Committee Produces Its 'Alternative' Option: Income Tax Increase for All
In a two-page document, the committee outlines a framework for closing the $5 billion deficit by balancing 70 percent of it through spending cuts and the remaining 30 percent by increasing revenue.
And then there were three.
An independent panel of Republicans, Democrats and policy experts who came together this week to help solve Minnesota's budget impasse came forth with a plan on Thursday that included $2.2 billion in permanent cuts, $1.4 billion in accounting shifts and $1.4 billion in new revenue—including a temporary, across-the-board 4-percent tax increase on personal incomes.
The bipartisan committee tasked with creating a so-called third alternative issued its recommendations Thursday to Gov. Mark Dayton and Republican lawmakers. In a two-page document, the committee outlines a framework for closing the $5 billion deficit by balancing 70 percent of it through spending cuts and the remaining 30 percent by increasing revenue.
When Rep. Kathy Lohmer (R-Lake Elmo) was asked Thursday afternoon what she thought of the committee and its recommendations, she responded: “I don’t see the point.”
There have been negotiations happening between the legislature and the governor. A lot of people weigh in on this process, “but we don’t call them commissions,” Lohmer said.
“These are just opinions,” she added. “The legislature and governor were elected to do a job, and that’s what matters.”
Constituents send emails and call with opinions and ideas every day, Lohmer continued. “That doesn’t make the front pages of newspapers.”
Phone messages were left and emails were also sent to Sen. Ted Lillie (R-Lake Elmo), Rep. Matt Dean (R-Dellwood) and Sen. Ray Vandeveer asking for reactions, but none of the lawmakers returned those requests on Thursday.
The committee based its recommendations on three strategies:
• Cut state spending $3.6 billion from projections, which results in a biennial budget increase of 3 percent (or 1.5 percent increase per year).
• Raise income taxes 4 percent for everyone during the two years of this budget (an expected $700 million).
• Increase state revenues from a Human Services surcharge ($250 million), a tobacco tax increase of $1.29 per pack (an expected $330 million) and an alcohol tax inflation increase ($140 million).
Over the long term, the committee recommended, sales taxes should be broadened and lowered.
“I note that most of the committee’s recommendations parallel my own proposals,” Dayton wrote in a statement to the media.
Dayton cited that the $2.2 billion in recommended permanent spending cuts is close to the nearly $2.1 billion he has proposed. The recommended $700 million from raised alcohol and tobacco taxes, along with a human service surcharge, also seems drawn to the letter of Dayton’s latest proposals.
Still, Dayton wasn’t ready to wholeheartedly endorse the recommendations. Specifically, he said, he “respectfully" differs with the recommended 4 percent temporary income tax hike for all Minnesota taxpayers.
“My goal has consistently been to protect most Minnesotans from either an income tax increase or a property tax increase, by raising state income taxes on only the wealthiest 2 percent of Minnesotans,” he wrote.
Dayton turned the pressure on Republicans in the Legislature, calling this framework the third “compromise proposal (the Republicans) have received in the past 24 hours.”
Minnetonka City Manager John Gunyou, a member of the committee, told Patch “there was a surprising commonality of thinking in the room” during the process of devising this budget resolution.
“We were all pretty pragmatic. We didn’t look at it from a real political standpoint,” Gunyou said. “But we’re also realists, so we talked through a lot of the options. The framework just made sense.”
Committee members knew there would be little happiness over the proposal to raise taxes on Minnesotans, Gunyou said.
“We had a nice long talk about that,” he said with a laugh. “Interestingly, everyone was pretty much in agreement. The feeling was that this needs to be shared by everyone. We’re hoping that might be a way to address this disagreement about who is paying what share, or a fair share.”
” The committee was created by former Minnesota politicians Vice President Walter Mondale, Gov. Arne Carlson and U.S. Sen. Dave Durenberger. Along with Gunyou, members included former Republican senator, Steve Dille, former DFL legislator, Wayne Simoneau, former state finance commissioner, Jay Kiedrowski, former Wells Fargo CEO, Jim Campbell, former Medtronic vice president, Kris Johnson, and current Minnesota Management and Budget commissioner, Jim Schowalter.