How Walz’s budget might affect you

February 24, 2019
From left, Reps. Nels Pierson, Duane Quam, and Duane Sauke discuss Gov. Tim Walz’s budget proposal during an Eggs and Issues event Friday at the Rochester Golf and Country Club.

Minnesota Management and Budget Commissioner Myron Frans came to Rochester Friday to talk about the nitty-gritty of DFL Gov. Tim Walz’s $49 billion budget proposal released Tuesday.

Frans’ talk was delivered Friday to a group of area business, nonprofit and political leaders at the Rochester Golf and Country Club as part of Eggs & Issues, an event sponsored by the Rochester Area Chamber of Commerce.

During the question-and-answer portion of the event, state Rep. Nels Pierson, a Stewartville Republican, expressed opposition to Walz’s plan to revive the 2 percent provider tax.

The tax on health care providers helps fund Medicaid and the state’s separate MinnesotaCare program. The tax is slated to go away at the end of the year.

Pierson argued that the original purpose for the tax 25 years ago had been served. Federal dollars now pick up the tab for much of the state’s health care costs, making the provider tax a “piggy-bank” for health and human services.

“I’ve been in the Legislature for four years, trying to figure out how to end this immoral tax on the sick,” Pierson said. “And I’ve been told, ‘don’t worry, Rep. Pierson, it’s going to sunset in 2019.’ But if it doesn’t fix your budget forecast. I guess we’ll just tax the sick again.”

Frans noted that the tax has been supported by governors and legislators from both sides of the aisle for a quarter of a century. He said the tax still supports health care programs for low-income people. If opponents of the tax don’t like it, they should come up with alternative.

“I love these discussions, but I don’t think we need to make them immoral or not immoral,” Frans said. “I think they are discussions about policy.”

The exchange offered a preview of the partisan battle over Walz’s budget that will unfold in the coming months in St. Paul.

Walz says the budget makes important investments in education, health care and communities. Republicans say the budget, which is a 9 percent increase over the last budget and includes a 20 cent gas tax increase as well as the 2 percent “sick” tax, is too expensive and hurts the people it purports to help, including the working and middle classes.

Here are some of the highlights of Walz’s budget proposal:


• Walz is proposing to spend $733 million in new money on E-12 education. Frans said the budget lessens the funding gap between school districts by providing more support from the state. By providing rural districts with stable funding, districts will have less need to hold referendums.

• It injects $522 million into the general education formula, which translates to a 3 percent increase the first year and a 2 percent increase the second.

• It increases funding for special education by $78 million. Special education needs continue to grow. Between the rising need and lagging aid, schools are forced to divert general fund dollars to the tune of $833 per student. The investment will close the gap.

• The budget earmarks $59 million to maintain funding for pre-kindergarten programs. Frans said the schools would lose some of their pre-K slots without the funding.

Health care

• The budget proposes to create a $190 million subsidy program to reduce by 20 percent the monthly premiums paid by Minnesotans who get their insurance through MNsure on the individual market.

• It also creates a state-based tax credit to cap individual market premiums below 10 percent of a person’s income. Frans said this will allow consumers to purchase better plans that they won’t be afraid to use.

• In 2022, the budget creates a statewide public option to increase access to health care. Frans said the buy-in option is designed to offer a high-quality, affordable plan to Minnesotans with more services, lower deductibles and lower co-pays than what is currently available on the individual market.

• It also includes $4 million for reforms to increase dental access and reduce pharmacy spending.


• The budget targets $423 million in general fund dollars for Minnesota communities. Frans said that and other expenditures make it the “single greatest investment in Greater Minnesota” in the state’s history.

• The proposal includes $61 million for aid to counties and cities; $70 million to complete the build-out for broadband; and $44 million for child care assistance. It also includes $150 million for affordable housing.

• Walz also proposes spending $1.9 billion in transportation and transit funding. To fund that, Walz proposes a 20 cent increase in the gas tax that will be phased in over two years and be indexed inflation.