Column: Governor's budget raises taxes without reforms
By Barb Haley, Minnesota District 21A representative
Gov. Tim Walz recently released his proposed state budget for the next two years, giving me reason for both optimism and concern.
I support a number of his proposals addressing issues the Legislature is working on, including safeguards to protect vulnerable adults as well as funding for rural mental health, broadband expansion, and state grants for students attending college. The governor's budget also overlaps with legislation I've authored in three specific areas: the safe schools levy, housing trust funds, and youth skills training grants. I'm proud to support these initiatives, which would have a positive impact on our area and all Minnesotans.
However, I remain concerned by the increased spending and huge tax hikes highlighting this proposed budget. As families manage their own budgets, they know what they'll earn and will accordingly prioritize spending and often need to make cuts in order to balance the checkbook. In my business career, I prepared and managed large budgets and often had to cut X to accomplish Y.
A major concern with the governor's budget is that it doesn't include any cost-cutting measures to reform state agencies or make them more efficient. It also fails to address the existing fraud and abuse in government programs. F
or example, fraud of childcare funds and the mismanagement of Minnesota's licensing and registration system are well-known, yet the governor requests increases for both.
Hit to rural residents
Regarding taxes, the governor's budgets raises them by over $3 billion. His proposal increases taxes on gas and healthcare, raises license tab and vehicle registration fees, and will result in higher property taxes for businesses.
The 20 cent per gallon gas tax increase has garnered the most attention thus far. This increase would give Minnesota the fourth highest gas tax in the country! Raising gas taxes especially hurts rural Minnesotans as we generally make longer drives to work and school.
We all agree we must fund our roads and bridges, but we did so without increasing gas taxes last session and we can do it again this year. I support legislation to dedicate sales taxes on auto parts exclusively to roads and bridges, but unfortunately the governor's proposal eliminates this plan and calls for increased gas taxes instead.
Local businesses moving products by truck would also be hit hard by this proposal. Businesses are facing challenges recruiting employees to work in Minnesota, which is already a highly taxed state. Even higher taxes will make it more difficult to attract people to live and keep businesses here, meaning jobs and economic growth could go elsewhere.
In addition, a gas tax hike would disproportionately hurt local farmers already facing low crop prices. Following the governor's proposal, I heard from an area farmer who operates a small hog farm. He estimates upping the gas tax would cost him an extra $4,000 per year for just one truck! Because of this proposal, every area farmer can expect increased costs, including the many who simply can't afford this extra financial burden.
I was also disappointed the governor's proposal doesn't extend Minnesota's reinsurance program, which has effectively lowered health insurance costs each of the last two years for individuals who don't get insurance through their employer or government. Funding for this program is already in place, meaning its extension wouldn't create an additional burden on the budget. If this program isn't extended, rate increases could be devastating, especially in our area.
Overall, I'm concerned about the seemingly never-ending growth in state spending. This budget alone would grow state government by 8.6 percent — from $45.5 billion to nearly $50 billion. I don't see how our communities and state can sustain these increases. Additionally, Minnesota has $2 billion in "rainy-day" funds. With this much in reserves and a significant state budget surplus, it's difficult to support the governor's expansive tax increases.
The House and Senate are creating their own budget proposals and, in the months ahead, will work with the governor to determine how to best fund state government. I am committed to safeguarding taxpayers' interests and ensuring government uses your money responsibly. I look forward to working with the governor to make improvements to his budget and fund our priorities without crushing Minnesota's taxpayers.