ST. PAUL — Reaction to DFL Gov. Mark Dayton's sweeping budget proposal, which would dramatically shift how Minnesotans pay for government, won mixed reactions from local lawmakers.
Dayton's $38 billion budget proposal includes $2 billion in tax increases, with just more than half of the money going to solve the state's projected budget deficit. The additional taxes include an income tax increase on the wealthiest 2 percent of Minnesotans, along with extending the sales tax to clothes costing more than $100 and services like car repair and haircuts. In exchange for widening the sales tax base, the overall rate would drop from 6.875 percent to 5.5 percent. The plan shifts the tax burden away from property taxes, providing every Minnesota homeowner with a $500 property tax refund.
"We're really going after reducing property taxes while at the same time balancing the budget, while at the same time increasing expenditures in areas that I think are vital for the future of Minnesota," Dayton said.
Republicans blasted the plan, saying it will end up costing all Minnesotans more in taxes.
"My first reaction is this is a wonderful budget for Wisconsin, Iowa and the Dakotas. He is playing a reverse Robin Hood — stealing from the poor and giving to the rich," said Rep. Greg Davids, R-Preston.
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Meanwhile, Rochester DFL Rep. Tina Liebling praised the governor for putting forward a budget that makes investments in key areas such as education while trying to make the state's tax system more fair.
"I am pretty pleased to see the direction he is going," she said. "It is no secret to anybody he was going to propose raising some taxes, and I like the direction (he is going). He is thinking about what Minnesota needs to thrive going forward and how we are going to pay for those things."
Dayton's plan boosts K-12 spending by $118 million and allocates an additional $40 million to fund optional all-day kindergarten. According to Dayton's office, that would provide $343 more in funding per student for Rochester Public Schools. Also included are $44 million in early childhood scholarships, an additional $80 million in grants to help students with college tuition costs and an extra $120 million for state and county aid. There is also $425,000 in his budget for a new veterans cemetery in Fillmore County beginning in 2015.
Despite DFL majorities in both the House and Senate, there is no guarantee Dayton's plan will win the Legislature's backing. Dayton's budget delays paying back the $1.1 billion still owed to K-12 schools until the 2016-2017 budget. It also raises taxes on cigarettes by 94 cents a pack and gets rid of certain corporate tax breaks while lowering the overall corporate tax rate from 9.8 percent to 8.4 percent. Then there's the expansion of the sales tax to clothing — an idea some fellow Democrats vehemently oppose.
Assistant House Majority Leader Kim Norton, DFL-Rochester, acknowledged Dayton's budget likely faces an uphill climb, but she said she is pleased his proposal avoids using shifts and gimmicks to balance the budget.
"The priorities are right, and I am excited about those. Can this pass our caucus? That is going to be a challenge," she said.
Rep. Mike Benson, R-Rochester, said the tax increases contained in Dayton's budget would end up hurting the state's economy by going after job providers and middle class Minnesotans.
"This doesn't surprise me, and it shouldn't surprise Minnesotans," he said. "This is what they voted for."
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Dayton said he realizes his plan will face tough scrutiny from lawmakers. He rejects the idea his plan would hurt middle class Minnesotans, saying that the average resident would see their taxes paid overall drop.
"It's a balanced approach," Dayton said. "I think it's one Minnesotans will see the benefits of despite all the people who are going to be screaming how terrible it's going to be."
