the governor’s agenda in his second term.

But there are also tax increases. Walz proposes a 1.5% surcharge on capital gains and dividends from individuals, trusts and estates over $500,000 and 4% on that income if it exceeds $1 million. Buried in a 200-place document, the governor also recommended a 1/8 cent increase in sales tax on seven-country subways for regional transit.

Those tax hikes angered Republicans, who are outnumbered powerless to stop the DFL agenda but were quick to criticize the governor’s plan. GOP leaders said Democrats have broken campaign promises to fully exempt Social Security from income taxes — a top priority for Republicans who have the support of some newly elected Senate Democrats and was part of an agreement between legislative leaders and the governor last spring that eventually fell apart.

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“Huge government growth in agencies. Huge government growth in taxes. This is a very, very worrying budget,” said Senate Majority Leader Mark Johnson, R-East Grand Forks.

Republicans had also hoped the governor would consider income tax cuts, arguing that the $17.6 billion surplus is a sign that the state is overtaxing its residents.

“If we can’t cut taxes now, when can we?” said House Minority Leader Lisa Demuth, R-Cold Spring.

Among the hundreds of provisions outlined in the document are the initial funds needed to get a paid family and sick leave program off the ground in the coming years, and state support for a regulatory framework if lawmakers legalize recreational marijuana.

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