All of the official story is here, in the official Governor’s Budget Recommendation with a summary here, and the video of the governor’s budget address here. Among the key proposals:
• Reducing sales tax from the current 6.875% rate to 5.5% and extending sales tax to cover more goods and services, including clothing purchases of single items costing more than $100. (Though Dayton observed that taxing clothing “goes against my upbringing.”)
• Overhauls property taxes, with rebates for individual taxpayers, increase in Local Government Aid, and
• Increases cigarette taxes.
• Higher income tax bracket for top 2%.
• Reduce corporate income tax.
More money for education:
• Increased scholarships for quality pre-school and access to all-day kindergarten for 85% of Minnesota children.
• More money for Minnesota State Grant college scholarships.
• Increased basic state aid to K-12 schools.
• Increased funding for special education.
MinnPost reported Republican responses, including:
Senate and House minority leaders Sen. David Hann and Rep. Kurt Daudt found nothing to like and everything to fault. They characterized Dayton’s proposal for a lowering and broadening of the sales tax as a middle-class tax increase and job killer.
“A more fitting title for the governor’s budget would be that this budget is for a better Wisconsin because that is where Minnesota jobs will go,” Daudt said.
The budget proposal quickly sparked Twitter discussion and debate at #mnleg. Among the critics:
And then there was the Twitter exchange between Rep. Mary Franson (saying the budget would make everybody poor) and Dayton staffer Bob Hume (suggesting that she read it before commenting), which quickly turned snarky:
(Hat tip to City Pages for blog coverage of the dust-up.)
(Can’t get enough of the budget? MPR has lots of good coverage here.)
Four days before the Governor’s budget was released, the Virginia-based Taxpayers Protection Alliance denounced it here, and said in a press release that Dayton should “to focus his efforts on balancing Minnesota’s budget by cutting unnecessary and wasteful spending and not by raising taxes.”
Wayne Cox, of the Minnesota Citizens for Tax Justice, offered his organization’s response to anticipated Republican criticism, saying in a press release:
“Republican leaders have it backwards. Economists believe keeping teachers and firefighters on the payroll is at least three times more helpful to the economy than keeping income tax rates at the top the same.”
“Republicans believe the answer to unemployment is, well, more unemployment. Another round of layoffs of teachers and snow plow drivers just makes the hill businesses have to climb higher. Businesses need more customers, not fewer.”
“What do economists conclude? Cutting spending involves cutting jobs and wages to public servants and private contractors. In stressed economy, businesses need more customers, not fewer. Fewer customers means fewer sales and hence fewer workers needed to produce these goods. When government spends, it triggers spending in the economy at a very high rate.
“Conversely, those with high income do not spend nearly as much of the last dollar they earn. They also have means to continue what spending by substituting dollars from savings. Hence, a reduction in after-tax income reduces spending by those with high incomes a much smaller amount. Business output drops much less as a result.”
Supporters of the Dayton plan weighed in quickly:
Minnesotans for a Fair Economy:
“After a decade of imbalanced, cuts-only state budgets we applaud Governor Dayton and his team for bringing forward a balanced and responsible proposal. Minnesota’s budget must be fair and it must work to fix a broken tax system that has greatly harmed our communities while benefiting only a few.
“Minnesotans know that big banks and other corporations worked to align the system in their favor. And while middle class families in our state have worked harder than ever to pay their tax bill and meet other expenses, many corporations used loopholes and failed to pay their fair share. Those days are over.”
Take Action Minnesota:
“Governor Dayton is right to push for long-term structural tax reform that makes tax rates fair and asks the richest 2% and corporate tax avoiders to pay their share and get our economy moving again. The Governor’s plan will create a more robust economy by ending some of the worst abuses of our current tax system.
“The Governor’s commitment to strengthening Minnesota’s health care programs by working to lower costs and increase access and developing a nation-leading health care exchange reflects his understanding that our current health care system remains one of the top economic threats to workers and employers alike and must be overhauled. His insistence on tougher contracting with HMOs is critical to achieve health care equity.”
Minnesota Association of Professional Employees:
“MAPE is very supportive of the smart investment Governor Dayton has proposed in state services. As part of a skilled statewide workforce, our members provide services and implement programs which help our seniors retire with dignity, our college students get a world class education, and help our jobless get the training they need to re-enter the workforce. We know that when we take care of our seniors, help our neighbors get new jobs and educate our children, we are doing our best to improve the quality of life for this state.
“By offering a balanced approach of tax fairness, investment in education and job creation, and ‘gimmick free’ budgeting, Governor Dayton’s has outlined a pragmatic direction to restore long term budget stability, while strengthening the middle class.”
“Budgets are not just balance sheets. Budgets are moral documents. In the coming weeks and months, the Legislature, the Governor, and the people of our state have important choices to make about the moral document we create together. We believe that God calls us to value the dignity and sacredness of all individuals and to continually expand the circle of human concern.
“The budget we adopt in the coming months ought to reflect our highest values and aspirations. It ought to unite rather than divide our state. It ought to foster prosperity for all rather than a few. It ought to move us out of gridlock and toward creative problem solving.
“Today, the Governor has started the conversation in a promising way.”
St. Paul Mayor Chris Coleman:
“Today, Governor Dayton made it clear that one-time budget fixes balanced on the backs of taxpayers can no longer be tolerated. By stabilizing local government aid, Governor Dayton is sending a clear message that the State will responsibly deal with its budget challenges rather than asking cities to bear the burden alone. Property taxpayers have seen an 86 percent increase in their property tax bills since 2002. This is an unacceptable burden on middle-class families in Saint Paul and throughout the state.
“We in Saint Paul know first-hand that budgeting games and gimmicks are unsustainable and that achieving structurally balanced budgets means making tough decisions. This budget includes reasonable changes to the state’s tax system that stabilizes property taxes, recognizes the importance of local government aid to Minnesota cities and includes the largest sales tax reduction in Minnesota history. These common-sense changes will allow the City of Saint Paul to continue to provide quality services to our residents.”