By Don Davis and Danielle Killey
Senate Democrats do not want to place an income tax surcharge on the richest of the rich, but they are looking into expanding a new tax the governor wants on the top 2 percent of Minnesota earners.
“We are going to take a look at whether the top 2 percent is the right number,” Senate Majority Leader Tom Bakk, DFL-Cook, said Wednesday after announcing a framework of the Senate Democrats’ budget plan.
Gov. Mark Dayton proposes increasing income taxes on individuals earning more than $150,000 in annual taxable income and couples with $250,000 income. Bakk said senators will look into whether to expand the concept to increase taxes on those making “slightly” less.
Bakk said senators probably will not agree with House Democrats, who back Dayton’s high-earner tax increase and also want to put a two-year tax surcharge on those in the top 1 percent of incomes.
Dayton said the surcharge, of an undetermined amount, is going too far and he does not support it.
Overall, the Senate, House and Dayton budget plans are a lot alike.
“It shows very similar priorities,” Bakk said.
The biggest difference among budgets is that the Senate plan would increase local state aid and property tax breaks by $464 million in a two-year, $38 billion budget. The other two plans suggest smaller increases.
The House and Senate would cut health and human services programs by $150 million while Dayton calls for an increase.
Spending in the current budget ending June 30 is slightly more than $35 billion. The House proposal comes in slightly less than $38 billion while the Senate just tops that figure. The governor’s plan falls in between.
Bakk said tax committees will decide specifics on a Senate tax increase, but predicted it will come in at about $2 billion. The other $1 billion of the budget increase would come from more revenue coming from a better economy.
Senate Minority Leader David Hann, R-Eden Prairie, said no more taxes are needed.
Besides the tax on high earners, Bakk predicted senators will agree with Dayton on increasing cigarette taxes. He also said he feels “very strongly about” taxing on line purchases.
Guns on hold
A Senate bill requiring all buyers of handguns and semi-automatic rifles to undergo background checks is on hold until the House decides what to do.
Senate Majority Leader Tom Bakk, DFL-Cook, said Wednesday the Senate Rules Committee, which needs to decide if a gun bill is to continue moving, will hold it until senators see if the issue progresses in the House.
On Tuesday night Rep. Michael Paymar, DFL-St. Paul, the House author of a bill to require broad background checks for gun buyers, pulled the plan when he realized there were not enough votes to pass it. But negotiations continue that could lead to a pared-down version that only adds background checks to buyers at gun shows.
On Wednesday night, Paymar said that House Speaker Paul Thissen, DFL-Minneapolis, wants the full House to take a vote on the broader background checks, so if a gun bill reaches the full House there will be an attempt to amend it. Paymar said he did not know if he or someone else would offer that amendment.
The Senate committee-passed bill would require universal background checks, a provision opposed by Republicans and rural Democrats.
The new House bill could be heard in committee yet this week.
LGA change eyed
Cities across Minnesota agree on a new formula that would deliver a more predictable state aid to them.
Coming together on a topic that usually divides urban, suburban, exurban, regional centers and rural communities comes at a time when Democrats in control of the governor’s office, House and Senate want to increase Local Government Aid.
The formula in a bill by Rep. Ben Lien, DFL-Moorhead, is simpler and city leaders say it gives them a better idea about how much aid to expect. It also automatically increases payments based on inflation.
“This formula will grow when cities grow,” Lien said.
But Rep. Pat Garofalo, R-Farmington, said the proposed formula would increase aid faster than general inflation.
Lien and Rep. Paul Marquart, DFL-Dilworth, said cities have lost millions of dollars in the last decade as LGA has been cut to help balance the state budget.
“We are reversing the trend,” Marquart said of the increased spending and the Lien bill.
“It’s time to reboot,” said Cloquet Mayor Bruce Ahlgren, president of the Coalition of Greater Minnesota Cities. “We’ve made cuts, we’ve made hard cuts.”
The bill also would provide funding for some suburbs that now receive no LGA.
The aid was established to provide aid to cities that cannot raise enough property tax to support fundamental services such as public safety. Wealthy suburbs have not received the aid since they can raise tax money they need.
Of the state’s 854 cities, 107 do not receive LGA now. That number would drop to 85 if the Lien bill passes.
The Lien measure was held over and may be included in an overall tax bill.
Flood prevention funding
Funding for cities such as Moorhead to finish flood-prevention projects could be part of a state public works borrowing bill.
A Senate committee discussed Wednesday providing about $14.7 million for Moorhead and $5.6 million for Oakport Township, which Moorhead soon will annex, to complete flood mitigation projects such as installing barriers.
“Literally, our community comes to a stand-still for two to six weeks while we fight this,” Moorhead Mayor Mark Voxland said of flooding in the area.
He said the city has made good progress in flood prevention work since the 2009 flood when the Red River reached its highest point in the city’s history.
“We have really come a long way,” he told senators Wednesday.
Flooding is a concern this spring. The ground is dry, but also frozen, so if the snow melts quickly it might not soak in and could cause flooding.
“If everything goes at once we could have a problem,” said Sen. Kent Eken, DFL-Twin Valley, who authored bills to provide funding.
Voxland said there is little federal money for flood control.
A purple meeting
Five Democrats and five Republicans met this week in what they call the purple caucus’ first meeting.
Sens. Roger Reinert, DFL-Duluth, and Jeremy Miller, R-Winona, formed the purple caucus earlier this month to bring the two sides together.
“It was a success and I am confident that the group’s energy will continue growing,” Reinert said of the first meeting. “Neither Jeremy nor I did any sort of recruitment for the caucus. We sent a general invite to senators. …. Folks came on their own, and that’s a good sign that the purple caucus has legs and isn’t just talk.”
Another meeting is planned after lawmakers return from next week’s Easter-Passover recess.