Gas tax hike, school funding boost top priorities in Walz's first spending plan

ST. PAUL -- Minnesotans could see a 20 cent per gallon tax hike at the gas pump under a proposal put forth to fund large-scale repairs to the state's roads and bridges.

Schools around the state could see hundreds of millions of additional dollars flow to their classrooms to help boost funds to pay teachers or increase school offerings.

Families, seniors and farmers could file for new tax credits or benefits and internet users around the state could see faster service by 2021 as part of plan to expand broadband service border-to-border by 2021.

That's if the Legislature approves Democratic-Farmer-Labor Gov. Tim Walz's first budget blueprint. Walz presented the $49.5 billion proposal for the next two years, which he deemed a "moral document," on Tuesday, Feb. 19.

But it was unclear just how much of the plan could become reality this year as leaders of the state's divided Legislature approached the plan with different views. Republicans, who hold a two-seat advantage in the Senate, said they'd oppose efforts to hike taxes.

Democrats, meanwhile, said they likely support most of the governor's plans.

In the next several months, lawmakers on either side of the political aisle will write their own spending plans. And by May, leaders will have to work together to put together an agreement to which they can all agree.

Some of the clearest points of division emerged Tuesday over Walz's proposals to increase the gas tax, auto registration taxes and motor vehicle sales taxes, as part of a larger transportation and infrastructure funding package. He also called for the extension of a 2 percent medical provider tax set to sunset this year.

Walz pointed to his landmark 2018 victory and said voters knew where he stood those issues and others when they elected him to office. He defended the increases as necessary to fix crumbling roads and bridges and to maintain a health care fund that helps low-income people.

“I ran for governor talking about raising the gas tax, I talked about historic investments in education and I talked about balancing out how we did (tax) conformity to benefit working class people,” Walz said.

Republican leaders said they were shocked to learn about the amount of proposed tax and fee increases included in the governor's plan. And they said a victory at the polls didn't mean the governor could count on their support.

"It's not something that we're going to just move to the middle on," Senate Majority Leader Paul Gazelka, R-Nisswa, said, referring to possible compromise.

Gazelka and other GOP legislative leaders worried that if approved, the new taxes and fees would make the state less competitive for businesses. Minnesota Chamber of Commerce President Doug Loon echoed the sentiments in a statement.

"The pathway toward economic prosperity isn’t through increased spending and higher taxes, especially at a time of surplus," Loon said. "These costs will be felt in the pocketbooks of all Minnesotans.”

Walz said the three central tenets of his budget were education, health care and community prosperity. And he proposed more funding for each.

Walz proposed $733 million in additional funding over the next two years for education, ranging from early learning through post-graduate programs. The largest piece of that, $523 million, would boost the general education basic formula by 3 percent in the 2019-2020 school year and by 2 percent the following year.

"My budget will help close the funding gap and make sure that every child has a good teacher, receives individual attention, and has access to the materials they need to develop the knowledge and skills to compete in today's economy," Walz said.

The funds would also help keep struggling preschools stay open, aim to improve school safety, offer grants to low- and middle-class students hoping to attend college and increase the number of teachers of color and Indigenous educators working in Minnesota classrooms.

“Educators want to give their students a safe and happy place to learn; schools where children are welcomed, supported and encouraged; and classes small enough for educators to know every child as a person,” Education Minnesota President Denise Specht said. “Gov. Walz is a teacher and he wants that too. The budget he presented Tuesday would bring our state closer to offering this vision of great public schools to every single student.”

Gazelka said he would look for areas where the state could innovate to improve education outcomes. He said lawmakers should consider opportunity scholarships to let students attend private or parochial schools.

In the area of healthcare, Walz urged lawmakers to support proposals to create a subsidy program to reduce monthly premiums for people on the state's health insurance marketplace, offer a state-based tax credit to help keep individual premiums below 10 percent and let the state offer a buy-in option for individual insurance plans.

The governor in decades to hail from Greater Minnesota also put forth plans to help rural areas of the state.

Lawmakers should approve $70-million to boost access to broadband in rural Minnesota, Walz said, as part of an effort to ensure statewide high-speed internet access by 2021.

Walz also proposed a $30 million funding boost for local government aid, a program aimed at helping cities and towns provide key services without hiking property taxes. He also put forth a $30 million increase in dollars for county program aid. And the governor said he'd also ask for $2 million in grants to be used to help fuel economic development proposals.

"City leaders have long been seeking to bring the LGA program back up to its 2002 high-water mark, and the governor’s proposal would finally get us there," Coalition of Greater Minnesota Cities President and Bemidji City Council Member Ron Johnson said in a statement.

And in an address a child care provider crisis, Walz said he'd push to get 15,000 more families into the Child Care Assistance Program and offer additional state grants to get starting child care programs off the ground.

Republicans said the efforts to boost funding for local government aid and rural broadband were areas they could likely support.

"I'm looking to areas we agree on," Gazelka said, "it's important that we find those."