Legislative Notebook: Commissioner Hopes Budget Plan Turns The Corner

Senate Minority Leader David Hann, with House Minority Leader Kurt Daudt

By Don Davis and Danielle Killey

The Dayton administration says it hopes the governor’s budget proposal helps Minnesota turn the table on a series of deficits.

“The last decade has been a very difficult one,” Commissioner Jim Schowalter of Minnesota Management and Budget said, both for government officials and the public.

Lawmakers and governors have dealt with budget deficits for most of that decade. One deficit topped $6 billion.

“We gradually start to dig our way out of the hole we have been in,” the commissioner said of the budget proposal.

The key to the budget, he said, is that it does not spend more than the state raises. Two years ago, lawmakers and Gov. Mark Dayton approved borrowing money against a tobacco lawsuit settlement to balance the budget.

The new Dayton budget includes no such borrowing, Schowalter said.

It also would repay a big chunk of money the state borrowed from schools. The repayment would be finished by 2017.

Cigarette tax proposed

Dayton’s proposal included increasing the cigarette tax by 94 cents per pack.

That would raise state taxes to $2.52 on each pack.

Anti-tobacco groups applauded Dayton’s cigarette tax increase plan.

“Gov. Dayton has prioritized the health of all Minnesotans,” said Matt Schafer of the American Cancer Society Cancer Action Network. “We stand ready to work with the governor and legislative leaders to ensure a tobacco tax increase is included in the final package. Together, we can reduce the economic and emotional burden of tobacco on our state and increasing the price of cigarettes is a proven strategy.”

Increased cigarette and tobacco taxes would bring in $370 million in new revenue under Dayton’s plan.

Dayton said the goal of the tax increase is to discourage smoking, not necessarily to raise more money.

The governor said he originally was not in favor of the tax increase. “I had to be talked into this one.”

Lawyers worried

Minnesota lawyers are not happy that their services would be taxed under Dayton’s plan to expand sales taxes.

Robert Enger, a legal aid attorney from Bemidji and president of the Minnesota State Bar Association, refers to a tax on consumers of legal services as a “misery tax.”  He said families often hire lawyers when they are vulnerable and suffering.

The Hennepin County Bar Association said taxing legal services could push business to neighboring states.

Tough on GOP

Democrat Dayton pulled no punches in blaming Republicans for budget problems.

“They misinformed Minnesotans about the fact of my tax proposals for the last two years,” he said.

And, he added, “they denied any responsibility for drastic property tax increases.” Republicans say local governments decide whether to raise property taxes, but Democrats counter by saying Republican decisions in recent years mean governments must make up for state payment cuts.

Cuts, too

The governor’s budget plan is made easier because health-care programs have been whittled down over the years.

Dayton praised Human Services Commissioner Lucinda Jesson for cutting programs almost $1 billion in the past two years. Such programs still will cost more than $11 billion in the next two years.

Some specific programs would be cut under the governor’s proposal, while overall spending would increase.

Dayton suggested that the number of state employees could shrink under his budget, but Schowalter said he was not so sure.

Dayton said that Minnesota state and local government entities rank 33th among the state in the number of public workers.

Lawmakers react

— Sen. Roger Reinert, DFL-Duluth, said he wants a sound budget. “I’m going to quibble about some of the details, it’s not all what I would have written, but it’s a great starting point.”

— Sen. Dave Thompson, R-Lakeville, said the Dayton plan raises the budget too much and would raise taxes on all Minnesotans. “Gov. Dayton has proposed a tax increase on all Minnesotans. This is not good for the people and harms our economy. Our state government does not need more money.  Families need to keep their own hard-earned money and government needs to do a better job with what it has.”

— Rep. John Ward, DFL-Baxter, called the Dayton budget plan honest. “We know that an educated workforce is an essential part of our economic competitiveness and is one of the best investments we can make. The governor’s budget rightly reflects the fact that education funding hasn’t kept up with inflation and that we’re near the bottom in class sizes.”

— Rep. Joe Radinovich, DFL-Crosby, said property tax increases have hurt. “Skyrocketing property taxes have hurt our seniors, businesses, and families over the last several years.”

— Rep. Mary Sawatzky, DFL-Willmar, praised Dayton’s effort to improve the education system. “For the past decade, we’ve failed to adequately invest in education, even though we know that a good education is absolutely essential to helping our children succeed and growing our economy.”

— Rep. Ben Lien, DFL-Moorhead, said voters in November told lawmakers they wanted no more budget gimmicks. “This budget begins that debate by focusing on long-term, structural solutions. It addresses the skyrocketing costs of higher education, inadequate funding for K-12 and provides many middle-class Minnesotans with much needed property tax relief.”

— Rep. Paul Marquart, DFL-Dilworth, said he was happy to see property tax relief in the proposal: “The governor’s budget also provides long overdue direct property tax relief to Minnesotans. We’ve seen property taxes double over the last eight years for Minnesota families and businesses. Direct relief will help middle-class Minnesotans put more money in their pockets and drive economic growth.”

— Sen. Matt Schmit, DFL-Red Wing, said the proposal provides a jumping point for discussions. “The next several months will be spent working out a responsible compromise that will strengthen our communities by giving local leaders and business owners a sense of predictability lacking in recent years,” he said. “After a decade of short-term budget fixes, I’m optimistic this session will produce a real and lasting solution to Minnesota’s budget imbalance.”

— Senate Minority Leader David Hann, R-Eden Prairie, said the plan would hurt Minnesota’s economy. “Our state government doesn’t need more money,” he said. “Growing our economy, not government is the right way to move our state forward.”