Dayton offers deal on budget

Dayton offers deal on budget

Article by: RACHEL E. STASSEN-BERGER and BAIRD HELGESON , Star Tribune
Updated: May 16, 2011 - 11:54 PM

His pitch: $1.8 billion in tax increases, $1.8 billion in spending cuts. GOP's answer: No tax hikes - period.
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Gov. Mark Dayton’s tax-increase proposal, according to the state Department of Revenue, would mean higher tax bills for about 45,000 of the state’s highest-earning taxpayers.



DFL Gov. Mark Dayton tried to budge glacial budget negotiations Monday by making a surprising offer to cut in half his proposal to raise taxes on high earners.

The new proposal would boost taxes on only the top 2 percent of tax filers in the state -- those with taxable incomes above $250,000 for joint filers and above $150,000 for singles. Dayton said that, plus other tax increases, would raise $1.8 billion, which he would pair with a similar amount in budget cuts to close the state's budget gap.

Dayton said he had come halfway in his proposal and the next move was up to Republicans.

Their response? No way.

"Whether it's a half a tax increase, a whole tax increase, or a quarter tax increase ... it's a bad idea," said House Speaker Kurt Zellers, R-Maple Grove, at a news conference packed with Republican lawmakers.

The legislative session must end at midnight next Monday. If the standoff continues, Dayton would have to call legislators back into a special session to continue working on a budget solution. By July 1, the 2010-11 appropriations would end and state government would begin to shut down.

While leaders say they can meet their deadline, rank-and-file lawmakers are increasingly wondering how that will happen.

So far, the two sides have yet to agree on a single major budget bill. Republicans maintain the state must live within the $34 billion it is projected to collect over the next two years, even though that will result in steep reductions in services.

"I can't imagine it being settled by our deadline of the 23rd of May," said Rep. Tom Rukavina, DFL-Virginia. "If the Republicans want to learn a lesson in the power of the governor, I guess they are pushing for it. ...We learned it under (former Gov. Tim) Pawlenty."

Dayton's Monday offer would slim down his tax-increase proposal and would require him to come up with another $1.8 billion in unspecified budget cuts that he said could be negotiated.

At the beginning of the session, Dayton proposed hiking taxes by $3.4 billion. Under the new proposal, only 2 percent of Minnesotans would pay higher taxes, according to the state Revenue Department -- 45,000 tax filers out of 2.4 million.

What Dayton called a compromise, legislative leaders called a non-starter.

"There are no votes for job-killing tax increases in the House of Representatives," said Zellers.

House Democrats say otherwise. Although they were squeamish about Dayton's initial tax-heavy budget, House DFLers say they would support the new proposal.

Rukavina estimated that at least "99.9 percent" of House Democrats would approve it and Senate Minority Leader Tom Bakk, DFL-Cook, said "a large majority" of Senate Democrats would give it their OK.

'No!'

When asked if there was any chance their devotion would wither under pressure of a special session or shutdown, dozens of Republican lawmakers shouted in unison: "No!"

Dayton said they shouldn't expect him to cave.

"For them to want me to go all the way over to their budget target, it's not compromise, it's not reasonable and it's not realistic," he said. "I'll go halfway, I won't go farther."

He said if things melt down now, it's lawmakers' "responsibility and their fault'' because he's moved closer to them.

As the budget battle rages, the Capitol has become a heaving sea of special interests hustling in and out of news conferences and legislators' offices to let their opinions be known.

Over the lunch hour, hundreds of gay and lesbian rights activists held a Capitol rally opposing a bill that would ask voters to constitutionally ban same-sex marriage. The crowd outside the House chamber chanted "All we need is love" and "All we need is rights."

The heads of more than a half dozen chambers of commerce -- mostly from communities facing steep cuts in state aid -- traveled to the state building to urge legislators to spare their funding, even if it means higher income and business taxes.

The business representatives said businesses are getting "hammered" by soaring property taxes as state aid cuts over the past years have caused city and county governments to hike local levies.

"We think it's time to look at something else to balance the budget," said Dan Dorman, a former Republican legislator who is now executive director of the Albert Lea Economic Development Agency.

Dorman and the others argued that the GOP's proposed aid cuts and the resulting property tax hikes would affect the economy far more severely than Dayton's proposal to raise taxes on high earners.

Nearby, a gaggle of unemployed and underemployed Minnesotans gathered to share stories about their economic struggles in hopes of changing the budget debate.

They handed Dayton's chief of staff, Tina Smith, about 1,500 letters from jobless Minnesotans.

"The tax system needs to be revamped," said Michael Walker, an unemployed union carpenter. "Something is wrong and it seems like people are afraid to spek up."