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 Dan Hall (R-Burnsville) released the following statement:

“I am very pleased that we have come together to complete budget agreement represents a true compromise and benefits all Minnesotans. Today’s deal will provide the first income tax cut to middle-class Minnesotans in 18 years while making a commitment to education funding, and other budget areas to ensure our state will remain a great place to live, work, and raise a family.” 

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.