Skip to main content Skip to office menu Skip to footer
Capital IconMinnesota Legislature

Legislative News and Views - Rep. Jim Davnie (DFL)

Back to profile

We Begin the 2nd Half

Wednesday, April 15, 2015

Dear Friends,

Now that virtually all of the work in policy committees has wrapped up, we’ve started the second half of the legislative session. We’re just starting to see the proposed budgets for various agencies in the finance committees this week. These omnibus spending bills will show which spending priorities really matter most to the legislative majority.

State and Local Taxes – why they matter to you

As I mentioned in my previous update, according to the 2015 Minnesota Tax Incidence Study, state and local taxes are going down for 90% of Minnesotans for the foreseeable future. However the whole story is a little more complicated. When we look at all state and local taxes, there’s still work to be done in terms of tax equity.

We often hear that the burden of government falls on the wealthy and that is true in terms of total dollars. However, when you look at how much people pay in state and local income as a portion of their incomes, the opposite is true. While the tax reforms we enacted last year are making our state’s tax structure less burdensome on most Minnesotans. There’s still work to be done.

Below is a look at how much households pay to state and local government as a proportion of how much they make:

Income Range

$41k

$41k - $65k

$65k - $88k

$88k - $112k

$112k - $143k

$143k - $190k

$190k - $274k

$275k - $490k

$490k - $1.5m

$1.5m &

over

All State & Local Taxes

12.6%

11.9%

11.9%

11.9%

11.8%

11.2%

11.0%

10.4%

10.4%

10.8%

As you can see, there isn’t an enormous difference in how much of their income people are paying in taxes, but generally, you pay more if you are lower on the income scale.

Budget Priorities

Before omnibus spending bills can be assembled, the amount of spending in each area above or below current spending must be decided by legislative leadership and the Governor.  The table below compares how each player in the process prioritizes spending. As you can see, the total amount of spending doesn’t actually vary that much but the choices within the state budget do.  Unlike the budget targets unveiled by the Governor and the Senate, the House targets prioritize as-yet unspecified tax reductions.  Here is a comparison of the three proposals:

 

Governor

State Senate

State House

E-12 Education

+ $694 million

+ $350 million

+ $157 million

Higher Education

+ $288 million

+ $205 million

+ $53 million

Tax reductions

$138 million

$460 million

$ 2.26 billion

Health Care, Nursing Homes, Disability Services

+ $341 million

+ $341 million

- $1.15 billion

Environment/Agriculture/Jobs Programs

+ $82 million

+ $45 million

- $35 million

Transportation

+ $26 million

+ $25 million

+ $148 million

Public Safety

+ $147 million

+ $117 million

+ $82 million

State Government/Veterans

+ $63 million

+ $52 million

- $67 million

Budget Reserve

+ $0

+ $250 million

+ 100 million

Total Net Spending    

$42.98 billion

$42.73 billion

$42.58 billion

For every $1 spent on education, the House proposal spends $15 on these tax reductions. H.F. 1, their most important priority of the session, mainly contained tax reductions specifically targeted at some corporations and business. If this is any indication, their proposal for $2 billion in tax giveaways won’t be broadly targeted towards average Minnesotans, but rather corporate interest groups.

For my part, I would like to see a more balanced approach to how we invest the projected state budget surplus. The last time we “gave it all back”, it was quickly followed by a huge budget deficit which took years to resolve.  It seems many of their areas of spending proposal are too small to keep pace with growing class sizes, increased public safety needs, population growth, or the health issues of an aging population.

Let me know what approach you would like to see with the state budget and contact me with your comments and questions. You can reach me by phone at (651) 296-0173 or by email at rep.jim.davnie@house.mn. Thank you for the honor of serving you at the State House.

Sincerely,

Jim Davnie

###