Dear Friends,
This week House and Senate leaders unveiled their budget targets for the 2014-2015 biennium. The budget targets traditionally vary slightly from the proposals put forward by the Governor, and are a framework for the legislature to work with as the budget bills begin making their way through the committee process.
Much to my surprise, House Democrats put forth budget targets that aim to raise taxes even more than the $1.8 billion dollars in new taxes proposed earlier this month by the Governor. Despite just a $627 million dollar budget gap, the majority wishes to raise $2.4 billion dollars in taxes -- more than four times the needed amount needed to close the gap.
The economy here in Minnesota is on the mend; we have been very fortunate that our economic situation has improved faster than other states as our country slowly begins to emerge from the recent recession. Our unemployment rate is improving and better than the national average. In 2012 alone, there were over 60,000 new business filings, and over 50,000 new jobs created. As a result, thanks to more people having jobs and paying taxes, Minnesota has generated more than $4 billion dollars in additional tax revenue -- all without a tax increase.
I have consistently stated that a healthy and vibrant private sector will generate the revenue to sustain legitimate functions of government and the public sector. We are seeing the positive effects of reforms and fiscal restraint made during the last biennium and the positive effects that this restraint has on job creation.
The blueprint is simple: limit the growth in government spending, and make government more efficient, not more expensive. Raising billions of dollars in taxes takes money out of the private sector and funnels it into increased bureaucracy and more government programs. This approach is irresponsible and puts at risk the gains our economy has made in recent years.
The House majority wants to make Minnesota one of the highest taxed states in the nation for the top tax bracket. This approach has been tried in high-tax states like California and Hawaii, and the results are predictable; taxpayers are fleeing California, the unemployment rate remains stubbornly one of the highest in the nation, and the state is bringing in billions of dollars less than anticipated. You simply can't tax your way to prosperity. That approach has failed elsewhere, and it will fail here in Minnesota.
Most folks that I have met and talked with whom have suffered loss of income during the recession have stated that they just want the economy to improve so they can get back to work or work full time so that they can take care of themselves and their families. They understand that a pro-business environment provides opportunities for employment which would not otherwise be there.
The Governor and the legislative majorities should not be jockeying to compete as to whom can raise taxes more. We can close this $627 million dollar budget gap without damaging tax increases. It's critical that we continue to work to find efficiencies, cut where there is waste and bloat, and implement reforms to save taxpayer dollars. The 2012-2013 budget limited the increase in government spending to just 1%. That is a reasonable increase, held government spending in check, and allowed Minnesota's economy to prosper. That's the plan we should be following, not a plan that will put jobs and our economic recovery at risk.
2013 Legislative Survey
Hard copies of my 2013 legislative survey went out in the mail this week. If you did not receive a copy or if you would like to save yourself a stamp you can fill out the survey and send your thoughts by clicking here. Your feedback helps me better represent you in Saint Paul, so I look forward to reading your responses.
Have a great weekend,
Jerry Hertaus
State Representative, District 33A