Lawmakers Begin Deliberating Over State’s $9.25 Billion Surplus

March 10, 2022

On February 28, Minnesota Management and Budget (MMB) announced another record-breaking economic surplus for the state.  

At $9.25 billion, the forecast surpassed the previous November economic forecast of $7.75 billion, setting a new all-time high for the state’s finances. While the forecast shows the state doing much better than expected, MMB representatives noted the recent Russian invasion of Ukraine was not included in the forecast and creates a level of uncertainty that could have a negative economic impact going forward. 

Among other initiatives, Gov. Tim Walz has advocated using the surplus for large investments into early childcare and paid family leave in his supplemental budget proposal. Following the MMB press conference announcing the larger surplus, Walz proposed increasing the size of his earlier proposal to use a portion of the surplus to provide direct rebate checks to Minnesotans. His new proposal increases the size of the rebates to $500 for individuals and $1,000 for couples. 

Minnesota Republicans called his plan a “campaign stunt” and advocated for a permanent tax cut by reducing first-tier income tax rate from 5.35% to 2.8% and eliminate the state’s social security and disability income tax. 

Following the surplus announcement, DFLers in the House used the moment to advocate for the frontline workers bonus bill, which passed out of the Minnesota House on February 24. The bill would send $1,500 checks to more than 667,000 Minnesotans who were on the frontline of the pandemic. This includes physicians and other healthcare workers, long-term care workers, teachers, retail staff, transit drivers, and others.  

The House DFL supports many portions of the governor’s supplemental budget proposal and will start setting budget targets for certain initiatives soon. Senate Republicans will also announce their budget spending targets in the coming weeks.