Minnesota Gov. Tim Walz released a revised budget following the February forecast of a budget surplus of $1.6 million.
The new budget takes into account the forecast and allocates funds toward working families, education and small businesses, the Revised COVID-19 Recovery Budget fact sheet states.
“Since the state now projects a budget surplus, we no longer need to use rainy day funds to balance the budget,” Minnesota Management and Budget Commissioner Jim Schowalter said in a release.
To support working families, the revised budget will provide tax relief to Minnesotans on unemployment insurance by allowing a subtraction of up to $10,200 for taxable unemployment benefits. The revised budget will also expand the renter’s property tax refund to include an additional 10,000 new people.
Also in the plans is expanding the working family tax credit to include 19 to 20-year-olds and low-wage working adults who do not claim dependents.
Walz announced the Earned Sick and Safe Time proposal, which would ensure every working Minnesotan could accrue up to 48 hours of paid leave for illness, appointments, caring for a child during school closure or seeking assistance following a domestic or sexual assault.
“Minnesotans have met the challenges of COVID-19 pandemic as they always do when faced with hardship — with grit and resiliency,” Walz said. “But we know that our students, working families, and small businesses have borne the brunt of this pandemic.”
To support small businesses, the revised working budget would exclude the first $350,000 from income for forgiven loan amounts. Approximately 90 percent of the loans received in the state are under that threshold and will receive the full tax exemption, the fact sheet states.
“Throughout the past year, Minnesota’s small businesses have made enormous sacrifices to their bottom lines for the good of our state, and the Paycheck Protection Program has been a lifeline for many small businesses,” Department of Revenue Commissioner Robert Doty said.
The revised budget also cuts the plan to raise the state cigarette tax and moist snuff tax and it would lower the previously-proposed corporate franchise tax rate from 11.25 percent to 10.8 percent. The current corporate tax rate is 9.8 percent.
Education has been hard-hit by the pandemic, and Walz addressed some of the unmet needs in his revised budget. He proposed providing $68 million in one-time funding for districts and charter schools. Walz also plans to expand access to tutoring and mental health services for students, investing $3.25 million this year and $5 million in the coming years to support the expansion.
The revised budget also plans to allocate $10 million over the biennium to fund professional development for educators on non-exclusionary disciplinary practices, the fact sheet states.
In an effort to maintain the state’s fiscal stability, Walz announced $491 million would be restored to the budget reserve. The state had originally planned to use $1 billion of the reserve funds to balance the budget.
“Our budget reserve gave us time to withstand dire projections created by the COVID-19 pandemic, gather information on real impacts, and respond without making unnecessary or drastic cuts,” Schowalter said. “Maintaining a full budget reserve allows Minnesota to continue to govern in a fiscally responsible manner and be prepared for whatever surprises are still ahead.”