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Tuesday Talk: Should Dayton Trim Revenue Plan?

March 05, 2013 By Joe Sheeran, Communications Director

February’s budget forecast shows the state’s projected deficit for next biennium dropped from $1.1 billion to $627 million. Gov. Dayton’s budget critics say these projections show there’s no need for new revenue. However, when adjusted for inflation and population, the state’s general fund is 10 percent less than it was a decade ago.

We’re also projected to run more than $1 billion in inflation-adjusted deficits in each of the next two biennia. If Minnesota wants to make necessary investments in 21st century education and infrastructure, policymakers must make structural fiscal changes to raise new revenue. 

How could we best utilize the projected reduction in the deficit?

Should policymakers use it to prevent further cuts, and stay the course with Dayton’s bold sales and income tax plan? Should policymakers rework the sales tax proposal? Is there another option?

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20 Comments:

  • Linda says:

    March 5, 2013 at 7:31 am

    Minnesota is already one of the highest taxed states.  We need to make Minnesota more welcoming to business, and then the
    revenue will grow by virtue of more taxes paid by workers/businesses.

  • Herb Davis,Jr. says:

    March 5, 2013 at 7:35 am

    I’d go with Dayton’s plan. There isn’t a plan that is better and he certainly isn’t likely to veto one he suggested.
    The less than courageous have the luxury of blaming Dayton while they politic for next election.

  • Alice says:

    March 5, 2013 at 8:40 am

    I am so sick of the myth that Minnesotans are paying the highest taxes.  Look up the facts.  We are about in the middle and have been for years.

  • KJC says:

    March 5, 2013 at 8:55 am

    We can forget the whole “tax breaks to the wealthy will grow jobs plan.”  We’ve tried it since the Reagan days…it had an appeal, as it seems to indicate a kind of “free lunch” is somehow available… but Where Are Those Jobs?  After 30 years of trying this we should be drowning in jobs by now, shouldn’t we?  We are in the worst situation for jobs since the Great Depression, and… by every measure…the wealthy are far better off.  It’s a failed policy. And the (federal) CBO staff report (that you and I paid for) proving that very point (in September ‘12) got a forced withdrawal from the Republicans, as they looked at the election implications.  Don’t believe that? Go ahead and check Forbes, even they say that’s what happened… and that is hardly an anti-capitalist magazine, agreed?
    (P.S. I have a copy of that report, if you can’t find it.)
    The most controversial portion of the Governor’s budget plan are the sales taxes being extended to professional services.  It’s possible that the improvement in the budget outlook should be used to pare that part of the plan down some….if nothing else, in the interest of getting it passed.  We can not afford to have St. Paul look like Washington, where the words “genuinely listen” and “compromise” have somehow become a sign of weakness in the view of one political party… rather than being what they are: necessities of modern life in a democracy.

  • Charlie Zea says:

    March 5, 2013 at 8:57 am

    There is no reason to trim the revenue plan at this time.  There are a couple pressing issues that have to be dealt with, like it or not.  We have to pay back the money that was “borrowed” from our public school systems. Another big issue is a long term transportation plan that will commit the State to provide the necessary funding to upgrade the roads and bridges in the State and to provide for an ongoing maintenance program.

  • Debbie Provence says:

    March 5, 2013 at 9:49 am

    I agree with Dayton’s plan.  It’s time to broaden the tax base, stop the shifts, and lower the sales tax.  As far as taxing the top 2% a little more—it won’t break them.  Minnesota has gone on too long with this anti-tax chorus, and I’m glad Dayton’s willing to make the hard choices and plan for the future.

  • Bill Graham says:

    March 5, 2013 at 10:00 am

    Governor Dayton has the political courage to propose what the State needs.  We need the new transit and gasoline taxes.  We need to close business loopholes, tax the high earners a bit more, expand the sales tax, and tax more inter-company transactions.  It’s the honest budgetary proposal we need to fix our fiscal mess.  The Legislature should get on with it.

