>> Mary: AS YOU'VE HEARD TONIGHT, NEW BUDGET FORECASTS WILL FRAME THE REST OF THE SESSION AND HERE TO TALK BOUT THAT MORE, BUDGET OMMISSIONER SHOWTIME SCHOWALTER.

[ Laughter ] >> WOW.

>> Mary: YEAH, THERE YOU GO.

WELL, THIS IS STILL HUGE, STILL HISTORIC.

I MEAN, INFLATION GOES BACK INTO THE FORECAST AND YOU STILL PRETTY MUCH HOLD ONTO THE SAME HISTORIC $17.5 BILLION.

DID YOU EXPECT THAT?

>> NOT REALLY.

YOU KNOW, BUT I DIDN'T EXPECT MUCH CHANGE EITHER.

YOU KNOW, THE BOTTOM LINE IS, THE ECONOMY'S DOING WELL N MINNESOTA, YOU KNOW, THERE WASN'T A BIG SURPRISE.

IF YOU REMEMBER, WHEN WE DID THE FEBRUARY FORECAST LAST YEAR, YOU KNOW, RUSSIA HAD JUST INVADED UKRAINE, LIKE THAT WEEK.

WE KNEW THERE WERE A LOT OF THINGS THAT WERE UP IN THE AIR.

NOTHING NEARLY THAT BIG, HANK GOODNESS, HAS HAPPENED SINCE NOVEMBER.

SO WE'RE EXPECTING SOME STABILITY.

>> Mary: LET'S TALK ABOUT THE UNCERTAINTY, THOUGH, BECAUSE THERE'S ALWAYS RISK AND I LIKE TO EEK OUT ON THE RISK FACTORS.

LET'S TAKE D.C., BECAUSE THAT'S TOP OF MIND, WHAT'S GOING ON.

THAT REALLY CAN TRICKLE DOWN TO THE STATE ECONOMY AND THE IMPASSE THERE, RIGHT?

>> YEAH, YOU KNOW, YOU'RE TALKING ABOUT THE DEBT CEILING LIMIT.

YOU KNOW, IF THE FEDERAL GOVERNMENT JUST DOES N UNFORCED ERROR OF EPIC PROPORTIONS, WELL, YEAH, EVERYTHING'S OUT THE WINDOW BECAUSE THAT'S GOING TO HAVE IMPACTS ON THE ECONOMY AND THE CAPITAL MARKETS AND EVERYTHING LIKE THAT.

I DON'T THINK THEY'RE GOING TO DO THAT.

WE ALWAYS FIND SOME WAY TO GET THE WORK DONE.

OUT OF D.C. AND I TRUST THAT THEY'RE GOING TO DO THAT AGAIN.

>> Mary: WHAT ABOUT THE HOUSING MARKET?

I DEFINITELY SAW THAT AS ANOTHER RED FLAG FOR YOU, INTEREST RATES PROBABLY CONTINUING TO CLIMB.

WE ALREADY DON'T HAVE ENOUGH HOUSING STOCK IN THIS STATE, SO HOW DOES THIS PLAY UNIQUELY IN MINNESOTA?

>> WELL, IT PLAYS BECAUSE WE HAVE A BIG BUDGET SURPLUS.

AND, SO, YOU KNOW, A NUMBER OF THE GOVERNOR'S INVESTMENTS, A NUMBER OF THE LEGISLATIVE INITIATIVES ARE TO PUT MORE MONEY INTO HOUSING.

SO, WHILE INTEREST RATES ARE STARTING TO COME BACK DOWN, THEY'RE BEHAVING JUST, I THINK, AS THE FEDERAL RESERVE WOULD HOPE.

YOU KNOW, IT'S STILL MORE EXPENSIVE THAN IT WAS A FEW YEARS AGO.

WE STILL HAVE HOUSING SHORTAGES.

SO IT REALLY CREATES AN OPPORTUNITY.

>> Mary: BUT IT SLOWED HOME CONSTRUCTION AND HOME BUYING, CORRECT?

>> CORRECT.

>> Mary: THAT REALLY AFFECTS THE STATE ECONOMY POTENTIALLY IN.

>> IT DOES.

