As the Labor Review went to press, four weeks remained before the May 23 adjournment date for the Minnesota legislature. At hearings at the State Capitol, and in meetings with legislators in their home districts, union members have turned out in large numbers to voice their concerns about proposed legislation and solutions to solving the state’s $5.2 billion budget deficit. Minnesota’s unions are urging a balanced approach to solving the deficit, one that includes new revenues.
The new Republican majorities in the Minnesota House and Senate maintain that they can solve the budget deficit through a cuts-only approach.
The House and Senate passed budgets with draconian cuts that need to be reconciled — and yet their budgets still contain a $1 billion shortfall, according to the state’s non-partisan fiscal staff.
DFL Governor Mark Dayton has proposed a budget that includes significant cuts — but his budget also raises new revenue by increasing the income tax rate on the state’s top earners.
Dayton’s case was bolstered by the latest “Tax Incidence Study,” released by Minnesota Revenue in March. The study reported that Minnesota’s middle income families pay about 12 percent of their income for all state and local taxes. The top ten percent of income earners, however, paid only 10.3 per cent of their income in state and local taxes. And the richest one percent of taxpayers — those earning more than $429,354 — paid only 9.7 of their income in state and local taxes.
“…Our state’s wealthiest citizens paid about four-fifths of what middle-income Minnesotans paid in state and local taxes, as a percent of their income. I think this inequity is wrong,” Dayton wrote in an op-ed in the Pioneer Press. “Basic tax fairness means that all Minnesotans should pay the same share of their incomes in total state and local taxes.”
Governor Dayton’s proposed budget would raise $3.2 billion in revenue by seeking a fair share of taxes from the richest Minnesotans — and spare 95 percent of Minnesotans from income or property tax increases.
The budgets passed by the Republican House and Senate, however, will bring property tax increases for middle class families — along with cuts to basic programs and core services that are part of the quality of life for all Minnesotans.
“Senate Republicans voted to raise taxes the old-fashioned Pawlenty way by increasing property taxes and then saying they didn’t,” commented Wayne Cox, executive director of Minnesota Citizens for Tax Justice.
“The no-new-taxes phase of this session is over,” Cox said. “Republicans in both the House and Senate have voted… to raise property taxes on the middle class. It is no longer a question of whether taxes are being raised, but whose.”
“While everyone understands the need to tighten the budget belt in these difficult times, we shouldn’t let the belt become a noose,” said Representative Paul Thissen, Minneapolis, the DFL leader in the House. “We need to make smart choices, fund our priorities, and balance the budget.”
Monday, April 18 — the due date for state and federal income tax returns — members of AFSCME passed out flyers at post offices across the state, urging support for Governor Dayton’s budget with $3.2 billion raised fairly by taxing the richest Minnesotans.
“We’ve gotten some words of encouragement,” said Roger Day, a Hennepin County social worker and member of AFSCME Local 34, as he distributed flyers outside the downtown Minneapolis post office. “It is ludicrous to think we can solve our deficit just by cutting.”
With the clock ticking towards May 23, the Governor and Republican legislative leaders have remained fixed in their positions for weeks. Nobody can predict the outcome.
The Invest in Minnesota coalition — which includes labor, faith groups, and nonprofits — has launched a campaign to highlight the impact of the Republicans’ proposed cuts.
Advocates hope to generate enough public outcry about the proposed cuts, along with support for raising taxes on the wealthy, to persuade a handful of key Republican legislators to support a compromise with Governor Dayton. The goal: to achieve a balanced budget that moderates cuts, protects essential programs, and raises revenues fairly.
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