Walz proposes modest 2024 budget adjustments

Minnesota Gov. Tim Walz proposed an array of modest adjustments to the state budget this year on Monday, focusing on public safety, children and safe drinking water.

Citing the sweeping changes made last year, Walz said his latest offering is restrained and focused. “We’re implementing life-changing programs like paid family and medical leave,” he said, adding, “This is a bonding year. It’s not a budget year.”

He described his smaller, supplemental budget proposal as focused on safety, children and water. “We’ll do this all by doing what we’ve done every single time, maintaining responsible balanced budgets,” he said.

DFL legislative leaders have urged caution this year as the extensive changes from the 2023 session settle into state law while Republicans have continued to accuse DFLers of spending too much.

In late February, the Minnesota Management and Budget Department announced a projected surplus of $3.7 billion, an increase of $1.3 billion over December projections. Officials also warned the state could sink into the red by $1.5 billion if Walz and the Legislature spend too much.

Walz said his proposal would leave $2 billion untouched in the budget to cushion a potential downturn. The state’s rainy day fund also is already fully funded at $2.9 billion.

The most expensive proposed item in the new budget is $45 million for a pilot of the child tax credit payment protection program. Approved last year, Minnesota is in the first year of its child tax credit for working families.

The proposed pilot program would allow participating families to opt-in for advance payments of their credits. Families would be able to keep the advance money, even if a parent took a better-paying job — up to a certain threshold depending on the household.

The aim of the program, which would start in 2025, is to help struggling parents with earlier, upfront payments during the year — rather than a credit on their taxes. It also would encourage them to participate without fear of being required to pay the money back, according to Walz and Revenue Commissioner Paul Marquart.

The credit is $1,750 per child. The income limit for the full credit next year is $38,260 for married joint filers and $32,240 for all others. Above that, the credit is reduced by a percentage in relation to the growth in income.

The pilot would guarantee that they are able to receive half the prior year’s credit even if their income increases. The idea is to get parents enrolled without fear of suddenly losing the support, Marquart said.

Walz and Marquart said the pilot will enhance the already groundbreaking tax credit in addressing childhood poverty. The governor’s mantra is that he wants Minnesota to be the best state to raise a child and for children. He claims the credit will reduce child poverty by one-third.

The governor’s supplemental budget proposal would direct $15 million to improve child welfare reporting, allowing case workers to spend more time with families, he said.

Walz also wants to spend $16 million to support ambulance and victim services in greater Minnesota, where the need for emergency care is extensive. Staffing and funding challenges throughout the state mean some areas are in danger of losing ambulance services.

In this case, a Republican legislator said it’s offensive for Walz to suggest $16 million is enough to triage the situation in rural communities. “This is not a luxury. In many cases it’s life or death,” said Sen. Andrew Lang of Olivia. An ambulance costs $400,000 and if distributed equally, Walz’s $16 million would be just $40,000 per primary service area, Lang said.

“I’m stunned to learn the governor wants to pinch pennies before funding emergency medical services for greater Minnesota,” Lang said in a written statement.

The governor made only minor changes to his proposed bonding bill which is now set at $989 million.

He didn’t include new money for milk for students who don’t take free school meals. Walz said he’s willing to discuss the matter but that his supplemental budget focused on the highest areas of need.

In the 2023 legislative session, lawmakers and Walz passed a $70.5 billion two-year budget and spent most of a $17.5 billion projected surplus. The proposed changes in the supplemental budget must take the whole landscape into account, he said.