In his final budget proposal as governor, Tim Walz wants the Legislature to expand the state’s child care tax credit and reduce grants used to care for disabled Minnesotans.
Walz also wants to “complete a comprehensive study” on how to reform the flawed computer systems that administer social services, and create a council to help businesses and workers adjust to an economy that may soon be ruled by artificial intelligence.
These ideas were part of the package that Walz released on Tuesday to supplement the state’s two-year budget.
The governor said his proposals are built around “common themes” of affordability and fighting social services fraud, adding that he will let Republicans take credit for what the final product looks like.
“Whatever it takes to make yourself feel good about it,” Walz said.
Whether Republicans, who share power in the Minnesota House, will play ball is genuinely unclear.
Rep. Paul Torkelson, R-Haska and chair of the House Ways and Means Committee, said Tuesday afternoon that, “There are areas in the governor’s budget where we can find common ground, including modernizing IT, federal conformity on Medicaid requirements, and an Office of Inspector General.”
(Torkelson also blasted Walz for two tax proposals that appear already dead. More below.)
Related: Walz’s plan to radically change Medicaid, semi-explained
But other House Republicans including Speaker Lisa Demuth, R-Cold Spring, were less willing to commit.
Demuth said in a statement that “fighting fraud will save Minnesota billions in the long run,” without specifying what Republican legislative proposals align with Walz’s plan.
Minnesota is one of a minority of states that sport a two-year budget. Walz signed the $67 billion, two-year budget last June, which means the Legislature has utterly no obligation at all to work with the governor on budget changes (or anything else) before they adjourn in two months.
For Walz, the deadline might be even sooner. He mentioned wanting to wrap things up by May 9 when Minnesotans can first fish this year for walleye and northern pike, among other freshwater creatures.
Budget proposals are (arguably) the most honest expression of what a governor wants to do with their power. Here’s what stood out from the supplemental.
Walz is throwing his arms up on controlling special education costs
In the governor’s budget proposal last year, he proposed trimming from 100% to 95% and then 90% the amount that the state reimburses school districts for special education transportation costs.
Even this slight reduction in school district reimbursements would have saved the state $54 million. But the proposal did not make the final budget.
When Minnesota Management and Budget released a forecast last month stating that special ed costs are set to skyrocket by $111 million compared with initial projection, it seemed likely that Walz would address this.
But Walz proposed no cuts for this two-year budget cycle. Instead, the supplemental discusses a “Blue Ribbon Commission” to make the hard decisions on special ed costs in the next two-year budget cycle (by which time Walz will be sipping a fruity drink on the beach or teaching geography again.)
Walz has no new ideas for raising revenue
The governor trotted out again his idea of slightly cutting the sales tax rate, while expanding the number of services that can be subject to sales tax (For example, fees you might pay to a lawyer would be subject to a sales tax).
He also endorsed a plan by Sen. Ann Rest, DFL-New Hope, to tax social media companies based on their number of users.
Rest’s idea died on the vine during budget negotiations at the end of last session. The sales tax idea did not appear to even enter budget negotiations.
The governor wants to study IT and AI
At a press conference last week, Walz discussed the urgent need to reform the old computer systems that administer Medicaid and other social services programs.
“These are conversations that were brought to me before I was even elected governor,” Walz said.
But the governor’s supplemental asserts that this well-established problem demands … more conversations
Walz has floated $4 million toward a study about how best to modernize IT systems.
Related: Waiting to load: The struggle to address IT systems that may contribute to social services fraud
Walz also wants $25 million that, in part, would address problems with MAXIS, the computer system that counties used to process Supplemental Nutrition Assistance Program eligibility.
But MAXIS was created in 1989, and the Association for Minnesota Counties has called on junking the system.
Lawmakers like Steve Elkins, DFL-Bloomington, and Mark Koran, R-North Branch, have suggested that modernizing IT would cost closer to $500 million.
Compared with social services IT systems, the problems and opportunities around artificial intelligence are less well-established.
The governor seeks up to $47 million toward “initiatives that would prepare Minnesota’s economy and workforce for increased artificial intelligence utilization.”
And Walz wants to create a “Governor’s Council on the future AI economy” to better understand the issue.
Enhanced Child Tax Credit
Here is the big spending item.
What we know now is that Walz wants to add $147 million to the biennium budget by expanding eligibility and payments to parents applying for a tax credit.
This includes families being able to add up to $3,000 more in expenses for a child under 5 years old that the expanded credit would cover.
Cuts in disability care
Sprinkled throughout the supplemental are cuts in programs for people with disabilities, including a one-time $71 million cut in disability grants.
The supplemental declares that these programs “are no longer necessary or are supported through other funding sources.”
Remember Operation Metro Surge?
The governor wants to start a $10 million response fund to address the impact of the federal government’s unprecedented immigration enforcement action in Minnesota.
Walz is also in favor of putting state money toward rental assistance and partly forgivable small business loans to people economically affected by the immigration enforcement surge.