    Bill Graham
    Burnsville

  • Bernice Vetsch says:

    March 5, 2013 at 10:00 am

    We should stick with Dayton’s plan in order to return the state, the counties, cities and towns and villages to fiscal health via LGA. And we need to make other investments for growth, such as those in infrastructure for the Mayo expansion and green energy.

    We need to rebuild our reserve so it is truly large enough to handle emergencies and, as others have noted, we owe a lot of money to the public school system. We need to pay special attention to the roads and bridges that need repair or replacement, and we need to substantially increase our stock of housing that is affordable no matter how low a person’s or family’s income may be.

  • Paul Conklin says:

    March 5, 2013 at 11:23 am

    I think it is interesting that we are always told “government should be run more like a business.” and “families have to live within their means, so should the government”.  Yet when it comes it investing and saving that advice seems to disappear.  What do successful businesses and families do?  Businesses borrow money for capital expenses that will return more than than they cost.  Families borrow money to improve their quality of life, when they are sure they have the projected income to pay off the loan.  And both smart families and smart businesses have a decent savings account to get them through the ups and downs of income and expenses.

    So, if the deficit is down, lets go ahead with the revenue plan that we can stick to for the long haul, cut unnecessary or unproductive expenses, carefully examine our capital expenses to make sure they produce a return or improve quality of life in a sustainable way, and make a long term savings plan that is part of the basic budget, not an afterthought if we can figure out how to spend all the money.

  • Dean DeGroot says:

    March 5, 2013 at 11:35 am

    After a decade+ of borrowing, raising property taxes, and seeing education and other investments cut, we seem to always be in the red.  We finally need to fix this and create a broader base of revenue sources.  It seems smart to both raise taxes on the wealthiest, since they have seen the greatest income gains in the past 20 years as well as adapt to the market: a greater service economy with less manufacturing requires services pay taxes.  We need to tax internet sales, too.  This all makes sense and creates a more stable fiscal environment. Govt. needs to have more revenue: name one business that has not increased their prices over the past 10-15 years?  Every entity needs to at some point.

  • Cindy Goustin says:

    March 5, 2013 at 11:36 am

    Tax the rich, take care of the poor, the sick, the children and the elderly. End wolf hunting and trapping in this state.

  • ChristeenStone says:

    March 5, 2013 at 12:06 pm

    I do not think we should hasten to cut Dayton’s plan, especially with the uncertainty in what will happen on the federal level. I recall the late nineties
    when we had a surplus and as a vote getter the choice was made to give rebates to everyone, a good vote getter. Roger Moe argued putting a bigger chunk away for a rainy day, and did even get some in a fund, which got used the next year in a trade off. I am very much in favor of using any surplus we could have in such a fund, to finish paying off our debt to the schools, or fixing the property taxes where they are more fair. I came from the pay with cash generation which considers credit a debt to be paid as soon as possible.

  • KJC says:

    March 5, 2013 at 12:22 pm

    A really lively and great discussion today.  I, too, have a very specific issue with the “run the government as a business” mantra.  Does the government need to be well-run?  Certainly.  And many business principles can be applied.  And some can’t.  Having been the CEO, a couple of times, I am cognizant of at least one crucial area where business tactics can’t work.  That would be?  Sometimes you down-size or even close a company.  You can’t down-size a country, saying “sorry we’ve only got enough work/money for 80%” of you, like you might with a company.  And just cutting what’s being spent doesn’t work, because the people and what’s needed, isn’t changed by that.  (It might be partial “shield” of the costs for a few… especially if they’ve lobbied for lots of tax breaks for themselves.)
    Once you see that you can’t merely “downsize” a country, like you might layoff employees in downsizing a business… then everything changes.  The “business” analogy is exposed for what it is: of more limited value.  Then you realize that the alternative: growth, is a more effective plan… and the whole “invest in the future” approach becomes the more logical answer.  That takes tax revenue.. the price of civilization.  And for 30 years the anti-tax crowd has been the “loudest” in our great land… with Cheney even saying “deficits don’t matter” ten years ago, as they wrecked our tax revenue stream and started two unpaid-for wars.  Look what that reckless behavior has done to us.
    Last year we did an informal poll on this site.  The “smaller government” blather was high.  I put up a list, and asked what anybody would give up for THEMSELVES.  Not one person came forward and agreed to take any reductions for themselves.  There is no leadership in pushing “I want smaller government for you, but not for me.”
    If we keep our eye on the Common Good, and shun those who play divide-and- conquer, we won’t go wrong…we will do the hard work our Founding Fathers left us to do: to continue to develop a More Perfect Union.

