Walz is proposing tax credit checks for 2.5 million Minnesota households

St. PAUL, Minnesota (AP) — Millions of Minnesota families will receive checks totaling $2,600 from the state’s massive surplus under a budget plan Gov. Tim Walz announced Tuesday, saying it would give residents the largest package of tax cuts in the state. History.

“This is a fair budget that will continue to create growth, lower taxes for Minnesotans while improving all aspects of their lives,” Walz said.

The checks will be structured as tax credits equal to $2,000 for families with incomes less than $150,000, and $1,000 for individual participants with incomes less than $75,000. They will be exempt from federal taxes. Taxpayers can also get an additional $200 for each dependent — up to three. Revenue Commissioner Paul Marquardt admitted that those who earn more than the maximum income will get nothing.

The administration said more than 2.5 million people in Minnesota would get the checks if lawmakers approved the plan.

Political cartoon

Walz’s proposed budget also includes expanded tax breaks for families with children and childcare expenses. In all, a middle-class family of four could make ten thousand dollars back, he said.

The Democratic governor’s budget also includes lower Social Security income taxes for more than 350,000 families, but it does not include eliminating the tax completely, as Republicans and some Democratic lawmakers had hoped. Social Security recipients with higher total incomes will still owe taxes on their benefits. But 43% of households receiving Social Security will save an average of $278 this year.

Budget Commissioner Jim Showalter said the tax cuts amount to $5.4 billion.

Republican leaders were quick to blast the governor’s plan for a big jump in total spending from the $54 billion in the current budget, which runs through June, and for his unwillingness to use the record surplus to completely eliminate state taxes on Social Security across all income. Levels or permanently lowers tax rates.

We currently have a surplus of $17.6 billion. This budget spends all of it. “Not only that, but it’s growing government by 25 percent,” Senate Minority Leader Mark Johnson from East Grand Forks told reporters.

“If we can’t cut taxes now, when can we?” asked House Minority Leader Lisa DeMuth, of Cold Spring.

The surplus results from a combination of stronger-than-expected tax revenues and lower spending, which creates opportunities for a large one-time spending spree, including the governor’s proposed tax breaks. But the projected future increases in revenue that could support continued spending or tax cuts are lower.

The governor’s budget proposal sets the stage for the key work of the 2023 legislative session. But his fellow Democrats, who now control both chambers, will have their own ideas about spending and tax priorities, and the final budget will be the product of committee hearings, room debates and private negotiations over the next few months.

Initial reaction from Democratic legislative leaders was positive, though noncommittal on key details of the governor’s budget.

House Speaker Melissa Hortmann, of Brooklyn Park, said in a statement: “I commend the governor for proposing a bold budget with an inspiring vision for our future. I look forward to continuing our partnership as we craft our budget and pass legislation to build Minnesota so it works better for everyone.”

“Governor Walz’s budget reflects many of the priorities Minnesotans have told us they value, including proposals that would build an economy that works for all by lowering costs for families and ensuring strong schools, safe communities, and a healthy climate,” Senate Majority Leader Cary Dzidzic, R-Minneapolis , in a statement.

Walz also proposed paying off the state’s share of the debt at US Bank Stadium, home of the Minnesota Vikings, 22 years early. Showalter said that the proceeds from electronic and paper gambling — now earmarked to pay down the debts of retired pitches and which are stronger than initially expected — would then go into the state’s general fund.

The governor’s budget also includes some tax increases that are sure to stir controversy, including higher capital gains taxes for higher-income taxpayers and a payroll tax to fund a paid family vacation and medical leave program that would go into effect in 2026. Annual car renewal fee The license tab, which decreases as the vehicle ages, will not go up but will go down more slowly.

Updated economic forecasts expected in late February may lead to adjustments. The legislature must adjourn by May 22.

The hearing has already gotten off to a fast start since January 3rd. And many of the top Democratic priorities are moving quickly through the legislative process, including several proposals that have been blocked by the GOP’s previous majority in the Senate over the past four years.

They include paid family and medical leave, the legalization of recreational marijuana, climate change legislation requiring Minnesota utilities to switch to carbon-neutral electricity by 2040 and a ban on so-called conversion therapy for LGBTQ youth.

Proposals also include funding more prosecutors for the attorney general’s office, making driver’s licenses available regardless of immigration status, creating an office for missing and murdered black women and girls, banning discrimination based on hairstyles, and free school meals for all students. and proposals to make voting easier, including restoring voting rights to offenders when they get out of prison.

Copyright 2023 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.