Weighing Budget Options
As budget discussions continue, several proposals from Governor Walz raise concerns for communities across Greater Minnesota. As I mentioned in previous newsletters, the February 2026 Budget Forecast shows optimism for the economy and a better outlook for the structural budget deficit. However, unless we can agree upon some budget cuts, we are still spending more than the budget forecast can support. On March 17th, Governor Walz sent the House and Senate the Executive Branch’s proposed supplemental budget. His budget proposal includes a $63.273M spending increase making the structural deficit even worse.
The Walz administration created some interesting proposals. For example, before Governor Walz released his budget proposal, we pushed a bill to the House floor using the “Urgency” procedure to create a permanent extension to the Pass-Through-Entity (PTE) tax. Unfortunately, it did not prevail as the House is tied 67 to 67 and that is exactly how this vote turned out. However, Governor Walz just proposed the same permanent extension to the Pass-Through-Entity (PTE) tax which costs Minnesotans nothing and enables individuals to save on their federal income taxes. So, please expect to see more on this topic soon.
Other tax related proposals include expanding the Child and Dependent Care Credit by raising the income threshold associated with the tax credit. In other words, if you made too much money to take advantage of the credit in the past, raising the income threshold may allow more families to qualify now. Standby for information on this topic as we work though our Tax committee process.
If you are a gun enthusiast, Governor Walz wants to create a new gross receipts tax of 10% on handguns and 11% on long guns. The Walz administration forecasts the tax receipts will contribute $9.209M in FY26-27 and $28.160M in FY28-29 to the budget. Needless to say, this proposal was not well received by many Minnesotans.
Today, I am barely touching on several of the budget proposals impacting many of us in Greater Minnesota. Next week we will be back in our committees working through many more of these issues as we move away from hearing proposed bills in committee and transition towards consolidating an agreement on one single bill from each committee. This fact is unfortunate, but a tied House results in a tie vote on many bills in committee where we are evenly balanced as well. Our Tax Committee and Capital Investment (Bonding) Committee are the exceptions as we always hear bills right up to the end of session and often produce one consolidated budget bill from these committees.
distractions you are hearing in the news, we are keenly focused on affordability. Just last night, we proposed two opportunities to suspend the House rules and hear two important bills on the house floor. First, we brought the House version of Senator Jasinski’s Car Tab Fee Reduction bill to the floor, and it did not prevail. Next, we proposed a partial Property Tax Refund and it did not prevail. These important proposals come at a time when many Greater Minnesota communities are already facing workforce shortages, rising health care costs, and many more impacts to our family budgets. As we move forward in our budget negotiations, I will continue advocating for solutions that protect essential services and ensure Greater Minnesota communities are not left behind.
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