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State Representative Jim Davnie
100 Rev. Dr. Martin Luther King Jr. Blvd.
651-296-0173
For more information contact: Charlene Briner 651-296-5809
HOUSE BRIEFS
State Rep. Jim Davnie On the Issues - Budget
In February, the Department of Finance released revenue forecast revealing serious financial challenges for our state. As a consequence of recession in the first half of 2008 and further weakening of the U.S. economy, experts projected Minnesota will collect less tax revenue than previously anticipated in the coming fiscal year. Consequently, the Department of Revenue estimated a $935 million deficit for the current biennium and a growing deficit thereafter. Whereas the federal government can operate in deficit, Minnesota policymakers are statutorily required to balance the budget.
My House colleagues and I sought a balanced approach for managing this deficit. Our proposal included provisions for using some budget reserves, eliminating corporate tax loopholes, and carefully paring back spending. House committees worked diligently on supplemental budget legislation to find efficiencies, reducing state agency budgets by approximately 3 percent and proposing similar reductions for the Legislature. Given the Governors opposition to any tax increase no general tax increases were proposed to erase the deficit.
The final supplemental budget and tax bills were the products of months of committee work and weeks of negotiations between the House, the Senate, and the Governor's Office. Truly, it was a bipartisan effort to pinch pennies where possible and spend only where necessary. In addition to reducing spending for most agencies, this year's budget and tax legislation accomplished several important goals. The Legislature appropriated an additional $23 million for direct homeowner property tax relief for pay '09, and increased statewide Local Government Aid by $42 million. With bipartisan support we closed corporate tax loopholes, especially tax havens and foreign operating corporation exclusions. Furthermore, we provided our schools with an additional $51 per pupil, the equivalent of a 1 percent increase to the funding formula.
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