Senate Republicans Stop 20 Cent Gas Tax Increase, Deliver Middle Class Tax Cuts and Boost Spending for Education in Final Budget Deal

Republicans also fought to restore nursing home funding and keep the successful reinsurance program in place that lowered insurance rates

Senate Republicans held firm on their opposition to Gov. Walz’s massive transportation tax increases and instead pushed for a permanent cut in the middle-income tax rate that will deliver tax relief for millions of taxpayers, the first permanent income tax cut in 18 years. The final budget deal also includes increased funding for K-12 schools, a top priority for both Gov. Walz and Senate Republicans.

“A true compromise has things you like and things you don’t like,” said Senate Majority Leader Paul Gazelka. “I’m thrilled to deliver middle-class tax relief to families with a permanent rate cut, I’m not so thrilled with the growth in government spending demanded by Gov. Walz and the DFL House Majority.” 

No to the gas tax

Gov. Walz and House Democrats agreed to drop all of their transportation related tax increases including the 20 cent per gallon increase in the gas tax, tab fee increases and sales taxes to pay for transit. In all the transportation tax increases proposed by Democrats totaled more than $1.64 billion. 

“Stopping the gas tax increase was one of our top priorities and I’m pleased Gov. Walz and House Democrats ultimately listened to the people of Minnesota and rejected this approach,” added Gazelka. 

Tax relief

The budget will include the first income tax cut for the middle-class in nearly 20 years. A rate cut of .25% to the second-tier income tax bracket takes it from 7.05% down to 6.8% beginning in tax year 2022. Minnesota taxes will also finally conform to the federal tax code, reducing the extra steps required for tax filers. 

“Minnesota is finally going to see income taxes go down for the first time in 20 years,” said Sen. Gazelka. “And everyone knew we needed to get conformity done for 2019. We made promises to lower and simplify your taxes, and we did it.”

K-12 Schools funding

Education funding was another top priority for Senate Republicans and the budget deal includes enough new funding for a 2% increase to the per student formula for each of the next two years. 

Human Services and Healthcare

A Blue Ribbon Council is created to identify $100 million in savings and provide recommendations for legislative action in the area of Health and Human Services. 

Gov. Walz and House Democrats also agreed to continue the successful reinsurance program that has proven to keep health insurance rates lower for families, farmers and small businesses in the individual insurance market. 

“I’m pleased Gov. Walz and House Democrats agreed to two more years of the reinsurance program because it worked. After years of double-digit increases, premiums were held in check for families, farmers and small businesses.”

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