Senate Republicans held firm on
their opposition to Gov. Walz’s massive transportation tax increases and
instead pushed for a permanent cut in the middle-income tax rate that will
deliver tax relief for millions of taxpayers, the first permanent income tax
cut in 18 years. The final budget deal also includes increased funding for K-12
schools, a top priority for both Gov. Walz and Senate Republicans.
Following the announcement of the budget agreement Senator Jeff Howe (R-Rockville)
released the following statement:
“Since the start of session, we have set out to craft a budget that helps middle-class Minnesota and our state’s taxpayer, and with today’s deal, we accomplished that goal for Minnesotans. This budget agreement delivers long-awaited tax relief, significant investments in education, critical health care reform, and a number of other accomplishments.”
No to the Gas Tax
Gov. Walz and House Democrats agreed to drop all of their transportation-related tax increases including the 20 cents per gallon increase in the gas tax, tab fee increases and sales taxes to pay for transit. In all the transportation tax increases proposed by Democrats totaled more than $1.64 billion.
Tax Relief
The budget will include the first income tax cut for the middle-class in nearly 20 years. A rate cut of .25% to the second-tier income tax bracket takes it from 7.05% down to 6.8% beginning in tax year 2022. Minnesota taxes will also finally conform to the federal tax code, reducing the extra steps required for tax filers.
K-12 Schools Funding
Education funding was another top priority for Senate Republicans, and the budget deal includes enough new funding for a 2% increase to the per-student formula for each of the next two years.
Human Services and Healthcare
A Blue Ribbon Council is created to identify $100 million in savings and provide recommendations for legislative action in the area of Health and Human Services.
Gov. Walz and House Democrats also agreed to continue the successful reinsurance program that has proven to keep health insurance rates lower for families, farmers and small businesses in the individual insurance market.