Governor’s supplemental budget moves Minnesota forwards

Several Senate committees heard Governor Walz’s priorities for the state’s $7.7 billion surplus and $1.3 billion in remaining federal funds. While the legislature will spend the rest of this legislative session debating how to handle the current budget, the Governor’s budget proposals share many of the same themes as Senate DFLers have been promoting.

Tax budget
The Governor’s tax proposal balances immediate cost relief for working Minnesota families and long-term investments in communities across the state. Most of the Governor’s budget returns about $850 million back to taxpayers in the form of one-time, direct payments of $350 for married taxpayers or $175 for single taxpayers, as well as permanent increases in the state’s Dependent Care tax credit, K-12 education credit, and Working Family Credit. These proposals would impact about 2.8 million Minnesota households. The bill also includes federal conformity language to make tax filing easier for Minnesota taxpayers. Another $100 million is dedicated to a new program, Public Safety Aid, which would be allocated to cities, counties, and Tribal Nations with police or sheriff departments. The funds would allow local leaders to decide how to best support public safety in their own communities.

Health and Human Services
This week the Health and Human Services Reform committee reviewed the 2022 Department of Human Services supplemental budget package. The state’s budget surplus puts the Legislature in a strong position to champion items in this budget that align with Senate DFL priorities, such as children’s mental health supports, affordable childcare, and bolstering our health and human services workforce.

Highlights from the Governor’s Supplemental Budget include:

  • $115 million for a workforce incentive fund to revitalize the states behavioral health, direct support, and housing workforce;
  • $10.4 million to create or expand new children’s inpatient psychiatric beds;
  • $20.4 million to expand our state’s mobile crisis services for mental health needs;
  • $11 million investment in the Homeless Youth Act;
  • $35 million to increase homeless shelter capacity and services across the state;
  • Increasing Child Care Assistance Program rates to the 75th percentile to increase access to affordable, quality child care; and
  • Expanding economic supports to help Minnesota families living in deep poverty.

Environment and Natural Resources
The Environment Finance committee heard testimony this week from the Pollution Control Agency and the Department of Natural Resources on their 2022 supplemental budget proposals. The focus of the governor’s budget continues to build on the agencies’ missions to combat the impacts of climate change on our communities and infrastructure, improve access to the outdoors, and ensure every Minnesotan has healthy air and clean water.

Notable provisions from the agencies’ requests include:

  • $15.5 million for community seedling and tree planting, especially those impacted by the statewide drought conditions of 2021;
  • $24 million for land and water restoration;
  • $2.5 million to advance work to address PFAS pollution in the state;
  • $73 million across multiple agencies for community climate adaptation, resiliency, and water conservation and storage grants; and
  • $28 million for infrastructure upgrades to ensure our state parks, fish hatcheries, and public water accesses are prepared to withstand the impacts of climate change.

The governor’s budget allocates a total of $81.5 million for the DNR’s climate-related priorities, $13.35 million for the DNR to address the impacts of the 2021 drought, and $87.91 million for the PCA budget and policy priorities.

Jobs, Economic Development, and Labor
One of the largest priorities in Governor Walz’s budget allocates $2.73 billion to the Unemployment Insurance (UI) Trust Fund. As a result of the pandemic, many states had to borrow funds from the federal government to pay UI claims. As a result, several taxes on businesses are triggered to pay the federal government back and return the fund to a healthy balance. To offset these taxes on businesses and return money to the federal government the Walz budget pays back the federal government and replenishes the trust fund. 

Other selected provisions:

  • $11.748 million to lay the groundwork for Paid Family and Medical leave Insurance program as well as the implementation of premium rates to pay for the benefits;
  • $170 million for the state’s Border-to-Border Broadband Grant program;
  • $50 million for a nonprofit resiliency and recovery fund;
  • $43 million in FY 2022-23 and $35 million in FY 2024-25 to target BIPOC communities, as well as women in the tech sector, for training in the tech sector that will lead to high paying careers
  • $5 million for Launch Minnesota;
  • $20 million in grants to businesses to upgrade their fleets and purchase electric vehicles and charging infrastructure;
  • $5 million in FY 2022-23 to help communities recover due to a planned power plant closures;
  • $8 million for clean tech workforce programs;
  • the creation of an Office for New Americans;
  • providing resources to DEED to help new businesses develop for the legalization of adult-use cannabis; and
  • the creation of sick and safe time benefit (one hour of earned sick and safe time for every 30 hours worked).

The pandemic has further stressed our housing stock as well as our availability of affordable housing generally. Governor Walz invests $225 million over the base appropriation. This is in addition to his investment in housing through his bonding bill.

Governor Walz included the following investments in his budget portfolio under the jurisdiction of the Housing Finance Agency:

  • A one-time increase of $100 million will be used to acquire, rehabilitate, and preserve existing rental and homeownership opportunities;
  • $12 million in FY 2022-23 and $24 million in FY 2024-25 for workforce and affordable homeownership;
  • $10 million in FY 2022-23 and $25 million in FY 2024-25 for rental assistance;
  • $25 million in FY 2022-23 and $30 million in FY 2024-25 for the Economic Development and Housing Challenge Program;
  • $19.5 million in FY 2022-23 and $19 million in FY 2024-25 for Family Homelessness Prevention and Assistance Program (FHPAP);
  • $12 million in FY 2022-23 and $30 million in FY 2024-25 for families at risk of experiencing homelessness;
  • $10 million in FY 2022-23 and $20 million in FY 2024-25 for Homework Starts with Home; and
  • Increased investment for Greater Minnesota Workforce Housing, Down payment Assistance, Landlord Risk Mitigation Fund, and flexible financing for housing development.