Editorial: Dayton innovation needs further examinationPublished 9:08am Tuesday, February 5, 2013
Gov. Mark Dayton and many DFL legislators have championed a very worthy budgeting goal for the state: Create long-term fiscal stability and drop the budgeting gimmicks. To achieve it, Dayton’s administration also has championed major tax reforms. Again, a worthy objective.
The governor unveiled a proposed biennial budget Tuesday that embraces both those goals. For that, he deserves credit.
Don’t take that statement as lockstep support for his $38 billion biennial plan. It’s way too soon to make that call. The job now of legislators — and all Minnesotans — is to examine the plan in detail and provide not just their views, but alternative ideas that reflect Dayton’s main mission: long-term fiscal stability without budgeting gimmicks.
The $38 billion plan rests on these major tax reforms: Tax hikes for the highest-income earners, lowered-and-broadened sales and corporate taxes, and property tax relief. It also increases spending by about $1 billion more than was projected while plugging a $1.1 billion deficit in the current budget.
The Dayton administration certainly made good on its promises from 2011-12 that significant tax reform would be part of this (and future) budget efforts.
The state’s highest-income earners see a 2 percent higher rate. The sales tax covers more goods and services but drops to 5.5 from 6.875 percent. Similarly, the corporate tax rate drops to 8.4 percent from 9.8 percent and loopholes for involving foreign corporations are closed. There are many other tax and fee changes involving everything from commuter rail to new parents.
Such moves are why Dayton and his GOP rivals both can label the reforms with the rhetoric that fits their respective political purposes. Witness this: Collectively, Dayton claims most Minnesota families will see their tax bills fall. Business groups, though, claim their bills could rise by $2 billion.
As legislators delve into the details, the most attention must be paid to spending — specifically why the state should spend $38 billion the next two years.
Remember, projections call for the state to take in $35.7 billion in that period (and without Dayton’s changes). The current budget spends about $34.4 billion.
What do Minnesotans get for $38 billion that makes it worth raising taxes by $2.3 billion? And is that extra spending sustainable in the long term without more increases?
Granted, those are big questions to ask. But legislators, Dayton and all Minnesotans have four months to find the answers and agree on a long-term, sustainable solution.
— St. Cloud Times, Jan. 27