On Monday, May 16, Governor Walz and legislative leaders announced the outline of a supplemental spending and tax deal that will guide end-of-session negotiations. The Legislature must finish its work by 11:59 pm on Sunday, May 22.

Since they agreed on a two-year budget last year, no deal is needed but lawmakers are grappling with how to handle a $9.3 billion state budget surplus.

Many details remain to be ironed out by individual legislators, but the broad outline of the deal includes:

• FY 23-25: $4 billion in new spending, including:
  • $1 billion for Health & Human Services
  • $1 billion for Education
  • $450 million for Public Safety and Judiciary
  • $1.3 billion to be determined

• FY 23-25: $4 billion in tax cuts

Overall, the tentative budget deal leaves about $4 billion in state coffers, in addition to a budget reserve of about $3 billion. Lawmakers expressed hesitancy about using more of the large surplus due to fears about inflation and the potential for a recession.

If enacted, this would continue the trend of hefty state budget spending increases. In state fiscal years (SFY) 2012-13, Minnesota’s two-year budget was $35.3 billion. The SFY 2022-23 budget was expected to be about $51.7 billion – a 46% increase in ten years before accounting for any additional spending during this session.

This framework comes on the heels of the $2.7 billion agreement to repay the state’s unemployment insurance system, a key priority of NFIB Minnesota that will reduce payroll taxes for over 150,000 small businesses around the state.

NFIB MN continues to fight for relief from high taxes. We’re supportive of Minnesota Senate proposals to reduce the state’s income tax, phase out the statewide general property tax on commercial/industrial property, a new tax credit to help small businesses offer paid time off to employees, and a modification for pass-through entities that could allow small businesses to receive a larger federal deduction.  

We continue to support the Consumer Choice of Fuel Act, which has passed the Minnesota Senate. This act would repeal the controversial California Cars rules and block state bureaucrats from adopting more regulations from the Golden State. Recently, Walz Administration officials claimed that existing law gives them authority to adopt California’s total ban on gas cars, lawnmowers, leafblowers, portable generators and other common commercial and household tools.

Read more about about why NFIB MN members overwhelmingly back the Consumer Choice of Fuel Act in this op-ed: Statewide View: We need Minnesota to stop importing bad ideas from California – Duluth News Tribune.

We’re also working hard to block a slew of new mandates, red tape and penalties that would hit small employers the hardest. The Minnesota House has proposed a $1+ billion, 24-week paid leave program, sick leave mandate, doubling OSHA penalties, new noncompete agreement restrictions, new energy taxes, a public option for health insurance, new insurance mandates and more.