ST. PAUL, MN -- A $1-billion tax relief plan was rolled out by Senate Republicans in St. Paul on Thursday.
The proposal is in response to lingering questions about what to do with Minnesota's projected $1.3-billion surplus.
What is the surplus? Basically the state has overbudgeted and underspent on things like road work projects infrastructure upgrades and more.
In simple terms. Imagine you budgeted $20,000 to remodel your kitchen and it only cost $15,000.
What would you do with the leftover $5,000?
That's what lawmakers in Minnesota are trying to figure out with the state's excess $1.3-billion.
"If you live in this state, you will be positively impacted by what we're proposing in this bill," said Sen. Robert Chamberlain, R - Lino Lakes.
It's a proposed bill that would provide more than $1-billion in tax cuts.
"The reserves are at an all-time high and now it's time to give the rest back to Minnesotan's," said Sen. Paul Gazelka, R - Nisswa.
Headliners in the bill are lowering the tax rate in the state's lowest-income tax bracket, completely eliminating taxes on social security income, expanding the K-12 income tax credit and more.
"It's about seniors, it's about farmers it's about mom and pop businesses, it's about charities, start-up businesses, mainstream businesses, it's about affordable housing," said Chamberlain.
Republicans are calling the plan a win for the low and middle class.
"The bottom line is, if you reduce taxes, you have a better economy," said Chamberlain.
Democrats are calling the plan into question, with Duluth senator Erik Simonson calling the plan irresponsible, saying it would "put Minnesota's economic stability in jeopardy."
Chamberlain. who is the chairman of the Senate Tax Committee said the proposal would make it easier to afford childcare, groceries, or medical bills.
"This is about people. It's not just about the number, it's about real people, real lives and what they do with it," he said.
With the next fiscal forecast looming in February, some Democrats are in wait and see mode, saying more clarity is needed before settling on a major tax relief plan.
Minnesota Governor Tim Walz has also urged caution with any relief plan, as the surplus is a projection, and could still move up or down pending that fiscal forecast.
The $1.3-billion dollar surplus is in addition to the state's $2-billion budget reserve, also known as the rainy day fund.
In a statement, Sen. Justin Eichorn, a Republican from Grand Rapids said, “Minnesota has a budget surplus of more than $1 billion,” said Senator Justin Eichorn (R-Grand Rapids). “With that much money in the bank, it baffles me that there are still those who want to spend more and raise taxes on low income and middle-income Minnesotans. We have more than enough to fund our core government priorities like roads and bridges and k-12 schools while also looking to make cuts and recoup funds lost to waste and fraud. With our surplus, it’s time we focus on our taxpayers and give relief to Minnesota families and small businesses.”
Below is Sen. Simonson's full statement:
“The tax bill released by Senate Republicans today is an irresponsible plan that, if enacted, would spend over $1 billion and put Minnesota’s economic stability in jeopardy. Until we receive an updated budget forecast, any proposal is nothing more than a wish list. Let’s see what the February forecast numbers are, and then focus on a bill that helps Northern Minnesota succeed. The Senate DFL is committed to policies that help working Minnesotans.”