IN MINNESOTA, THE BIGGEST ISSUE IS WORKERS AND MAKING SURE THAT WE HAVE ENOUGH PEOPLE TO FUEL THE BUSINESSES AND OPPORTUNITIES THAT ARE ALREADY HERE BECAUSE WE'RE SEEING CONTINUED GROWTH, WE'RE PROJECTING CONTINUED GROWTH IN MINNESOTA, BUT IT'S NOT AS ROBUST AS IT WAS A NUMBER OF YEARS BACK.

>> Mary: LET'S TALK LABOR SHORTAGE BECAUSE THAT'S THE THING THAT HAS BEEN THIS UNDERLYING WEAKNESS IN OUR ECONOMY, IN THIS COLD, NORTHERN STATE THAT KEEPS GROWING BUT NOT FAST ENOUGH.

TALK TO ME, BRING US BEHIND CLOSED DOORS A LITTLE BIT BECAUSE THE GOVERNOR SAYS THE BIG PICTURE OF HIS BUDGET IS REALLY TO ATTRACT PEOPLE TO THIS STATE.

BUT PRACTICALLY, NOT POLICY, BUT NUMBERSWISE, WHAT MAKES PEOPLE MOVE HERE, HOW DO WE ACTUALLY GET THEM TO MOVE HERE AND WORK HERE?

>> PART OF IT IS JUST RESPECT.

YOU KNOW, HOW DO WE HAVE A SOCIETY, HOW DO WE HAVE BENEFITS, HOW DO WE HAVE A WORKFORCE THAT MAKES URE THAT PEOPLE CAN COME HERE AND SUPPORT THEIR FAMILIES.

CAN LIVE LIFE AND MAKE SURE THAT THEY CAN DEAL WITH THEIR WORK LIFE, THEIR PRIVATE LIFE AND MAKE IT ALL WORK.

THE GOVERNOR'S GOT A NUMBER OF INITIATIVES, WHETHER IT'S PAID FAMILY MEDICAL LEAVE, WHETHER IT'S INVESTMENTS IN HOUSING, THERE'S ALL KINDS OF THINGS THAT WE CAN DO TO WELCOME PEOPLE HERE THAT OTHER STATES AREN'T DOING RIGHT NOW AND WILL MAKE MINNESOTA A GREAT PLACE TO WORK.

BUT ON TOP OF THAT, WE'VE JUST GOT A GREAT WORKFORCE.

SO THE OTHER THING WE CAN DO, AND THIS IS PROBABLY THE CENTERPIECE OF HIS ENTIRE BUDGET, IS TO HELP PARENTS, HOW DO WE HELP FAMILIES, WORKING FAMILIES, WHO MAY HAVE TO HELP THE KID AT HOME, MAY HAVE CHILD CARE PROBLEMS, MAY NOT BE ABLE TO GET THEIR KID INTO CHILD CARE.

THERE'S A LOT OF THINGS THAT WE CAN DO TO HELP THAT FAMILY BE LESS STRESSED AND HELP THEM GET JOBS.

>> Mary: LET'S TALK ABOUT THE BUDGET ASPECT OF BOTH OF THOSE.

LET'S GO TO PAID FAMILY LEAVE, THAT'S A BIG TICKET, TALK ABOUT OW THAT IMPACTS THE FORECAST AND THE STATE BUDGET GOING ORWARD.

>> WELL, IT DOESN'T IMPACT THE FORECAST BECAUSE IT'S NOT IN LAW.

>> Mary: RIGHT.

>> IT'S A HUGE ISSUE FOR LEGISLATORS.

OF WE'RE LOOKING FORWARD TO THAT DEBATE AND MOVING THAT FORWARD.

>> Mary: BUT IT COULD CHEW UP A LOT OF THAT PROJECTED SURPLUS OR A GOOD CHUNK OF IT.

>> IT COULD CHEW UP SOME OF IT.

BUT IN TERMS OF THE THE $17.5 BILLION SURPLUS, YOU KNOW, IT IS A RELATIVELY MINOR ACTOR COMPARED TO WHERE MOST OF OUR MONEY GOES, WHICH IS SCHOOLS, HEALTHCARE, FOR ELDERLY, FOR POOR INDIVIDUALS, KIDS.

YOU KNOW, THAT'S WHERE THE LION'S SHARE OF OUR BUDGET GOES AND WILL CONTINUE TO GO.

