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Legislative News and Views - Rep. Tim Kelly (R)

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SESSION ENDS WITH SOME TAX CORRECTIONS AND EVEN MORE SPENDING

Tuesday, May 20, 2014

The final week of the 2014 legislative session was highlighted with good news and bad news.

First the good: we’ve begun to correct some of the legislative majority’s tax increase mistakes.

Last session, Governor Dayton and House and Senate Democrats approved more than $2 billion in unnecessary tax and fee increases that impacted all hardworking taxpayers across Minnesota. I discussed the potential problems associated with this economic strategy with legislative leadership.

As you recall, the impact felt locally was tremendous. Companies such as Red Wing Shoe and other local businesses stepped forward and shared how a number of the new business taxes would put them at a competitive disadvantage with Wisconsin and other states, and how that disadvantage would ultimately impact their workforce and economic livelihood.

To their credit, the Democrats listened. We repealed three of their business-to-business taxes early in the 2014 session. We even passed two other proposals that attempted to give money back to Minnesotans through income tax deductions as well as some limited property tax relief.

This is a philosophic difference that often puts Republicans and Democrats at odds. Democrats believe the best way to collect more state revenue is to raise taxes. Republicans believe state government should create an environment that encourages private sector businesses to grow. Doing so would employ more of our workers, allowing them to contribute to the state’s coffers through the income tax and allowing them to buy more products, thereby paying more in sales taxes.

In my opinion, correcting tax increase mistakes is always a good idea and I was happy to support these plans. Unfortunately we didn’t do more.

The City of Red Wing can be somewhat pleased that the River Town Renaissance Project was included in this year’s capital investment bill, though not at the $6 million level it requested. Roughly $1.5 million will now be available to begin this tourism project, as it seeks to improve sewer and drinking water infrastructure; replace a harbor retaining wall; construct riverboat docking facilities at Levee Park; and renovate the historic Sheldon Performing Arts Theatre. The Port Authority will also receive $500,000.

The downside to the 2014 session is the majority party’s decision to continue down the path of more regulations, more mandates, and more spending. Some of the most egregious: a $400 million bailout of Obamacare; $160 million on the MNsure agency and its troubled website; unnecessary Obamacare and statewide anti-bullying mandates that will cost Minnesota’s schools hundreds of millions over the next three years; and $90 million for a brand new office complex at the State Capitol for the Minnesota Senate.

In all, the majority party and Governor Dayton increased state spending by more than $3 billion in 2013, and on the last day of session they added another $283 million to the expense sheet. To me, that level of spending is simply unsustainable and will force future legislatures to make extremely difficult budget balancing choices in the future if tax collections begin to underperform.

As lawmakers leave St. Paul, they do so knowing, despite their philosophical differences, that the budget is in balance and a projected $1.2 billion surplus has been allocated. In roughly six months, an updated economic forecast will tell us if the financial decisions made by this legislature were prudent, or if the next legislature is going to be forced to explore different economic alternatives.