Walz’s proposal will add billions to already bloated welfare spending
Minnesota spends quite a lot on welfare. In the 2020-2021 biennium, for example, Minnesota spent a total of $47.4 billion, of which $13.6 billion, or 29 percent, went to Health and Human Services –– a category whose programs fall under welfare per the Census Bureau definition.
This is 30 percent higher than what Minnesota spent on welfare in the 2010-2011 biennium –– $10.5 billion (in 2021 dollars).
Total spending on welfare has grown both in number and as a proportion of total general fund spending. This trend continues into the 2022-2023 binneum budget, which is the state’s current operating budget.
In the current operating budget, welfare spending takes up 32 percent of total general funds –– compared to 29 percent in the last binneum. Moreover, total welfare spending is 20 percent higher compared to the last operating budget (2020-2021 binneum).
Minnesota also spends more on welfare compared to other states. Using data from the U.S. Census Bureau, American Experiment research found that Minnesota spent over $32,000 for every person in poverty in the year 2019. This is the third highest rate in the country and is nearly 75 percent higher than the national average.
And in the next operating budget (2024-2025 binneum), welfare spending is forecast to reach $18.4 billion, and makeup 34 percent of general fund spending –– compared to 32 percent of the current budget. This is 12 percent higher than the current spending level.
Walz’s proposal will add to already bloated welfare budget
In light of the state’s $7.7 billion surplus, Governor Tim Walz has proposed a supplemental budget which the legislature will consider this session. Among the categories that will get a major boost under the governor’s proposal is welfare spending.
Under Governor Walz’s recommendation, the state will spend $16.9 billion on welfare in the 2022-2023 binneum. This is about half a billion dollars more compared to the current operating budget of $16.4 billion.
The majority of the new spending, however, shows up in the 2024-2025 budget cycle. For this binneum, Minnesota is forecast to spend $18.4 billion, which is already significantly higher than the current spending level.
Walz’s proposal will add more than $2 billion to that, bringing total welfare spending to over $20 billion. This is 25 percent higher than the state’s current spending levels. Additionally, under his plan, welfare spending will make up 35 percent of total general fund expenses in the 2024-2025 binneum.
This growth is unsustainable
Minnesota’s spending on welfare has grown significantly in recent years both in size, per capita terms as well as when taken as a proportion of total government spending. Walz’s supplemental budget will merely accelerate this trend.
This is concerning for multiple reasons. For one, Minnesota is a high tax, high-spending state. This means that increased spending, especially on long-term programs like welfare, puts the state at high risk for future fiscal imbalances whereby tax collections may fail to meet spending obligations.
But in addition to that, if welfare continues to take a bigger portion of state funds, this will put pressure on the budget and take away spending on other government services.