Walz Won’t Rule Out Gas-Tax Increase Despite $1.5 Billion Budget Surplus

Minnesota Management and Budget released its Budget and Economic Forecast report Thursday, estimating that the state will have a $1.5 billion surplus for the 2020-21 biennium.

According to the report, an additional $491 million will be added to the state’s budget reserve, or “rainy-day” fund, which now totals $2.075 billion—a record high, according to Republicans.

Both Republican and Democratic leaders called press conferences throughout the day to discuss the surplus, which Republicans believe is a result of their “fiscally prudent” policies implemented under a GOP-controlled legislature, KSTP’s Tom Hauser reports.

Republican Senate Majority Leader Paul Gazelka (R-Nisswa) said the surplus should end conversations about raising the gas tax during the upcoming session. Instead, Gazelka would like to see one-time spending on repairing roads and bridges, Hauser adds.

In a press release issued after their press conference, the Minnesota Senate Republican Caucus attributed the surplus to their “tax relief package” passed in the last biennial budget.

“This surplus shows that the Republican approach of lowering taxes and restraining runaway spending works. Democrats predicted doom-and-gloom when we passed our tax bill last session, but instead our state’s budget picture is stronger than ever,” House Republican Leader Kurt Daudt (R-Crown) said in a Thursday press release.

Daudt agreed with Galezka’s assessment that Thursday “should be the last time anyone around the Capitol talks about raising taxes this session.”

“We know Minnesotans won’t support massive tax increases with a billion dollar surplus—that’s why House Republicans are ready to stand up for your pocketbooks, and fight for meaningful tax relief for Minnesotans whose hard work has helped put our state on sound financial footing,” Daudt added.

Gazelka asserted that “the last budget passed by the Republican-led legislature, combined with the hard work of Minnesota workers, led to today’s surplus,” but Gov.-elect Tim Walz (D-MN) isn’t buying it.

Hauser reports that Walz dismissed Republican claims that the budget surplus should take a gas-tax hike off the table, saying they clearly haven’t “driven on 94 or highway 14 at 4 o’clock.” Walz told reporters that he wouldn’t “draw a red line” against the increase.

“Our budget will reflect the priorities of the people of Minnesota: ensure every child, no matter their race or zip codes receives a high-quality education; increase access to affordable health care; help provide communities with the tools they need to not just survive, but thrive,” Walz said in a Thursday statement.

“Our recent listening tour made clear that Minnesotans are hungry for a government that puts people before politics,” Walz added. “They are ready to tackle the challenges in their communities and build a better life for everyone.”

Thursday’s forecast comes just two days after the Center of the American Experiment released its annual “The State of Minnesota’s Economy” report, which found that while the state’s per capita numbers exceed national averages, its per worker numbers are far below the national averages.

“The picture that emerges is concerning,” the report says. “We find that Minnesota is a hard working but low productivity economy.”

As Battleground State News reported Wednesday, the report found that Minnesota’s “excessive rates of personal taxation” push its “productive workers out,” while its “high rates of business taxation” deter “investment, entrepreneurship, and small business formation.”

Walz’s first budget proposal is due early 2019, and is expected to address a gas-tax increase, as well as universal pre-k and a MinnesotaCare buy-in option.

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Anthony Gockowski is managing editor of Battleground State News and The Minnesota Sun. Follow Anthony on Twitter. Email tips to [email protected].
Photo “Tim Walz” by Tim Walz.