MINNEAPOLIS (WCCO) — There are 12 days left until the legislative ends and both sides remain far apart. Negotiations broke down again Tuesday afternoon no talks are scheduled until Sunday night.

One of the major stumbling blocks, WCCO’s Esme Murphy reports, is a 2% medical provider tax that’s been on the books in Minnesota since the early 1990s, and brings in an estimated $700 million in revenue.

Those dollars are used to fund health care for the poor, and services around the state, especially in rural and under-served areas.

That tax is set to expire this December and it’s become a major battle ground in the budget stalemate.

Gov. Tim Walz addressed the budget impasse while greeting children at a clean water event earlier Wednesday, saying he remained “optimistic.”

For Walz, keeping a 2% provider tax on medical providers is essential; last week, he rallied health care providers in the Twin Cities and rural areas who say, without the $700 million a year from the tax, rural clinics would close and thousands would lose benefits.

“We don’t want to leave you hanging on this. We are committed to the health and well-being of our communities, and to their providers. You have got a reliable partner in state government,” Walz said.

Republicans, however, call it a “sick tax” that gets passed on to consumers — so a $100 doctor visit costs Minnesotans $102. But the Republican Senate Majority Leader says if the 2% tax stays, that amounts to yet another massive DFL tax hike.

“In the $12 billion of tax increases over the next four years, we couldn’t get them to lower one of them,” Sen. Paul Gazelka said.

Jennifer Jacquot-Devries has a genetic kidney disease and is one of 83 thousand low-income Minnesotans who gets medical coverage through Minnesota Care.

“Without the provider tax I worry that we could be kicked off Minnesota Care,” explained Jacquot-Devries. “Medical Care could almost go away completely and it’s a really unique and amazing program for people just above the poverty lines.”

Democrats say if the provider tax is allowed to expire another 1.1 million people on Medical Assistance could see coverage cuts.

The 2% provider tax is going to play a critical role in the final budget negotiations.

One theory is that it would be easier for Republicans to agree to keep the provider tax because it is an existing tax that has been around for decades than agree to any new taxes like the governor’s gas tax.

Esme Murphy

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