Gov. Tim Walz proposes a $65 billion budget for Minnesota

More than 2.5 million Minnesota homes would receive checks from the state, and some seniors would see lower taxes on their Social Security benefits under DFL Gov. Tim Walz’s $65.2 billion budget plan.

The governor on Tuesday proposed his full vision of government spending and taxes for the next two years. It relies on an estimated record-breaking $17.5 billion surplus to supplement money for schools, housing, paid work vacations and tax breaks for Minnesota residents.

“I’m happy about this budget,” said Walz during a press conference on Tuesday. “I think it builds on a long tradition of progressive taxation and investing in things that matter.”

Walz’s budget is the starting point for negotiations with the legislature. With Democrats in full control of state government, this year’s budget battles are likely to feature more nuanced disagreements than fundamental ones.

One looming conflict is whether Minnesota should provide checks to residents. Walz has been asking for the payments for a year, but DFL lawmakers have not embraced the idea.

On Tuesday, Walz proposed that single taxpayers earning less than $75,000 should receive $1,000 through an early income tax credit and couples earning less than $150,000 should receive $2,000. Families could also get $200 for each dependent, up to three children. It’s a stripped-down version of his earlier proposal, which would have seen Minnesotans with a broader income spectrum qualify for the money.

“People can make good decisions for themselves and some of that excess needs to get back into their hands,” Walz said on Tuesday.

Legislators have also offered different visions for Social Security tax cuts. Republicans have long pushed for a total abolition of the state tax on welfare. However, some Democrats worry about the resulting loss of $1.3 billion in government revenue over the next two years, a figure that would increase in the following two-year budget. According to Walz’s plan, around 350,000 households would see their Social Security taxes reduced.

Minnesota would add an Office of Cannabis Management to handle regulations for recreational marijuana, hemp-derived products, and medical cannabis under Walz’s plan. He also recommended grants to help people enter the legal cannabis market, more resources to treat and prevent drug use disorders, and the elimination of nonviolent marijuana crime.

“It’s time to safely legalize adult cannabis use,” said Lt. gov. Peggy Flanagan. “Ban doesn’t work.”

On Tuesday, Walz also proposed increasing spending on local government and county program aid, as well as cash to purchase up to 30 electric buses.

The full budget presentation is the culmination of a week-long rollout by the Walz administration. The governor has highlighted aspects of the budget with events at a school, business and fire department.

Some of the other biggest items in Walz’s two-year spending plan are more money for education, housing and a new paid leave program. The governor wants to automatically increase future education funding to counter inflation and increase spending on special education, English language learning and free student meals.

He proposed more than $950 million for housing needs, from down payment assistance to preventing homelessness and maintaining affordable housing. But while DFL lawmakers proposed $3.4 billion in rental vouchers over the next two years, Walz only earmarked $10 million for rental subsidies.

Its paid family and medical leave program will cost an estimated $670 million to start and will later be funded by a payroll deduction, which its administration said would affect both employers and employees.

And in addition to the one-time payments and tax breaks for Social Security, Walz previously unveiled plans for tax credits for families with children.

This is an evolving story, check back for updates.


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