Gov. Mark Dayton’s budget proposal, unveiled Tuesday, includes a tax hike for the wealthy, cuts to health care for 7,200 low-income adults, an increase in spending for K-12 education, a 6 percent decrease in the state workforce,and steady funding for local governments. “I have always said that a budget is about values and priorities, as well as dollars and cents,” Dayton said. “My budget represents my values and priorities, one of which is to keep my promises that I made to the people of Minnesota last fall.”
Detailed budget statements at Minnesota Management and Budget office website.
Dayton’s budget would cap state subsidized health insurance at 200 percent of the poverty level, a 75 percent reduction, and would result in 7,200 adults losing state health care services. The Department of Human Services would see a 2.8 percent decrease. There would also be a reduction to nursing homes and home health care services.
“I respect those who would prefer that I make no cuts,” Dayton said at a press conference. “To the critics I say, ‘Where would they come up with a better alternative?'”
He said, “I’m not willing to make barbaric cuts in essential services.”
Local government aid will be held steady which Dayton said will hold the line on property taxes.
Minneapolis Mayor RT Rybak praised the budget and the funding for local governments.
“In my nine years as mayor, this is the first time that a governor has delivered a budget that helps hold the line on property taxes,” he said in a statement. “Governor Dayton inherited a fiscal mess that was made far worse for the middle class by years of the State’s passing the buck onto local businesses and homeowners. In proposing no more crippling cuts to Local Government Aid, Governor Dayton has drawn the line.”
St. Paul mayor Chris Coleman said the funding for local governments would help the core cities continue to be the economic drivers for the state.
“Saint Paul and other core cities are the economic engines of Minnesota,” he said in a statement. “With Governor Dayton’s bold leadership, Saint Paul will continue to be a prime location for job creation and economic development.”
Dayton also proposed an increase funding for K-12 education, and much of that increase would go to statewide all-day early education. The shift in aid payments to schools that was implemented by former Gov. Tim Pawlenty would continue, but would be repaid at 10 percent per year starting in 2014.
Higher education funding, particularly for state college and universities, will see a 6 percent reduction. Public safety will be maintained at current levels.
The proposal will also contain a 6 percent reduction in the state workforce. “There are gong to be layoffs,” Dayton said, though he predicted many of the estimated 800 jobs lost would come through early retirements and not filling positions once vacated.
The proposal increases taxes for the “4th tier” of taxpayers, the most wealthy Minnesotans. That rate will increase to 10.95 percent for joint tax-filers who make over $150,000 and head of household filers making over $130,000. Dayton is also proposing a 3-year temporary 3 percent tax on people whose taxable income is $500,000.
And the proposal would close loopholes on “snowbirds” who file taxes in other states but live in Minnesota five months and 29 days a year.
“I believe this budget proves that I am a man of my word,” Dayton said of the tax increase pledge he made during his campaign in 2010.
Dayton said that the top tax rate has gone down in Minnesota over the last two decades from 12.5 percent to 9.8 percent.
He hopes that he and Republicans can come to an agreement on the budget in the next few months. “I expect to have to give up some of this proposal as a way of finding common ground with the legislature,” he said, adding, “We will both be unhappy with different aspects, and that’s the process.”
Republicans blasted the budget proposal. Senate Majority Leader Amy Koch said, “This is the highest income tax in the country.”
House Speaker Kurt Zellers said, “This is a feeble and pathetic attempt to go back in time. It will not work. It’s not what governors across the country are doing.”
He added, “Don’t worry, we are not going to let Mark Dayton tax our jobs out of our state.”
Koch said, “We will work to find common ground, but the tax increases are not going to be accepted by the House and Senate.”
Sen. Geoff Michel added, “What he chose was to put together his campaign platform and that’s fine; I’ll give the governor credit for being consistent, however, I don’t want to say it’s dead on arrival but I don’t think its got much of a heartbeat.”