Dear Neighbor,
This was an important week at the Capitol, where we received a number of budget bills on the House floor, along with a tax bill that pays for state spending.
The Democrat majority’s tax bill includes some $2.6 billion in new taxes. It adds up to around $3 billion when you include various proposed fees. Estimates show this would cost every person in the state $550 million.
This would make us the second-highest taxed state in the nation and mark the highest state tax increase in at least 30 years. The bill passed with zero votes from the minority.
A top concern of mine is that a number of the taxes are extremely regressive. The proposal would raise income taxes on nearly one-third of Minnesotans – from the very rich to people making around $22,000. The House Democrat plan will also raise taxes on Internet purchases, sports memorabilia, cigarettes, and alcohol, to name a few.
We spent a good deal of time during the nine-hour tax bill debate discussing budget priorities. On Monday, the House passed a bill which includes a $26 million net reduction in baseline funding for nursing homes and other long-term care facilities. This is a very problematic provision for nursing homes statewide that already are having a tough time making ends meet. We need to do more to protect our vulnerable citizens and, especially with $3 billion more in proposed revenue, our seniors deserve better.
A new KSTP/SurveyUSA poll shows only 9 percent favor tax increases as the main way to balance our budget. Keep in mind, this is $3 billion more from hard-working Minnesotans, but our projected shortfall is $627 million and shrinking.
Our state economy is rebounding from the Great Recession and revenue continues to increase. We could balance our budget without raising taxes just by sticking to within our projected 3-percent growth.
I am wary such a huge tax increase could threaten the gains we have made. There could be huge impacts to our local economies if citizens and businesses are subject to such a costly burden. Our border communities like Moorhead could be hit especially hard in what already is a very competitive environment.
The House version of the tax bill will now go through the conference committee process to iron out differences with what our Senate colleagues propose. The Senate has some key differences, including a new tax on clothing. They also propose a tax on farm machinery repairs, something which also concerns me greatly.
I will keep you posted as things take shape in St. Paul. The emails I continue to receive regarding the issues are very much appreciated, so please continue providing me with your input. You also are invited to participate in a legislative survey I am conducing. This is last call if you haven’t already responded. Click here for the link.
Sincerely,
Paul