Dayton’s budget: No new business taxes after all

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Saying he’d had the opportunity to “recalibrate” his initial proposal, Gov. Mark Dayton released his supplemental budget Thursday morning at the State Capitol, which would eliminate the unpopular business-to-business service taxes but also do away with his proposed $500 per homeowner property tax rebate.

The new budget seeks no changes to Minnesota’s existing sales tax structure, including no taxes on either purchased services or clothes.

However, it does still include a proposal to raise income taxes on the wealthiest 2 percent of Minnesotans, as well as the so-called “Snowbird Tax,” which would require people who live in Minnesota two months out of 12 to pay income taxes. The cigarette tax also remains in the supplemental budget, as does the elimination of corporate tax loopholes.

Dayton said those revenue increases would raise an estimated $1.816 billion during the next biennium and be enough to eliminate the projected $627 million budget deficit.

“I believe this proposal is the responsible balanced budget the people of Minnesota deserve,” Dayton said. “There are no shifts, borrowing, or other gimmicks to balance it, just honest, straightforward accounting.”

House Speaker Paul Thissen (DFL-Mpls) applauded Dayton’s decision to eliminate the business taxes, releasing a statement that gave the governor credit for starting “a long-overdue conversation about how best to solve our state’s structural budget issues,” while also praising him “for listening to the concerns of the business community.”

He described the revised budget as “responsible and fair,” and said it “puts middle class Minnesotans first.”

Republican lawmakers were less supportive. House Minority Leader Kurt Daudt (R-Crown) said he was happy to see the governor had “reeled back some of the tax proposals that he put forward,” but was still “a little dismayed” about the taxes that remained.

“Minnesota’s economy has grown over the last two years, the unemployment rate is down and we feel like things are headed in the right direction,” Daudt said. “And we know that Minnesotans’ understand that raising taxes in a fragile economy will actually hurt Minnesota’s economy and hurt job growth in Minnesota.”

Now that legislative leaders have the governor’s final budget proposal to reference, committees can really begin to dive into the numbers. Thissen said that work will begin very quickly.

“Next week we will release our budget targets as we continue to work together toward our shared goal of a balanced budget that invests in education, a strong middle class and a thriving future for Minnesota,” he said.