Senate Republicans proposed a nearly $51.9 billion state budget on Tuesday, arguing Minnesota doesn't need to raise taxes amid a projected budget surplus and billions in federal aid.

Leaders of the GOP-controlled Senate debuted their initial topline numbers for the next two-year state budget, offering a counterpoint to Democratic Gov. Tim Walz's plan. However, the totals could change, since they don't account for the latest federal relief package that includes an estimated $2.6 billion in one-time money for state government.

"We have billions coming in from the federal government, Minnesota has a surplus and what do we do about it? Well, here's what we don't do: First of all, we don't raise taxes," Senate Majority Leader Paul Gazelka, R-East Gull Lake, said in a video announcing the budget priorities. "The governor continues to talk about raising taxes, even with all that money. Not going to do it."

Walz proposed a $52.4 billion budget in January, which included tax increases on top earners and corporations. That was before state economists predicted Minnesota would have a $1.6 billion surplus in the next two-year budget — a major swing from the previous estimate of a $1.3 billion deficit — and before Congress approved the latest COVID-19 relief package.

The governor plans to release a supplemental budget Thursday, and House Democrats are scheduled to lay out their budget target numbers next Tuesday. The divided Legislature and Walz will spend the next couple of months trying to align their differing visions for state spending and revenue before the regular legislative session ends May 17.

"The proposed Senate Republican budget targets are woefully inadequate," House Speaker Melissa Hortman, DFL-Brooklyn Park, said in a statement. "Minnesotans deserve a budget that will help them recover from COVID-19, and the Senate Republican budget fails them."

Hortman notes that the GOP budget would reduce spending on agriculture, rural development, housing and veterans.

Budget dynamics at the Capitol have shifted dramatically in recent months. The brighter outlook and federal relief dollars have added fuel to Republicans' opposition to tax increases.

Republicans said Tuesday they will prioritize tax relief for businesses that got loans through the Paycheck Protection Program, and for people who need unemployment insurance during the pandemic. They estimated those tax breaks and other tax relief proposals this session would amount to $591 million.

GOP leaders said they also want to extend reinsurance, a controversial program intended to prevent high health care premiums by supporting insurers, and create a fund to cover law enforcement mutual aid costs during emergencies. The Senate approved a bill to create a $20 million law enforcement account, which could be used for expenses during the trial of former Minneapolis police officer Derek Chauvin, but they haven't reached an agreement with House Democrats on the measure.

They also proposed an overall 5% cut to state government administrative costs.

"We are not going to be continuing to grow government," said Sen. Julie Rosen, R-Fairmont, Finance Committee chairwoman. "I want to make sure that we spend our money well."

Jessie Van Berkel • 651-925-5044