Governor Walz released his budget recommendations last week in what is commonly referred to as the unofficial start to the Legislative Session. The Governor’s $52.4 billion two-year budget proposal was advertised as a COVID-19 recovery budget. It addresses the projected $1.3 billion deficit by tapping into the state’s budget reserves (use $1 billion, leaving $847 million in the reserve) as well as creating a new top-tier income tax bracket for those making over $1 million per year. The budget recommendations are based on the November budget forecast which is scheduled to be updated in March, which could result in supplemental budget recommendations from Governor Walz.
Of particular interested to EDAM members in the Governor’s budget recommendations:
The Governor’s DEED Budget had an $11.04 million cut target and unfortunately, that cut is proposed out of the Minnesota Investment Fund and the Job Creation Fund. MIF is cut to $7.75 million ($12.3 million base) and JCF is reduced to $7.5 million ($8 million base). These are one-time cuts with the base funding restored in the next biennium, but they remain concerning. EDAM is working with lawmakers in the House and Senate on legislation for MIF and JCF to maintain their base funding levels as well as new funding for Redevelopment Grant Program at $8 million per year.
On a more positive note, the Governor’s budget does recommend $7 million for the angel investor tax credit as well as $50 million for the border to border broadband grant program.
The budget prioritizes housing and includes $114 million in new spending, including:
$100 million for housing infrastructure bonds
- $4 million increase for the Challenge Program
- $4 million increase for the family homeless prevention and assistance program
- $1.5 million for the homeownership assistance fund
- $1 million for Homework Starts with Home program
- $1.5 million for workforce homeownership
- $500,000 for Bridges Rental Assistance, and
- $1 million for manufactured home park infrastructure funding.
House and Senate Committees will hear from Governor Walz’s Commissioners as they shed light on the budget recommendations this week. The Republican controlled Senate is advocating for addressing the budget deficit with 5% cuts to all state agencies. The DFL controlled House prefers the Governor’s approach of tapping the state’s budget reserves and raising taxes on high earners. Now that the Governor’s budget has framed the discussion, the House and Senate will begin assembling their budgets through the committee process in earnest.