Minnesota Senate Democrats call for $1 Billion in new taxes.
Would increase income taxes for families earning more than $250,000 and singles earning more than $135,000.
Senate DFLers call for $1 billion in taxes
Patricia Lopez and David Phelps, Star Tribune
Published April 8, 2003 DFL08
Calling the Republican no-tax-increase pledge "an assault on Minnesota values," Senate DFLers proposed a budget package Monday that would raise about $1 billion from income and cigarette taxes.
Income taxes would go up for families earning more than $250,000 and singles earning more than $135,000 -- about 5 percent of wage earners in Minnesota. Cigarette taxes would triple -- adding $1 to the current 48 cents per pack, giving Minnesota the fifth-highest cigarette tax in the nation.
Senate DFLers also would cut spending by $1.2 billion, about a third as much as the cuts proposed by Gov. Tim Pawlenty, and would close about $160 million of unspecified corporate tax loopholes.
Senate Majority Leader John Hottinger said Pawlenty's proposal is "not the direction Minnesota wants to go."
Hottinger, DFL-St. Peter, said the governor's proposal to erase the state's $4.2 billion projected deficit largely through cuts alone spares the few at the expense of the many.
"The Pawlenty plan, with its cuts to education and health care, early childhood development and local government funding, will make us dumber, sicker, with more criminals and fewer police," he said.
The $1.15 billion in increased tax revenue, plus $124 million in a onetime shift, would go to offset proposed cuts by Pawlenty in four basic areas: education, jobs, public safety and health care.
The lion's share of that money -- $571 million -- would go to health care, especially for services to seniors, the disabled and the uninsured. Proposed cuts to those areas have drawn some of the sharpest outcry from interest groups. DFLers said they would direct more money to nursing homes, Meals on Wheels and senior nutrition programs.
The plan also would spend $225 million more on K-12 schools than would the Pawlenty proposal, with another $150 million for higher education.
Another $200 million would go to local government aid, fending off cuts in police and fire departments that cities have said would be necessary should they lose state funds.
It also would create a fourth income tax rate in Minnesota that would be set at 9.4 percent -- a dramatic jump from the current top rate of 7.85 percent. At $350,000, a family of four would pay the proposed rate on income above $250,000, increasing its tax bite about $1,100.
Monday's plan puts the DFL-led Senate and Republican-led House more than $1 billion apart on proposed spending and poles apart in their approaches to one of the worst fiscal crises to face the state.
It also puts Senate DFlers in direct opposition to Pawlenty, who pledged as a gubernatorial candidate that he would not raise taxes throughout his four-year term.
Governor's response
In an elaborately staged counter-response to the DFLers, Pawlenty held a news conference at the state's Revenue building, down the street from the Capitol. When Pawlenty took the podium, the Beatles' song "Taxman" blared from speakers, while a video screen behind him labeled the Senate plan "Yesterday's Answers to Today's Problems."
Pawlenty, who had been prepared to go on the offensive against the suspected tax proposal since last week, said that as "hundreds of thousands of Minnesotans are getting ready to file their income taxes next week, and as they struggle to pay those taxes, the message from the DFL is, 'That's not enough.' ".
House Republicans said they would not back off their no-tax-increase plan.
House Republicans, who released their plan last week, have expressed support for a $1-a-pack cigarette tax increase but only as a swap for the health care provider tax that funds state-subsidized health insurance.
Speaker Steve Sviggum, R-Kenyon, said that without that swap, the cigarette tax increase is a nonstarter in his caucus. The income tax increase, he said, "is from Pluto."
"I can't go to a tax increase and keep my word," Sviggum said. Reminded that he, unlike Pawlenty, made no such pledge, Sviggum said, "I'm speaking for my governor."
The bond between Sviggum and his former majority leader is a close one, and Sviggum said he not only opposes a tax increase on philosophical grounds, he is determined to help Pawlenty keep his pledge.
Calling the Senate plan "class warfare," Sviggum predicted that it would be "defeated and defeated soundly" in the House.
Senate Minority Leader Dick Day, R-Owatonna, said that with no other ideas, Hottinger undoubtedly had reached under his desk and found an old napkin from legendary DFL Senate Taxes Chairman Doug Johnson to former Senate Majority Leader Roger Moe that said: "Roger, let's tax the rich -- Doug."
Day said DFLers "have no other ideas."
Senate DFL leaders argued that Republicans have already acknowledged the need for additional revenue through their controversial proposal to add slots to Canterbury Park -- the so-called "racino."
"The debate is not about whether we should raise taxes," assistant Senate Majority Leader Ann Rest, DFL-New Hope, said Monday. "Republican proposals to raise property taxes, cigarette taxes, car taxes and millions in fees have closed that debate. This is a debate about which taxes."
The only way to truly share the pain of Minnesota's fiscal crisis, Hottinger said, is for those at the top to contribute a little more. Pawlenty's "low-standard, low-expectation, low-investment budget," would be a "race to the bottom," he said.
Search for compromise
With all the plans in, the task over the next six weeks will be to find room for compromise among three elements with varying agendas and what for now appear to be rock-hard positions.
Even House Republicans and Pawlenty are not in complete agreement. Pawlenty is extremely cool to the Canterbury casino proposal, saying that government has no role in expanded gambling and that he probably would veto such a bill.
House Republicans are for now unwilling to forgo the estimated $100 million in revenue such a proposal would yield. Despite their fervor for spending cuts, they are under tremendous pressure from local government officials, particularly in rural areas that depend heavily on state aid.
Pawlenty is scheduled to fly around the state today to criticize the DFL proposal. He has stops planned for Duluth, Grand Forks, Moorhead, Alexandria, Worthington, Mankato and Rochester.
On Wednesday, the Republican governor will have his weekly meeting with the legislative leadership. "I'll tell Senator Hottinger what he already knows. We're not raising taxes," Pawlenty said.
He said the public will be impatient with the Legislature if it does not pass a budget by its May 19 adjournment. |
