Capitol Watch: Walz budget still unbalanced
Governor Walz made news last week traveling around the Midwest holding tightly controlled town meetings in front of friendly audiences. It feels like he’s searching for the meaning of life after an embarrassing national defeat. It also feels like he’s bored with his current job.
That being said, Walz (or his staff) did find time to release an updated state budget based on new numbers from the February forecast. Walz uses one-time money left over from the previous $17 billion surplus (plus previous tax increases) to meet the constitutional definition of “balanced.” But spending still outpaces revenue by billions in each of the next two biennia.
The February forecast predicts revenue will be $64.494 billion in 2026-27 and $67.882 billion in 2028-29.
Governor Walz plans to spend $66.332 billion in 2026-27 and $70.400 billion in 2028-29.
The simple math shows the Walz budget spends $1.838 billion more than it takes in for 2026-27 and $2.518 billion more than it takes in for 2028-29.
There is $7.269 billion in the bank as we begin the 2026-27 budget process. The unbalanced approach used by Walz reduces that amount to $3.983 billion for the 2028-29 budget. And it completely disappears after 2029, leaving the state budget with an ongoing structural imbalance.
A responsible budget would cut permanent spending to align with revenue and use one-time money for one-time spending (like tax rebates). One of the excuses Walz gives for not meeting with Republican legislative leaders is that they haven’t released their version of the 2026-27 budget. Fair enough. Let’s hope we see a GOP budget sooner rather than later, and let’s also hope it is structurally balanced.
More notes on the Walz budget
On the revenue side, Walz’s sales tax proposal to broaden the base and decrease the rate contributes to tax increases of $330 million in 2026-27 and $445 million in 2028-29. Remember this the next time he calls it a middle-class tax cut. It’s a tax increase.
Tax revenue forecast 2026-27: $61,794,511
Tax revenue Walz budget 2026-27: $62,124,348
Difference: $329.837 million
Tax revenue forecast 2028-29: $65,943,938
Tax revenue Walz budget 2028-29: $66,379,861
Difference: $444.923 million
On the spending side, Walz sounded like a Republican defending his proposed funding changes in Human Services. His plan reduces proposed spending in Medicaid by capping the reimbursement rate for Medicaid providers at 2% instead of the inflation rate. Walz defended the proposal by arguing he’s not cutting spending, only reducing the rate of growth in the program. That argument has been made by Republican budget-cutters for decades, while Minnesota Democrats have weaponized any reduction in the growth of spending as mean-spirited budget cuts. Welcome to the party, Tim.
The Walz budget reveals once again who he really is at his core: a union teacher. His budget proposes to end funding for private school students, something the state has done for over 50 years. This involves a very small amount of money but sends a mean-spirited message to private school parents: get your own ride to school.
More drama in the Minnesota Legislature
We can’t seem to make it one month in Minnesota without personal drama from elected officials. This time it was Republican Senator Justin Eichorn of Grand Rapids who was arrested and charged with soliciting prostitution from a 17-year-old girl. Thankfully the 17-year-old turned out to be a Bloomington police officer.
Eichorn’s fall from grace provided capitol-watchers an opportunity to see how the two parties would handle the scandal. Republican Senate Leader Mark Johnson wasted no time and immediately called for Eichorn to resign. A few days later, he announced a motion to expel Eichorn would be made from the Senate floor. Eichorn resigned his seat before the vote was necessary.
We can’t help but contrast the swift action of Senate Republicans with the foot-dragging and protectionism of Senate Democrats concerning Sen. Nicole Mitchell, A.K.A. the Burglar. Because they’ve been protecting Mitchell and waiting for the justice system to run its course, Democrats had to hold back their condemnation of Eichorn until it was safe.
Sen. Erin Maye Quade took their hypocrisy a step further with a press statement charging “the Republican Party has created a permission structure for Republican leaders to act with sexual predation and be rewarded.”
Rewarded with expulsion from the Senate, Sen. Maye Quade? They threw him out immediately. Maye Quade must also believe no one remembers her 2017 complaints against a fellow DEMOCRAT Senator Dan. Schoen, who also had to resign from the Senate. Leave it to political hacks like Erin Maye Quade to attempt to squeeze as much partisanship out of every situation, no matter how far-fetched.
The race to replace Sen. Eichorn has already begun in earnest. With Trump winning the district by 14,000 votes, the winner of the Republican primary is likely to be the next Senator. It will be a battle of big names in the district with Keri Heintzeman, the wife of current State Representative Josh Heintzeman, facing off against Josh Gazelka, son of former Senate Majority Leader Paul Gazelka. Both candidates have strength in the Brainerd area, so the race might come down to who does better in Grand Rapids. There are two other Republican candidates in the race so far.
Since Gov. Walz has been schooled by the Supreme Court on how to issue writs of special election, we expect him to let us know the dates of the primary and general elections on Monday.