To The Editor;
Governor Tim Walz has released his first budget proposal for the next two years, and State Representative Joe Schomacker (R-Luverne) said it’s highlighted by more than $3 billion in tax increases over the next two years alone.
“The amount of tax increases included in the governor’s plan are just enormous,” Schomacker said. “There aren’t many people in southwestern Minnesota who are asking for a 20-cent per-gallon increase at the gas station.”
Schomacker said the Walz proposal would raise Minnesota’s gas tax by twenty cents—a massive 70 percent increase—vaulting Minnesota’s gas tax to 4th highest in the nation.
It also includes increases to tab fees, the motor vehicle sales tax, business taxes, and reinstatement of the sick tax, which is set to expire at the end of the year, adding $1 billion to the cost of health care for Minnesotans over the next two years.
“I can understand the governor’s philosophy of raising taxes by $3 billion, but the taxes he’s raising are regressive,” Schomacker said. “We’re going to have our disagreements on overall spending and whether tax increases should happen or not, but relying on tax increases that hit the working poor and elderly the hardest is troublesome.”
Governor Walz’s plan also fails to extend reinsurance, which could cause rates to skyrocket 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.
The cost in calendar year 2020 of the 20 percent rebate is approximately $106 million, which would only impact about half the market. The 20 percent subsidy is twice as expensive than the state cost in calendar year 2020 of extending reinsurance, which would only cost approximately $54 million. Schomacker said the Governor’s proposal would do nothing to prevent rates from skyrocketing, and would very likely mean that the administration is proposing to pay twice as much so Minnesotans can ultimately pay higher premiums on the individual market.
“Governor Walz’s plan would cause premium rates to skyrocket, and his band-aid approach would not even cover the likely cost increases,” Schomacker said. “His plan helps fewer people at a higher cost to the state, while forcing Minnesotans to pay more out-of-pocket for their health care. Nonsensical doesn’t even begin to describe it.”
In Fiscal Years 20-21, the Governor’s budget raises general fund tax revenue by $1.224 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 $3.078 billion. In Fiscal Years 22-23, the tax increases balloon dramatically; the governor increases general fund tax revenue by $1.43 billion, with another $1.52 billion for the sick tax and $1.73 billion in transportation taxes.
Schomacker concludes, “of course we understand this is the starting point for the discussion on the budget. We will have a long way to go from here to get where we need to be.”
