Dear Neighbor,
Greetings from the Capitol, where we are wrapping up another busy week in the Legislature. We have arrived at the midway point of the 2013 session and budget work is picking up. Here is an update on that subject and more.
HOUSE MAJORITY ISSUES BUDGET PROPOSAL
House Democrats have revealed the outline of their new biennial budget. Their proposed spending total is at least $39.3 billion, with at least $2.4 billion in new taxes.
There is a “temporary” income tax added for top earners. This is on top of the income tax hike the governor is seeking and it would give Minnesota one of the highest rates in the country, at 11 percent or more. Senate Democrats and Governor Dayton seemed surprised by this provision and are not embracing it. Senate Majority Leader Tom Bakk was quoted by the media saying he does not like putting Minnesota in the top five in any tax category. Here’s a link to a map showing income tax rates for all 50 states.
The economic policy we put in place in 2011 and 2012 has gotten us pointed in the right direction. Revenue is rising by about 3.5 percent and is continually outperforming prior projections. Our state gained 14,500 jobs in February –getting us back to pre-recession numbers – and the state's unemployment rate is down to 5.5 percent.
Raising taxes at this time is unnecessary and could stall our progress. The reason we have a $627 million shortfall projected is not due to a lack of revenue, it is because spending is set to jump at a faster rate. The House is proposing a 9-percent increase and the governor is proposing a 7-percent increase.
We can balance our budget without raising taxes by staying within the limits of available revenue. It comes down to setting priorities and then sticking to them.
HEALTH INSURANCE EXCHANGE PASSES
The House recently passed the Health Insurance Exchange Bill as it came back from conference committee. The wide variety of opinions on this bill is amazing, with Democrats calling it the biggest change in health coverage in the past 50 years, and Republicans saying the exchange will not lower costs or give more choices for those purchasing insurance in this fashion. Here is a link to a column I wrote on this topic which provides much more information.
I appreciate the input I continue receiving from local citizens on these and other issues. Your emails are a great help as we continue making important decisions in St. Paul.
Sincerely,
Paul