Senate Republicans held firm on their opposition to Gov. Walz’s transportation tax increases and 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 Minnesotans.

Following the announcement of the budget agreement Senator Mark Johnson (R-East Grand Forks) released the following statement:

“A divided government is difficult, but, in the end, the legislation reflects a wide range of interests from across the state. This agreement provides the first middle-class income tax relief in nearly 20-years, it invests in our schools, colleges, and universities, and it encourages reform in our ballooning health care budget. These were some priorities Minnesotans laid out before session began, and we worked hard to make our budget and policy bills reflect those priorities.” 

No to the Gas Tax

Gov. Walz and the House 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 the Governor and House 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, 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.