New Budget Aims to Protect Future Surplus

(KNSI) – Governor Tim Walz unveiled a biennial budget Thursday that is projected to leave Minnesota with a surplus into Fiscal Year 2029.

A combination of spending cuts and tax increases will bolster the financial bottom line. The Walz Administration says it won’t change eligibility for Medicaid services but promises to cut back on growth rates in payment increases, estimated to save $1.3 billion.

Another proposal is to slash support for private schools and drop special education transportation reimbursements by 5%. A press release says districts will be incentivized to become more efficient.

Walz is proposing a sales tax decrease, dropping the rate by .075%. He says it would be the first in state history. There is a caveat, though. The tax would be imposed on more services, including legal and financial advising. A surcharge on health maintenance organizations would spike from 0.6% to 1.25%.

Republicans are already signaling the budget may be dead on arrival. House Speaker Lisa Demuth (R-Cold Spring) refuses to hike taxes. “Democrats already used their one-party control to raise taxes on Minnesotans by more than $10 billion dollars, and spent us into a looming deficit. Any tax increases are off the table. House Republicans will push for a responsible budget that makes life more affordable for families, not one that raises their costs and hurts our seniors.”

Lastly, the administration reiterated the case for a package of anti-fraud bills. The bills come after the public was ripped off by hundreds of millions of dollars in child nutrition and autism services scams.

The new budget assumes a surplus of $355 million after the 2028-29 session.

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