Governor Tim Walz released his budget proposal for the upcoming two year budget cycle Feb. 19, and District 16B State Representative Paul Torkelson of Hanska and District 16A State Representative Chris Swedzinski of Ghent expressed disappointment when it comes to the proposed tax increases.
The governor’s proposal would raise Minnesota’s gas tax by 20 cents per gallon vaulting the state’s gas tax to fourth-highest in the nation.
“In the area of transportation, he is eliminating revenue out that we put into roads and bridges last year and replacing it with massive tax increases,” Torkelson said. “The gas tax increase proposed is unconscionable, a 70 percent increase.”
Torkelson said the first seven cents of the gas tax increase is necessary just to replace the money taken from transportation and moved to the general fund. The proposal also includes in-creases to tab fees and the motor vehicle sales tax.
“The governor’s budget proposal pulled back the curtain on his priorities for Minnesota, and let’s just say it doesn’t look good, especially for those of us outside the Twin Cities,” said Swedzinski. “This regressive increase to the gas tax would be very damaging to people in Greater Minnesota, especially seniors, lower earners and the agricultural industry in general. The burden of the governor’s tax increase certainly would be felt at the pump, but it also would drive up the prices on goods and services we purchase every day. It’s hard to see widespread support for the governor’s tax increases, especially since the state has a substantial budget surplus.”
Torkelson said the budget is baffling, as he had authored an enormous transportation funding law last session that’s scheduled to invest hundreds of millions of dollars into road and bridge needs without raising any taxes.
“Governor Walz wants to take state revenues that are statutorily dedicated to transportation and spend that money on other government programs, and he wants to raise the cost of driving your car by ridiculous numbers to make up for it,” Torkelson said. “With the regressive nature of these taxes, poor and elderly residents will be hit the hardest with these proposed changes.”
The proposal for the 2020-21 biennium includes more than $3 billion in tax increases over the next two years alone, and $4.7 billion in tax increases for 2022-23.
Walz’s proposal also does not extend Minnesota’s reinsurance program, which could cause rates to rise once again by 50 percent or more on the individual market. Instead of extending reinsurance, the governor has proposed a 20-percent premium subsidy only for those who do not receive federal tax credits under the Affordable Care Act.
In 2020-21, the governor’s budget raises general fund tax revenue by $1.2 billion. The extension of the sick tax adds an additional $947 million, with transportation-related taxes adding $907 million for a total tax increase of $3.1 billion.
In 2022-23, the tax increases balloon dramatically. The governor increases general fund tax revenue by $1.4 billion, with another $1.5 billion for the sick tax and $1.7 billion in transportation taxes.