Governor Mark Dayton is pushing for a mix of new spending and taxes that he says will help working families and stabilize Minnesota’s fiscal future.
The Democratic governor’s final supplemental budget proposal released Friday seeks to reinstate tax breaks popular with Republicans and to conform with the recent federal tax bill in a way that raises new revenue from business taxes. It also leaves $123 million of the state’s $329 million budget surplus on the bottom line as a cushion.
“I’ll warn you in advance, it’s complicated,” Dayton said Friday before detailing his proposal. It’s so complex because changes in federal tax law will have broad implications for Minnesotans no matter what the Legislature does.
Dayton has said repeatedly any tax conformity will have to benefit working families and the state’s bottom line to win his support. “Thus preserving the structural surpluses and the budget integrity which I have said is so vitally important,” the governor added.
The proposal is just a piece of the state’s $46 billion, two-year budget.
Republicans quickly panned many of the governor’s ideas.
Senate Majority Leader Paul Gazelka, R-Nisswa, characterized Dayton’s budget proposal as overly complicated and criticized the governor for asking taxpayers to foot the bill to address the state’s recent bureaucratic failings.
“It raises taxes,” Gazelka said in a statement. “It’s the wrong direction for Minnesota.”
A big portion of Dayton’s budget deals with how Minnesota will go along with recent changes to federal tax laws. If state leaders do nothing, filing next year will be complicated and many residents could see unexpected tax hikes.
Dayton’s plan would use a mix of policies to direct most of the benefits to lower- and middle-class families, about 2 million of whom would see a cut in state taxes worth as much as $319 million. Much of the new revenue the state needs to pay for those cuts and other spending would come from modifications to business taxes that mirror recent federal changes.
“No wage earners will pay any higher taxes because of this,” said Cynthia Bauerly, state revenue commissioner.
Dayton also wants to eliminate tax cuts on tobacco, business property and estates passed last year by Republicans that he signed into law, but later wanted changed. The dispute led to the governor vetoing funding for the Legislature, a battle that ended up in court.
Business leaders were not happy with the governor’s proposal with Doug Loon, president of the Minnesota Chamber of Commerce saying: “Minnesota would take a big step backward under this budget.”
Dayton is proposing a mix of new spending and fees to fix troubled state bureaucracies and address the state’s growing opioid crisis.
Dayton wants to spend $10 million on the Minnesota Licensing and Registration System, or MNLARS, which has struggled since summer to process vehicle titles and license plates. He also wants to institute a $2 fee to help pay for improvements to the system heading forward.
The governor is also proposing new fees to fund expanded oversight of long-term care facilities and protect seniors and vulnerable adults. Dayton wants assisted living facilities to pay a new $7,500 licensing fee that will be used to fund oversight.
The governor is also hopeful the Legislature will approve an opioid stewardship bill that would implement a per-pill fee on the powerful narcotics to pay for drug treatment and prevention. Dayton has already proposed $12 million in new spending to combat opioid addiction.
After 17 students and staff we gunned down on Valentine’s Day last month at a Florida high school, pressure has been on state and federal officials to do more to make schools safer.
In Minnesota, Republican lawmakers have signaled new gun control measures are out of the question, but they are supportive of new resources to improve school security and address students mental health concerns.
Dayton wants about $26 million for school safety and security through a mix of ongoing funding and grants. Similar proposals backed by Republicans are making their way through the House and Senate.
Dayton also wants to continue his legacy of increasing education spending each year he is in office by putting more resources into preschool and special education. The preschool money would replace a one-time commitment made last session while increased special education money would help districts close the growing gap between mandated services and state and federal funding.
Dayton — who is in the final year of his second term as governor — gave his last State of the State address Wednesday. Republican lawmakers said the governor’s budget priorities would have a big impact on what happens the last two months of the legislative session.
Initial reactions from Republican leaders were largely critical of the spending positions set by the Democratic governor. They don’t want any tax increases and don’t think taxpayers should be on the hook for the Dayton administration’s oversight failings.
“Gov. Dayton’s budget proposes over a billion dollars in harmful tax increases to finance hundreds of millions of dollars in government spending, and he’s asking Minnesotans to pay more in DMV fees to clean up the MNLARS mess created by his administration,” said Rep. Jim Knoblach, R-St. Cloud, who chairs the House Ways and Means Committee. “Republicans have no plans to ask Minnesotans to pay more taxes when we have a budget surplus.”
Knoblach added that he was pleased with some of the governor’s ideas, such as school safety funding. “We will review his proposals in the coming days, and will come forward with proposals of our own in the coming weeks,” he said.