PAID FAMILY MEDICAL LEAVE IS REALLY PAID FOR MAYBE SOME FROM SOME SEED MONEY FROM THE STATE BUT ULTIMATELY IT'S PAID BY EMPLOYERS AND ULTIMATELY JUST SORT OF LIKE ALMOST LIKE A WORKERS COMP PROGRAM.

>> Mary: SO BUDGETWISE, YOU SEE IT AS SEED MONEY AND IT'S A ONE-TIME USE OF THAT KIND OF ONE-TIME SURPLUS MONEY?

>> YEAH.

THAT'S EXACTLY HOW WE PROPOSED IT.

AND HOW I EXPECT IT WILL WORK.

>> Mary: AND YOU MENTIONED CHILD CARE, AND THIS MAYBE FALLS IN DEPARTMENT OF REVENUE, CHILD CARE CREDITS.

BUT THE TWO OF YOU WORK TOGETHER.

EXPLAIN HOW WE CAN HELP, BECAUSE, AGAIN, THAT'S ANOTHER CRISIS AREA, WE MENTIONED LONG-TERM CARE EARLIER BUT CHILD CARE IS A STATEWIDE CRISIS.

>> IT IS.

CHILD CARE IS A STATEWIDE CRISIS AND, YOU KNOW, THE COST OF RAISING KIDS, PARTICULARLY KIDS WHO ARE IN POVERTY, YOU KNOW, WE JUST SEE LONG-TERM IMPACTS OF THAT.

AND, YOU KNOW, WE SHOULD LEARN FROM THE LAST COUPLE OF YEARS, AND ONE OF THE THINGS WE LEARNED IS, YOU KNOW, IF A FAMILY IS IN POVERTY, GETTING A LITTLE BIT OF MONEY HELPS A LOT.

IN FACT, IT HELPS THEM GET OUT OF POVERTY.

WE SAW CHILDHOOD POVERTY RATES GO DOWN SIGNIFICANTLY WHEN THE FEDERAL GOVERNMENT STARTED GIVING THOSE FAMILIES MONEY.

AND THE STATE CAN DO THAT TOO.

THE GOVERNOR'S PROPOSAL REDUCES CHILD POVERTY BY 25%.

THAT'S A BIG MOVE AND IT ARE REALLY HELP KIDS LONG TERM.

>> ary: LET'S TALK REBATE CHECKS, PEOPLE LIKE IT, PEOPLE WANT IT.

I GET ASKED ABOUT IT ALL THE TIME.

YOU MUST TOO.

EXPLAIN HOW THAT IMPACTS THE BUDGET.

>> SO, IT IS A BIG ONE-TIME TAX REDUCTION.

THE GOVERNOR PROPOSED THE BIGGEST TAX REDUCTION IN AGGREGATE THAT WE'VE EVER SEEN.

AND A BIG PIECE OF THAT WAS THAT ONE-TIME TAX CUT TAX REBATE TO INDIVIDUALS BEING ONE TIME, IT HELPS USE SOME OF THAT ONE-TIME MONEY THAT WE'VE GOT IN THE SURPLUS, HELPS GET IT INTO PEOPLE'S POCKETS, REALLY HELPS PEOPLE JUST PAY THE BILLS BECAUSE WE ALL KNOW, YOU KNOW, WHETHER IT'S CURRENT BILLS, YOUR RENT CHECK, WHATEVER IT IS, YOU KNOW, A LITTLE BIT GOES A LONG WAY.

AND THIS IS REALLY THE GOVERNOR'S PLAN.

>> Mary: WHAT ABOUT THE INCOME LIMITS, I'VE HEARD 75K, PEOPLE DON'T THINK THEY'RE RICH WHO MAKE 75 AND UP.

>> NO, THAT'S RIGHT.

BOTTOM LINE IS WE'RE TRYING TO FIND WHAT'S THE RIGHT AY, WHAT'S THE BEST WAY TO GET THAT MONEY, MAKE SURE IT'S MEANINGFUL, MAKE SURE WE GET AS MANY PEOPLE COVERED AS POSSIBLE AND WE HAVE A NUMBER OF DIFFERENT PROPOSALS, INCLUDING THE CHILD CARE TAX CREDITS, THE DEPENDENT CARE CREDITS, THE REBATE, ALL OF THESE THINGS GO TOGETHER.

>> Mary: AWESOME.

THANK YOU SO MUCH FOR DETAILING WHAT CAN BE VERY