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State Representative Patti Fritz
100 Rev. Dr. Martin Luther King Jr. Blvd.
651-296-8237
For more information contact: Sandy Connolly 651-296-8877
NEWS COLUMN
IT'S ALL ABOUT REVENUE
Last week the possibility of a government shut-down dominated the news media around the state, with plenty of blame and finger pointing going on. While it is unfortunate that the Governor, House and Senate did not agree on a final budget before the end of special session, there are significant differences of opinion between the three bodies that made agreement difficult. If our state government was controlled by one party, agreement would come quickly. However, with a Republican Governor and House of Representatives, and the Democrats in control in the Senate, middle ground will need to be found.
History has told us that, while voters are bothered by the need for a special session, they are even more disturbed if the job doesn't get done right. This could be especially true this year, as there are some very important issues remaining to be resolved, specifically, funding for health care and K-12 education. As with any budget, adequate spending would be easy if revenue wasn't a problem. The Governor and the Senate are actually not that far apart on what they want to spend. The questions remain, how are we going to pay for increased funding for education, and are we going to cut 30,000 working Minnesotans off of MinnesotaCare?
Early on in this budget-setting session, despite his claims that our state does not have a revenue problem, Governor Pawlenty advocated generating $300 for the state budget through the expansion of state gambling. Once it became apparent that this proposal lacked support on both sides of the aisle, it was withdrawn, leaving a big revenue hole in the Governor's budget plans.
To address this need for revenue, both the House and the Senate proposed a gas tax, with the money going exclusively to fund the critical transportation needs of our state. Governor Pawlenty vetoed this tax, despite that fact that it had strong bipartisan support. The next day, he acknowledged the need for revenue by proposing a 75 cents per pack cigarette tax.
In their counter proposal two weeks ago, the Senate accepted 55 cents of the Governor's proposed 75 cents cigarette tax, stipulating that it be dedicated to avoid the cuts to MinnesotaCare and other related health care costs. If this proposal had been accepted, the Health and Human Services bill could have been completed immediately, leaving funding for education as the main remaining piece.
The Senate proposed spending 5% on education in both 2006 and 2007, and restoring childcare funding for 18 thousand Minnesota children. The specifics of the funding would be worked out by the education Conference Committee, with strong emphasis on no new property taxes.
Their plan would generate revenue, in part, with a temporary income tax surcharge on the state's highest earners. In the spirit of compromise, the Senate reduced the tax rate from the original proposal.
Statistics show that under the current tax plan, Minnesotans who are making $32 thousand a year and under are at a tax rate of 11.3%, while those who make $700 thousand a year and above have a tax rate of 7.9%. No one likes to see a tax increase, but there should be fairness. The proposed cigarette tax will hit the poorest Minnesotans the hardest; this temporary tax increase is designed to spread the burden to the highest income earners, as well.
It is believed that this temporary income tax increase on the wealthiest would pass in both Houses if the money were dedicated to funding education.
The Senate proposal also recommended closing some corporate tax loopholes for about $30 million.
While the Governor rejected the Senate's plan, he has not yet made a specific counter-offer. It is unrealistic to believe that he would accept the Senate's plan in its entirety. Instead, the Governor and his supporters should now consider what parts of this plan they like and what parts they won't accept. Hopefully, agreement can be reached as both sides continue to move toward a middle ground. It is critical, however, that pressure for a quick resolution doesn't lead to funding decisions that will be harmful to both our students and those Minnesotans who rely on MinnesotaCare as their only option for health insurance.
In the meantime, the Senate has a "lights on" proposal that will avoid a government shut-down if agreement can't be reached by June 30. We are anxiously waiting to hear the Governor's response; I am hopeful that he will show his willingness to compromise soon and offer a plan that is dedicated to the well-being of all Minnesotans.
News Items
- STATE REP. PATTI FRITZ PARTICIPATES IN START OF LEGISLATIVE SESSION - (Posted: Jan 9 2013 3:32PM)
- Rep. Fritz: Homeowners, Farmers Need Property Tax Relief - (Posted: 2012-05-01 00:00:00)
- Rep. Fritz: Let’s Vote on a Bonding Bill that Benefits All - (Posted: 2012-04-19 00:00:00)
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