Gov. Walz Determined To Send Tax Rebates To Minnesotans From $17.6B Surplus

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Minnesota Gov. Tim Walz seems determined to send tax rebates to residents. Last week, Gov. Walz reasserted his plans to send tax rebates to Minnesotans from the state’s enormous $17.6 billion budget surplus. The governor, however, admitted that the rebate amount could be smaller than he had planned earlier.

Tax Rebates To Minnesotans Could Be Smaller

On Friday, Gov. Walz said that his budget proposal would include sending one-time tax rebates to Minnesotans. The tax rebate, however, could be smaller than what Gov. Walz earlier anticipated. Also, the governor admitted that his proposal had found only “lukewarm support” among his fellow Democrats so far.

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Gov. Walz first proposed sending tax rebates last year, including $1,000 for individual filers and $2,000 for joint filers. At the time, the projected surplus was just $9.25 billion. Most of that extra money was left unspent as the 2022 legislative session ended in partisan stalemates.

As of now, the governor hasn’t revealed the new rebate amount, but he could give the details of it when he announces his budget proposal on January 24.  

“I think people are feeling inflation, even though it may be cooling a little bit," Walz told The Associated Press. "I think there's a sense out there amongst Minnesotans, whether they're conservative or liberal, that a little bit of the surplus could really help."

Along with sending tax rebates to Minnesotans, Gov. Walz’s budget proposal also plans to index state aid for school districts to inflation. This is in line with Gov. Walz’s commitment to making bigger investments in public education.

Will Walz’s Budget Proposal Win Support?

Following the 2022 midterm elections in November, Democrats took control of both houses of the Minnesota Legislature. However, some differences are starting to emerge among Democrats on how the budget surplus should be used.

In a press conference last week, House Speaker Melissa Hortman and Majority Leader Jamie Long noted that their priority is to approve tax credits of $3,000 for families with a child age 5 or younger (with a cap of $7,500). Hortman, however, is also hopeful of reaching a compromise.

Gov. Walz also signaled something similar, saying that his budget would include "a version" of child tax credits.

"I just want a tax rebate back to the people of Minnesota, to make life a little more affordable for them," Gov. Walz said. "And I think there will be a form of that, coupled with, I think, tax relief especially targeted at the middle class."

Gov. Walz also plans to exempt (partially or fully) more residents from income taxes on Social Security. Presently, about half of Minnesota Social Security recipients don’t pay taxes on Social Security. The governor, however, wants to retain the tax for the “very wealthiest Minnesotans."

Minnesota Republican and some Democrat legislative candidates campaigned on eliminating the tax altogether. Hortman, however, believes that eliminating the tax would not be good for future budgets.

Despite the differences, Gov. Walz is "super optimistic" about the legislative session.