Committee Produces Alternate Minnesota Budget Solution

An independent panel of Republicans, Democrats and policy experts who came together this week to help solve Minnesota's budget impasse came forth with its plan on Thursday, which included $2.2 billion in permanent cuts, $1.4 billion in accounting shifts and $1.4 billion in new revenue—including a temporary, across-the-board 4-percent tax increase on all personal incomes.

In a two-page document, the committee outlined a framework for closing the $5 billion deficit by balancing 70 percent of it through spending cuts and the remaining 30 percent by increasing revenue.

The committee based its recommendations on three strategies:

• Cut state spending $3.6 billion from projections, which results in a biennial budget increase of 3 percent (or 1.5-percent increase per year).
• Increase income taxes 4 percent for everyone during the two years of this budget (an expected $700 million in revenue).
• Increase state revenues through a Human Services surcharge ($250 million), a tobacco tax increase of $1.29 per pack (an expected $330 million) and an alcohol tax increase ($140 million).

The committee recommended that sales taxes should be broadened and lowered long-term.

"I note that most of the committee’s recommendations parallel my own proposals," Gov. Mark Dayton wrote in a statement.

Dayton cited that the $2.2 billion in recommended permanent spending cuts is close to the nearly $2.1 billion he has proposed. The recommended $700 million from increased alcohol and tobacco taxes, along with the human services surcharge, also seem to reflect Dayton’s latest proposals.

Dayton said, however, that his views "respectfully differ" from the recommended 4-percent temporary income tax hike for all Minnesota taxpayers.

"My goal has consistently been to protect most Minnesotans from either an income tax increase or a property tax increase, by raising state income taxes on only the wealthiest 2 percent of Minnesotans," he wrote.

Minnetonka City Manager John Gunyou, a member of the committee, told Patch "there was a surprising commonality of thinking in the room" during the process of devising this budget resolution.

"We were all pretty pragmatic," Gunyou said. "We didn’t look at it from a real political standpoint. But we’re also realists, so we talked through a lot of the options. The framework just made sense."

Committee members knew there would be little happiness over the proposal to raise taxes on Minnesotans, Gunyou said.

"We had a nice long talk about that," he said. "Interestingly, everyone was pretty much in agreement. The feeling was that this needs to be shared by everyone. We’re hoping that might be a way to address this disagreement about who is paying what share, or a fair share."

Dayton turned the pressure on Republicans in the Legislature, calling this framework the third "compromise proposal [the Republicans] have received in the past 24 hours."

The independent committee was created by former Minnesota politicians Vice President Walter Mondale, Gov. Arne Carlson and U.S. Sen. Dave Durenberger. Along with Gunyou, members included former Republican Sen. Steve Dille, former DFL Rep. Wayne Simoneau, former state Finance Commissioner Jay Kiedrowski, former Wells Fargo CEO Jim Campbell, former Medtronic Vice President Kris Johnson and current Minnesota Management and Budget Commissioner Jim Schowalter.