Minnesota Senate Republicans say no new taxes, fees in budget plan

Republicans in the Minnesota Senate countered Democrats' spending and tax proposals Thursday with a budget they said would eliminate government waste and avoid raising taxes or fees.

Laying down a marker against two of Gov. Tim Walz's signature proposals, state GOP leaders made clear they will not support a 20-cent-per-gallon state gas tax for roads and bridges, nor his plan to extend a 2 percent tax on health providers, which Republicans call a "sick tax."

In all, the Senate Republican majority offered a $47.6 billion two-year budget, nearly $2 billion less than what Walz and House Democrats have proposed. Their plan sharpens the divide between the two parties, setting up spending negotiations that will dominate the next two months of the legislative session.

"These budget targets reflect a very serious, realistic and responsible attempt to balance the state priorities with the ability to live within our means," said Senate Finance Chairwoman Julie Rosen, R-Vernon Center. "We still remain concerned about the future of the economy of Minnesota and nationally, and this budget reflects those concerns."

The proposal cuts the budgets for a number of state agencies, but overall the GOP plan is about a 4.7 percent increase over what the state spends now. It includes one-time spending in some areas, including school safety, mental health grants, broadband expansion and reimbursements for deputy registrars burdened by problems with the state's vehicle licensing and registration system.

Health and human services would get the largest boost. Senate Majority Leader Paul Gazelka, R-Nisswa, said Republicans are looking for ways to curb health spending but want to take care of the state's most vulnerable residents.

Senate Democrats fired back at their Republican counterparts, saying the plan fails to keep pace with inflation and the state's growing population. Sen. Susan Kent, D-Woodbury, dismissed it as "accounting gimmicks and some fuzzy math."

Democrats also pushed back against the Republicans' plan to let a 2 percent tax on health care providers expire at the end of this year. The 27-year-old tax generates about $700 million a year to pay for health care for lower-income Minnesotans. Republican lawmakers argue that the tax puts a financial burden on patients.

Walz gathered Minnesotans from across the state Thursday at the Capitol to talk about the provider tax and his other health care plans.

"Let's be clear in this room, the provider tax is going to stay. Those three dozen senators over there know that," Walz said. " … So the game is being played, what will be extracted for that?"

One priority for Senate GOP leaders, meanwhile, is a continuation of the reinsurance program, which gave insurers about $139 million in 2018 to help keep medical bills down. Gazelka said losing the program would destabilize the market. Walz's budget would eliminate reinsurance and add a public health care subsidy to offset premiums.

Walz's budget for 2020 and 2021 shrank slightly this month after a state economic forecast showed slower growth. But his $49.4 billion plan would still increase spending by 8.4 percent over the current budget. House Democrats offered an even larger proposal of $49.8 billion. The Democrats suggested drawing more tax revenue from corporations to help pay for new initiatives in areas like education. They also want to increase the gas tax to pay for road and bridge improvements.

"We haven't picked that number yet," Gazelka said. "That has to fit within the resources we have."