Editorial: Budget revisions are step in the right direction, but let’s stay cautious

Gov. Mark Dayton’s revised budget is much improved over his initial budget of January 2013.

He dumped the “business-to-business” sales tax that generated a snowstorm of opposition from Edina to Elk River, from Caledonia to Little Falls, and all parts in between. Business-to-business sales taxes hurt a company’s bottom line because in most cases, the extra expense needs to be swallowed and cannot be passed on to the purchaser. The uproar was well deserved. A business-to-business sales tax is not good for Minnesota’s business community. The idea must not be revived.

The proposed property tax rebate to each homeowner has also been dropped. While it’s hard to complain about a check for $500 with your name on it, this too was not a good idea. Rebates are not based on need and on tax burden. Many of us have legitimate complaints that our property taxes have risen dramatically and are just too high for our modest homes and small businesses. Property tax reform should be on the table but the rebate is not sustainable and therefore not a real solution.

The Governor has proposed a tax increase on the state’s top two percent of wage earners, raising about $1.1 billion total. Even if he didn’t intend to, Dayton has quieted his critics by dropping the onerous sales tax. Now arguing against the fourth tier tax makes critics appear unwilling to compromise. He might get his additional taxes anyway, losing the battle but winning the war.

Senate and House Democrats have also introduced their budget plans. They are similar to Dayton’s version, but they have proposed additional spending and added taxes. The Senate DFL plan includes property tax relief of $400 million, full funding for all-day kindergarten, but no specific tax increases. Some support Dayton’s added tax on the state’s top two percent of wage earners. Others have hinted at revisiting the sales tax extensions.

In the House, DFLers have suggested adding a temporary income tax surcharge to the top level, creating a fifth tier on top of the Governor’s fourth tier tax increase. They would use the extra money to pay back the school districts, and fund all-day kindergarten, among others.

While we support spending $170 million to fund all-day kindergarten for all children, we urge our state leaders to go slowly on any tax increase or additional spending.

The Governor and the DFLers in control of the State House and Senate need to listen to Republicans when they sound alarms over tax increases. Our economy is growing. The unemployment rate is going down. More workers mean more income tax paid into the state’s coffers. That means more money is coming in without tax hikes.

Legislative leaders need to make every effort to keep any tax increase to a minimum. We’d encourage them to continue to put plugs into tax loopholes that give unfair advantage to certain sectors, which might raise a few extra dollars. It is likely that some tax increases will be necessary to cover extra funding for education programs. However, any tax increase should be approved after other options are exhausted and then, only to the extent that is absolutely necessary.

When it comes to the overall budget picture, a few matters bubble to the top in any discussion. These should be on the legislature’s 2013 To Do list:

• Education funding for preschool and all-day kindergarten is a priority. Funding needs to be fair to all school districts and equitable to all students.

• The State Capitol building needs dollars for essential structure repair and internal improvements. The Capitol is a state treasure and needs to be preserved for generations of Minnesotans yet to come. This one bonding project must pass this year. Cass Gilbert’s masterpiece, built in 1905, is crumbling. Some $110 million is needed this year to protect and restore the building.

• The Mayo Clinic’s offer to spend $3 billion to make Rochester a world-class destination needs to be accepted, after proper oversight and accountability has been established. We have an unprecedented opportunity to ensure our state has the finest in medical care. While extensive details need to be worked out, we need to make it very clear to Mayo that we are your home base and we intend to work closely with you for the next century or two.

• Money the state owes the school districts in the “shift” needs to be paid back as soon as possible, either under the current payback plan or an accelerated one.

• The proposed quarter cent sales tax for metro transit projects has merit. While it deserves a thorough debate, in the long run, this is probably in the region’s best interest.

As these and many other topics are debated, we ask our legislative leaders to LISTEN to each other, not just talk at each other or worse yet, ignore each other. We ask they drop every political cliché about conservatives or liberals, Democrats or Republicans. We’d rather each elected official ask, “What’s best for my constituents” and “What’s best for Minnesota” 10 times over before asking ONLY  “What is best for my political party.”

We are buoyed that the economy is recovering. We see the jobless rate dropping well below the national rate. We see houses being built down the street. We see Wall Street reaching new highs. On the whole, the state economy is very healthy.

Still, we need to temper our exuberance. Let’s keep our state spending in line, and any tax increases to a minimum. Let’s carefully prioritize our needs versus our wants.

Minnesota has a bright future. May intelligence and compassion take the lead in this legislative session.  – An editorial from the ECM Editorial Board.

 

We invite our readers to respond to this and any other commentary on these opinion pages. Send your reactions to peggy.bakken@ecm-inc.com.

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