Will the Walz-Flanagan budget move Minnesota forward? Not likely

Governor Walz took some time to go around the state last week touting his budget proposal. With very little done so far into the session, pressure may be mounting to get something done.

Star Tribune reported,

“I don’t think it’s time to panic yet,” Walz said, noting he’s frustrated over early inaction on sending direct checks to workers on the front lines of the pandemic, as well as replenishing the state’s Unemployment Insurance Trust Fund. The fund was drained by record claims during the pandemic and has triggered big tax hikes on businesses.

With legislators back home for the Easter/Passover break this week, Walz is using his bully pulpit to increase pressure to pass parts of his plan. He said legislators in both parties are talking to their communities about the session. “They’re out there listening to their folks, and I think they’re hearing it.”

Gov. Tim Walz and Lt. Gov. Peggy Flanagan presented their supplemental budget proposal as a way to move Minnesotans forward, and they continue to market it as such. According to Flannagan, their budget invests in expanding economic opportunity, protecting Minnesota’s health and safety, and supporting children and families.

Certainly, the lack of consensus around what to do with the surplus is disconcerting, especially considering that businesses are facing tax hikes that could have been avoided. But will the Walz-Flannagan budget move Minnesota forward as Walz claims? Very unlikely.

The plan doesn’t invest, it spends

One word that is hard to miss in Walz’s plan is “investment.” The plan is brimming with all the things that Walz will invest in. Walz wants to ‘invest’ in childcare, health care, education, local jobs — the list goes on.

As I have written before, government investment means something quite different from the traditional definition of investment — wherein current consumption is foregone and funds are allocated into a venture in the hopes of turning a profit.

It is highly unlikely that Minnesotans will stand to profit from Walz’s proposed “investments.” This is mainly because most of our problems in childcare, housing, and job creation are due to the inability of supply to meet demand. Regulations and an unfriendly tax system prevent our economy from creating jobs and restrict the supply of goods and services, thereby raising prices. A lot of research has tied high housing costs to restrictive regulations and excessive fees. High childcare costs are also due to stringent requirements.

On the flip side, however, once these “investment” programs are in place, they will require billions more in future tax revenue in order to be sustained. Minnesotans will be hit with a double whammy of higher taxes and higher costs — since these investments are unlikely to address rising costs.

What Walz’s plan gives Minnesota is not “investment,” but billions more in spending, which is likely to turn into higher taxes in the future. To say the least, more spending won’t move Minnesotans forward.

The plan has no permanent tax relief

One of the biggest factors holding our economy down is our high taxes. Minnesotans are some of the most highly taxed residents of any state. This has affected our job creation rates, business creation rates, and GDP growth rates, among other things.

Walz’s plan, however, offers no significant permanent relief that could usher in investments and reverse the trend of Minnesota losing high-skilled, highly productive workers to other states. So it is quite puzzling that this plan is expected to expand the economy without providing the incentives that would induce investment in the economy.


Any plan that aims to move Minnesota forward has to offer relief to high taxes, and not focus on increasing spending without addressing what is causing those high taxes. Walz’s plan is no such plan.

Walz’s plan focuses on throwing money at all our problems, something which will necessitate even higher taxes in the future without addressing the root cause of our state’s problems.