Gov. Tim Walz March 28

Gov. Tim Walz delivers his 2021 State of the State address. 

(The Center Square) –“Normalcy is on the horizon,” Gov. Tim Walz told Minnesotans in his 2021 State of the State speech.

Walz delivered his speech Sunday night from his old Mankato classroom.

The state is recovering quickly from the global pandemic, he said, with 80% of seniors having a single vaccine dose and two-thirds of school personnel vaccinated. Starting Tuesday, he said, all Minnesotans ages 16 and older will be eligible for the COVID-19 vaccine.

Walz called for a “goal-line stand” against COVID-19 with masking and social distancing to fight against spreading COVID-19 variants as nearly 80,000 Minnesotans get a dose injected.

He also renewed his push for tax hikes. While he dropped some taxes in a revised budget, he called on some Minnesotans to pay more taxes to fund additional services targeted to lower-income Minnesotans.  

“While the wealthiest Minnesotans did well during the pandemic, our students, small businesses, and working families struggled to get by,” Walz said.

Walz’s proposed budget seeks to hike the corporate income tax, which taxes all profitable businesses. Rough estimates place that number at 34,000 businesses. 

His proposed budget reduced his planned corporate tax hike from his originally proposed 11.25% to 10.8%, which would have bumped Minnesota to the second-highest corporate rate in the nation behind New Jersey at 11.5%.  The state's current corporate tax rate is 9.8%.

Walz's revised proposal keeps his new fifth-income tax tier for household incomes above $1 million or a single earner bringing in $500,000 or more, which would shift Minnesota from the fifth-highest income tax – 9.85% on taxable income over $164,400 a year — to the third-highest.

The budget also kept a higher tax rate on capital gains: 1.5% on sales profits between $500,000 and $1 million, and 4% if more than $1 million.

Walz touted his recovery budget, saying it would give Minnesotans the necessary help to recover from COVID-19 by making the first $350,000 of business Paycheck Protection Program (PPP) loans and the first $10,200 of unemployment benefits in 2020 tax-free.

Meanwhile, Senate Republicans have passed a bill seeking to completely exempt PPP loans from state taxes. 

Walz claimed those taxes would fund tax breaks for more than 300,000 Minnesotans, direct cash payments for 32,000 struggling families, and $50 million into small business COVID-19 forgivable loans.

Walz said things are moving toward normal as some COVID-19 restrictions are being lifted in the state and across the nation as vaccination numbers climb.

But “getting back to normal isn’t good enough,” Walz said, asserting the government should redistribute wealth to poorer Minnesotans hard-hit from COVID-19. He touted his “Due North” education plan, which he said will stem learning loss and close the opportunity gap.

Senate Majority Leader Paul Gazelka, R-East Gull Lake, released a video pre-speech, saying the state is “moving in the right direction” in recovering from COVID-19.

Gazelka called for “clear guidance” as to when Walz will lift emergency powers and when kids can resume regular activities such as proms and graduations.

He also renewed his stance to pass a budget that helps Minnesotans without raising taxes.

Staff Reporter

Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square. A graduate of Hillsdale College, his work has appeared on Forbes.com and FEE.org. Previously, he worked as a financial analyst at Pepsi.