ST. PAUL, Minnesota (WCCO) –Governor Tim Walz is abandoning some of his proposed tax increases and giving tax breaks to small businesses and Minnesota residents who have received additional unemployment benefits, according to his revised budget plan released Thursday.
It cuts its proposed tax increases from $ 1.66 billion to $ 670 million, which include the elimination of its increase in cigarette and inheritance taxes and reducing an increase in the corporate tax rate from 11.25% to 10.8%. Additional taxes on the richest Minnesotans stay.
The plan would also make the first $ 350,000 of paycheck protection loan companies received from the federal government exempt from state taxes. Up to $ 10,200 in additional unemployment benefits would also be tax free. The Minnesota Senate has passed its own bill to address these issues, exempting all paycheck protection loans from state tax liability and 18% of unemployment benefits for certain income levels.
About 90% of PPP loans in Minnesota were less than $ 350,000 and would qualify for full tax exemption under the governor’s proposal, according to a press release from Walz’s office.
“With the recent good news that Minnesota is now projecting a positive budget balance, we recommend additional investments to support working families, ensure students catch up with their learning, and help small businesses stay afloat while stimulating economic recovery. Walz said in a statement. .
The move responds to an improving financial outlook for Minnesota. State budget forecasters in February predicted a swing of nearly $ 3 billion in the next biennial state budget Deficit of $ 1.3 billion for a surplus of $ 1.6 billion. Walz updated his budget proposal for lawmakers to reflect the changes.
Its revised plan does not take into account the roughly $ 2.6 billion that the state is expected to receive in state government aid – in addition to money for other programs – of the $ 1.9 trillion federal COVID-19 stimulus package, which means its budget could still be revised.
Walz’s budget would replenish the state’s reserve accounts when he previously called on lawmakers to raise $ 1.53 billion to fund state priorities. He also suggests expanding eligibility for tax credits for working families and establishing a sickness and safety leave program that would guarantee workers up to 48 hours a year on paid leave.
But the proposal is almost certain to face opposition in the legislature, where Republicans control the Senate and have doubled down on their refusal of any tax hikes. Senate Republicans in their budget targets published this week did not include any tax increases and 5% reductions in government administrative costs. House LDF has not yet detailed its financing plan.
“We have billions of dollars available to fully protect workers and businesses from unnecessary tax hikes, and to make sure the government does not take advantage of allowances meant to help Minnesotans,” said the parliamentary minority leader. Kurt Daudt, R-Crown, in a statement.
Lawmakers will need to reach agreement on the next two-year state budget before the session adjourns.