ECM Capitol reporter
Democrats lauded Gov. Mark Dayton’s proposed state budget as the boldest seen in decades.
But Dayton acknowledged his revamped $38 billion budget, released Thursday (March 14), is less adventurous that the budget he proposed originally.
“It’s not as bold as it was before,” the Democratic governor said, smiling.
While Dayton’s budget retains an income tax increase for the top two percent of wage earners to gain $1 billion — affecting about 54,000 Minnesotans, according to the administration — he jettisoned his sales tax expansion proposal, which extended the sales tax to clothing, business-to-business transactions and many other products and services not now subject to the tax.
The governor attributed his retreat on the $2 billion tax expansion to lack of support in the Legislature and public.
Dayton, though, keeps his quarter-cent, metro-wide sales tax proposal for transit.
“I don’t know the answer to that,” he said when asked whether a quarter-cent increase is big enough.
The governor, urged by Health Commissioner Edward Ehlinger and others, kept his proposed 94-cent-per-pack cigarette tax increase — cost is a driving factor getting people to quit, teens not to start, he said — and looks to closing some $323 million in perceived business tax loopholes.
Dayton, too, citing a belief in tax fairness, keeps the so-called snowbird provision.
Under it, non-residents living in Minnesota for two to six months would be subject to the income tax. Now, if you live in Minnesota for less than six months, you are not subject to the income tax.
But the governor concedes the prospects of getting the provision through the legislature aren’t good.
One high-profile provision dropped in the governor’s reworked budget is a property-tax rebate of up $500.
“I think that was always going to happen,” Senate Majority Leader Tom Bakk, DFL-Cook, said of the income tax increase on the wealthy.
Property tax relief is very important to the Senate, Bakk said.
Senators are hoping to do something more in that area, he said.
Republican leaders argued that job creation and a brightening economy make raising taxes unnecessary.
“(It’s) government gone wild down here,” Senate Minority Leader David Hann, R-Eden Prairie, quipped, standing outside the Governor’s Office.
The governors is raising $1.8 billion to solve a $627 million budge deficit, he said.
But Dayton insisted that people who don’t want any tax increase need to specify exactly where they propose to cut the budget.
“I challenge them,” he said.
Minority Leader Kurt Daudt, R-Crown, spoke of finding efficiencies and then letting the economy work.
Tim Budig can be reached at [email protected]