Governor Walz Releases Supplemental Budget Recommendations

March 19, 2024

This week marks the first and second policy deadlines at the Capitol, when bills that do not spend money must have made their way through each committee with jurisdiction over the bills. This means a lot of full committee agendas and some very long committee hearings. The Senate Judiciary Committee met well past midnight on Monday evening, we expect more of the same this week as lawmakers attempt to keep bills in play for possible enactment before the Session ends in mid-May.

The other big development this week is the Governor’s supplemental budget recommendations being released. While the two-year budget was set last session, lawmakers often pass supplemental budgets in the second year of the biennium, a process that unofficially kicks off once the Governor weighs in with his recommendations. Governor Walz has proposed a very modest approach to supplemental spending this year in part to leave money on the bottom line to help address what budget officials predict could be a “structural imbalance” in the coming biennium.

The Governor has proposed utilizing a fraction of the current $3.7 billion surplus and leaving the bulk of the money on the bottom line to offset potential deficits in the coming years. His proposal is for $226 million in new spending this year, with the most expensive recommendation centering on a new “Child Tax Credit Payment Protection Pilot,” a $45 million program to enhance last year’s child tax credit. This would allow families to opt in to receive advance payments of the child tax credit. Those who qualified for the child tax credit one year would be guaranteed to receive up to 50% of the amount for each child in the next tax year, without a tax penalty even if their income goes up. This would protect people whose incomes increase over a year from owing the state taxes because of the credit.

The Governor also reiterated his previously stated proposal that lawmakers assemble a bonding bill of $989 million, the other usual focus of the second year of the biennium. While the Governor’s recommendations on bonding and supplemental budget spending typically frame the debate around the Capitol, it is up to Legislators to actually assemble the packages and pass them into law. DFL lawmakers have proposed significantly higher supplemental spending proposals, once the policy deadline has passed attention will turn to work on those bills and we’ll see how closely they end up aligning with the Governor’s recommendations.