MINNEAPOLIS (WCCO) — Gov. Tim Walz has announced his two year $52.4 billion COVID recovery budget, and it includes a broad expansion of summer programs for children, and direct assistance for Minnesota’s poorest families.

The budget relies on a series of tax increases totaling $1.6 billion on Minnesota’s wealthiest individuals. Republicans were quick to respond saying the tax hikes are dead on arrival.

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Walz laid out a sweeping budget that includes 2021 free summer school programs for students 4 and older, a $750 cash payment to 32,000 low income families, and an increase in the child tax credit of $160 a year for most Minnesota families. And he wants $150 million for businesses damaged in the riots after George Floyd’s death.

“We know when workers are supported, when children are supported, when quality of life is supported, it creates an economic environment were things thrive,” Walz said.

The governor’s plan calls for using $1 billion from state reserves and $1.6 billion in new taxes. Specifically he wants a 1.5% increase in the income tax rate for those earning $1 million or more. He wants a 1.5% hike to the capital gains tax, an increase in the corporate tax rate from 9.8% to 11.25%, and he wants to reinstate the estate tax exclusion at $2.7 million.

Walz says it’s time for those who have done well during the pandemic to pay their fare share.

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“We are going to ask those that are most fortunate, those corporations that have profited at this time, to pay their fair share to make sure we can continue to provide the services that we need,” Walz said.

The budget drew immediate fire from Republicans, who say the state needs to cut spending and that every single one of the proposed tax increase are dead on arrival in the Republican Senate.

“Thank God Republicans control the Senate,” Majority Leader Paul Gazelka said. “We are not going to increase taxes on anyone.”

This budget argument is expected to dominate discussions at the Capitol through the end of the session; it could go longer. This is one of the years that, if there is not a budget agreement by the end of June, there could be a government shutdown.

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The governor is also proposing increases in cigarettes and vaping products. He’s looking at increasing the cigarette tax by a $1 a pack and a 95% tax increase on vaping devices.

Esme Murphy