  • Ginny says:

    March 5, 2013 at 12:29 pm

    Let’s go with the Dayton budget. This is the first time in years we’ve seen a solid, sustainable, reasonable budget. Cutting loopholes and taxing clothing items that cost over $100 each and taxing services as well as other kinds of transactions will work. Let’s just get it done for a change

  • Bernice Vetsch says:

    March 5, 2013 at 1:09 pm

    Some time ago (so long that I don’t remember where I ran across it), I read that every Republican president since Nixon has created a deficit, but every Democratic president has gotten rid of it by growing the economy. 

    Which Mr. Obama did say was his preferred method of getting rid of the Bush tax cut and wars plus the greedy Banksters-debacle deficit. Those who are shouting that the deficit is what’s important are wrong (and so is their wish to cut entitlements, which does nothing but create poverty).  He should never talk to Simpson-Bowles again.

  • Ross Reishus says:

    March 5, 2013 at 1:38 pm

    Others here have said it well.  Keep the budget that’s in motion. Invest in the future. MN’s high taxes haven’t exactly crippled our state’s economy when you see that we’re currently 12th in the nation for job growth, and rank 3rd on the happiest state to live in list.  If high taxes were really a problem, we would still be at 2008 level recession numbers on everything, or worse. Clearly that’s not the case.

  • Sherry Folsom-Meek says:

    March 5, 2013 at 3:42 pm

    Gov Dayton should continue forward with his budget plan. The wealthiest people in the state need to pay their fair share of income tax to invest in Minnesota’s future. With the pulltabs not bringing in as much revenue as we hoped for, we need to require the wealthiest Minnesotans to pay their fair share.

  • CLH says:

    March 5, 2013 at 5:00 pm

    I too support the Governor’s budget, though I know it is a shock to see our “favorites” taxed for the first time.  As others have said, Minnesota has not had a budget that could sustain growth and protect us from shortfalls in the future. Instead, our leaders chose to borrow and pay high interest rates instead of raising taxes.
    We now have a Governor that is brave enough to submit a tax plan that is guaranteed to make everybody a little bit mad! Brilliant!

  • Don Knudson says:

    March 5, 2013 at 5:48 pm

    More funding certainly is needed.

    It is time to invest again in our state’s education and infrastructure.  The past borrowing against obligations to public school funding, cuts to higher education etc. has threatened the quality and affordability of higher education. Class sizes have increased in primary and secondary schools. The cost of higher education has been shifted to students who come out of school with huge debt trying to find job.  Students with large education debt are essentially set up for failure. 

    Corporations in MN want an educated work force.  Do they also want a workforce that is burdened with financial worries trying to pay off $50,000 even $100,000 of education debts?  I hope not.  So it’s time to invest in educating the workforce of the next generation.

    I’m glad I live in MN and have a governor who believes the purpose of government is to serve the common good for all of the people and believes that government is not just a vehicle to serve the private interests of a few. Thanks, Governor Dayton.

  • Ginny says:

    March 5, 2013 at 9:18 pm

    I would like to see some real-life examples of how the service tax would affect certain businesses. How does it compare with other, non-service industries? Would any service related business step up and calculate this for our benefit?