By Mark Fischenich
Free Press Staff Writer
MANKATO — For south-central Minnesotans, the allure of Gov. Mark Dayton’s proposed budget could be determined with a few questions.
Do you smoke? Do you make big money? Do you buy a lot of higher-end clothes or do most of your purchasing on-line?
People answering yes to those questions should be prepared to pay higher taxes if the Democratic governor’s budget plan survives mostly intact as it moves through the Democratic Legislature.
Are property taxes your biggest pet peeve? Are you a college student? Are you somebody who would never pay $100 for a jacket or a pair of shoes?
An affirmative response to those questions probably means your taxes would decline under Dayton’s budget plan, which was released Tuesday and received a strongly positive response from Democratic lawmakers and a skeptical to hostile reaction from Republicans.
“There’s just a lot in here that’s fabulous,” said Sen. Kathy Sheran, DFL-Mankato.
Sheran mentioned the $500 property tax rebate that would go annually to most homeowners and farmers, the increase in aid to cities and counties that should provide further property tax relief, the freezing of state property taxes on business property, the 20 percent cut in the corporate tax rate.
She also talked about the $300 boost in the size of state grants to eligible college students, the $52 per student hike in the K-12 school formula and investments in health care programs that aim to reduce the rising cost of medical care.
Mostly, though, Sheran talked about how the budget is projected to actually eliminate the state’s recurrent red ink problem — not just push it off to the next budget cycle with accounting shifts and borrowing — and pay back over six years the state’s borrowing from K-12 schools.
The Legislature, even though it’s controlled by Democrats, will likely look to change many of the details of the tax changes and spending proposals in Dayton’s plan, she said. But she predicts that the final budget will honestly match spending and revenue.
“As long as the governor is at the helm, that will not get lost,” Sheran said after she and other legislative DFLers met with Dayton. “No more doing operations of the state on a credit card. ... The governor simply will not support anything that comes to his desk that violates that principle.”
Rep. Paul Torkelson, R-Lake Hanska, was preparing to join fellow Republicans in a meeting with Dayton Tuesday night to hear details of the budget plan.
Torkelson said he could potentially support Dayton’s proposal to extend the state’s sales tax to Internet purchases.
“Of all the sales tax changes, that’s the one I find least unpleasant,” said Torkelson, saying that the tax is owed, but not collected, and would give Main Street retailers a more level playing field with on-line retailers.
But the other tax hikes — a cigarette tax increase, a higher income tax rate on incomes over $150,000 and married couple incomes above $250,000, sales taxes extended to services and to clothing items priced at $100 or more — are likely to face strong opposition from Republicans, according to Torkelson. He was also surprised the governor didn’t do more to simply the state’s exceedingly complex tax system as part of the proposed tax reform.
And while Republicans don’t have the numbers to block legislation in the House or Senate, he expects Democrats will ultimately balk at many of the tax increases.
“Frankly, I don’t think the Democratic majorities are going to be able to swallow them wholesale,” he said. “... We’ll see what we end up with in the end.”
The governor’s office, however, is already on offense in persuading regions of the state that the tax package and spending priorities would be a net positive for the vast majority of Minnesotans.
In Blue Earth and Nicollet counties, just 1 percent of taxpayers would be impacted by the income tax hike on high earners. In Rochester’s Olmsted County, by contrast, 2.4 percent of earners would be impacted.
More than 3,500 Mankato-area college students would see the $300 bump in their state grants, Mankato Area Public Schools would see $184 more per student in state funding and homeowners would see double-digit reductions in property taxes in Nicollet County (down 13.4 percent) and Blue Earth County (down 11 percent), according to the governor’s office. A typical Blue Earth County household with a median family income of $68,000 and a home valued at $162,000 would see no increase in income taxes and a $517 reduction in property taxes.