Gov. Walz calls for $12 billion in new spending to make MN ‘best state in the country for kids’ – Twin Cities

Democratic Gov. Tim Walz detailed a big part of his coming budget proposal Tuesday, saying he wants $12 billion in new state spending over the next four years to make Minnesota the “best state in the country for kids.”

Walz’s proposal would tap about $5.2 billion of the state’s historic $17.6 billion budget surplus in the next two-year budget for a mix of tax credits and expanded programs for families and their children. The remaining $6.8 billion would come in the following biennium when the state’s budget surplus is expected to continue to grow.

“This is the budget we’ve been waiting on,” Walz, a former high school teacher, told educators at Adams Spanish Immersion Elementary School in St. Paul. “This is the transformational moment that can happen.”

The $12 billion includes:

• New spending on multiple school programs including general operations, special education, universal meals and mental health services.
• Lower- and middle-income parents would have better access to child care and preschool and be eligible for tax credits to offset those costs and other expenses.
• Walz also wants to create a new state agency, the Department of Children, Youth and Families, which would oversee some aspects of state government now under the purview of the Department of Human Services.

Lt. Gov. Peggy Flanagan said the measures would cut the rate of child poverty in the state by 25 percent. Growing up in a low-income family, Flanagan called the budget plan something she’s been “waiting my whole life to roll out.”

“No one would be more proud of this budget than my mom,” Flanagan said of her mother, who died in November.

Criticism from GOP

Republicans were quick to criticize Walz’s plans, especially the creation of a new state agency, with House Minority Leader Lisa Demuth, R-Cold Spring, saying the governor was “more focused on expanding government bureaucracy in education than helping children.”

Sen. Jason Rarick, R-Pine City, the top Republican on the Senate Finance Committee, said in a statement that Walz’s announcement was a “public relations stunt to send even more money into struggling schools without any accountability to parents or student achievement.”

In the previously divided government, the budget proposal Walz is rolling out over the next week would be mostly a wish list. But now that the Democratic-Farmer-Labor Party has control of state government with thin majorities in the House and Senate, Walz might get a lot of what he wants.

‘Rebates are still there’

The $12 billion in new spending, $5.2 billion of which would be included in the next two-year budget, would leave plenty of room for other priorities, Walz said. That includes things like paid sick time and family leave, expanding access to health care and returning some of the budget surplus to taxpayers.

“The rebates are still there,” Walz said, referring to the $1,000-per-taxpayer or $2,000-per-household rebates he wants to send to residents. Doing so would cost the state about $4 billion in one-time money.

Walz is expected to continue to discuss pieces of his two-year budget plan at events over the next week and the entire proposal will be detailed Jan. 24. It will lean heavily on the budget surplus, about $12 billion of which is one-time money already in the bank with about $6 billion expected over the coming two years.

Highlights of the governor’s proposal include:

New tax credits

Expansion of the child and dependent care credit would provide up to $4,000 per child with a maximum of $10,500 to families, reducing costs for an estimated 100,000 households.

The broader credits would reduce state tax collections by $539 million in the next biennium.

A state child tax credit would provide lower-income families $1,000 per child with a maximum of $3,000. It would reduce tax revenues by $1.1 billion in the coming two-year budget.

New school spending

The per-pupil funding formula, which now costs $7.4 billion annually, would increase by 4 percent next year and 2 percent the following year for a total of $717 million.

After that, the formula that districts use to cover the cost of operations would be tied to inflation with an estimated added cost of $750 million a year.

Additionally, Walz wants to provide about $400 million a year to offset districts special-education costs from currently unfunded state and federal mandates. He’s proposed spending $390 million to make school meals available at no cost to students and $158 million to expand students access to mental health services.

Preschool and child care

Walz wants to increase rates in the Child Care Assistance Program to match federal recommendations for the program that serves about 30,000 children. He’s also proposing an overhaul of the program’s waitlist to serve more families.

Additionally, Walz’s budget adds $90 million annually to the state’s early-learning scholarship program. The state now spends roughly $170 million a year on preschool programs.

Budget work has just begun

The Legislature has until the end of May to complete the next two-year budget. Over the next four months, lawmakers will cobble together a spending plan from a long list of priorities and proposals outlined by Walz and legislative leaders.

Walz’s announcement came hours after DFL leaders of the Senate Education Finance Committee said they wanted $500 million in immediate funding for schools after nothing was passed last session under divided government. That money would help with current district costs for transportation, special education, students learning English and meals for students.

In his inaugural address this month, Walz promised he would use the state’s budget surplus to “fully fund education.” Asked Tuesday if his $12 billion budget proposal would do that, the governor said his plans would put schools, students and families in a much better place.

“Children are not just a formula. We are going to measure it on results,” Walz said. “Yes, this is what we were talking about. But I will say it is a moving target.”