Walz-Hortman gambit: MN rebate checks without spending strings attached

Dave Orrick, Pioneer Press
·4 min read
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This might sound bizarre, but here’s the new scenario that emerged Wednesday at the Minnesota Capitol: The state’s top Democrats — Gov. Tim Walz and House Speaker Melissa Hortman — set aside their long-sought spending priorities and pushed $4 billion in tax rebates to Minnesotans. That’s right, Democrats pushing tax rebates with no spending strings attached.

And the state’s top Republicans opposed that idea. That’s right, Republicans opposing a tax rebate.

Weird, right?

The Wednesday weirdness underscores the topsy-turvy world of election-year politics in a state with divided party control of government today — and everything up for grabs at the voting booth in the fall.

In the meantime, more than $7 billion in a forecast state budget surplus remains unspoken for as there’s no agreement for what to do with it.

WALZ-HORTMAN GAMBIT

In their gambit announced at a Wednesday press conference, Walz and Hortman, DFL-Brooklyn Park, said they were willing to give up on half of a previous agreement with Senate Majority Leader Jeremy Miller, R-Winona, that called for $4 billion in tax breaks and $4 billion in spending.

While both parties had favored parts of each component of that deal, the Democrats were far more wed to the spending proposals, while Republicans were more supportive of the tax breaks. Regardless, the details of how to spend that $4 billion remained elusive when the Legislature adjourned in late May.

There had been bipartisan agreement on the tax breaks. That agreement called for permanent reductions in the first-tier of the state income tax bracket, an end to the state’s tax on some Social Security earnings, as well as other credits. But that plan was tied to the spending plan that never happened. So neither happened.

On Wednesday, Hortman signed onto a separate $4 billion plan — Walz’s plan. That plan is simply to pay $4 billion back to 2.7 million Minnesotans in the form of checks: Individuals earning up to $164,000 would get a check for $1,000, while married couples filling jointly earning up to $273,470 would get $2,000 checks.

Walz previously called these “Walz checks” but on Wednesday said, “You can call it whatever you want,” adding later, “Minnesotans are going to call them ‘gas checks,'” referring to the skyrocketing price of gasoline and other goods and services.

“It’s simply unconscionable to be sitting on $7 billion while Minnesotans are trying to make those bill payments,” Walz said, referring to the amount of the state’s budget surplus not yet appropriated. Some $5 billion of that is already sitting in state accounts in cash.

There is a catch to Wednesday’s announcement. While Hortman said she personally supports it, and one other key Democrat — the House’s fiscally moderate tax committee chairman, Rep. Paul Marquart, DFL-Dilworth, also signed on — the plan hasn’t been presented to the House’s full Democratic-Farmer-Labor caucus. That larger group includes progressives who have been clamoring for many of the spending plans that the new proposal would have to jettison. Such plans range from child care subsidies to crime-prevention programs that don’t involves cops with guns.

An aide to Hortman said she expects to present the plan to her caucus next week.

GOP: NOT ENOUGH

Miller threw cold water on the plan Wednesday, emphasizing that he’s seen nothing in writing and received no official communications from Walz or Hortman.

“I don’t even know what it is exactly,” he said in an afternoon video call with reporters in which he called the Walz-Hortman news conference a “stunt.”

But his argument also revolved around the size of the package. Even though in May he agreed to the $4 billion plan that included the elimination of the tax on Social Security earnings, on Wednesday he retrenched to a previous Republican Senate plan for $8 billion in tax breaks. The Republican-controlled Senate passed that in April, but it never had much Democratic support and stood no chance of being approved in the House.

House Minority Leader Kurt Daudt, R-Crown, similarly scoffed at the Walz-Hortman plan, calling it “not real” and also suggesting that the entire $8 billion should be returned to taxpayers.

Additionally, Miller and Daudt criticized the one-time payments for not being permanent — as opposed to the permanent changes to the state income tax code they have supported.

The shift among GOP leaders to a hard line of $8-billion-or-nothing is consistent with the rhetoric of former state Sen. Scott Jensen, the GOP’s presumptive nominee for governor who is challenging Walz in November.

“When I’m governor, I’ll give the whole surplus back and more,” Jensen said in a statement. “Not through a one-time gimmick that will only further exacerbate inflation, but through a responsible, long-term approach that will provide ongoing financial relief to hardworking Minnesota families.”

In the nation’s only other divided legislature, Virginia lawmakers from both parties and Republican Gov. Glenn Youngkin have managed to come to agreement. On Tuesday, Youngkin signed a state budget that includes $4 billion in tax relief, increased spending for education and law enforcement, and direct rebate checks of $250 for individuals and $500 for couples filing jointly.

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