NORTH MANKATO — Mankato area lawmakers asked local residents and officials for ideas to change the tax code that would stabilize the state budget, but more importantly be palatable to enough people to be able to pass the Legislature.
“It’s clear we have changed the balance in the revenue stream from income taxes to property taxes,” said State Sen. Kathy Sheran, DFL-Mankato, noting that property taxes have gone up 86 percent in the past 10 years.
Sheran; Rep. Kathy Brynaert, DFL-Mankato; and Rep. Clark Johnson, DFL-North Mankato, said state revenue collections are out of balance and that budget deficit fixes in the past 11 years have left the state careening into routine budget shortfalls.
“What we’re here to hear about is what you’re willing to do — what the public is willing to support us on — so we can get a budget that isn’t in deficit every year,” Sheran told a group of about 30 at a town hall meeting in North Mankato Saturday.
One audience member said taxing bad things, like carbon, makes sense. Another said a mileage tax or tire tax should be applied rather than relying on a dwindling gas-tax fund for highway improvements. Sheran said that while there are discussions by some about those types of taxes, the public support and political will is simply not there to enact them now.
And Brynaert said that while the push by Gov. Mark Dayton and others to expand the sales tax to more goods and services makes sense, the devil is in the details.
“I wish we would lower the rate and expand the base on the sales tax. But the push-back is unbelievable,” she said of the many interest groups who oppose adding a tax on their goods or services.
Johnson, who recently won a special election, said he wants to hear from people about an expansion of the sales tax.
“If we’re going to expand it, on what items? Someone said we should focus on non-discretionary items,” Johnson said. “Maybe there are some non-discretionary purchases out there we could look at.”
Sheran said expanding the goods and services taxed could also recoup income taxes that many Minnesotans avoid paying. She said people who live in Florida for much of the year to avoid paying Minnesota income taxes, or those who work for cash and don’t report their income, would at least pay sales taxes on more items and services they purchased in the state.
Minnesota Department of Revenue Deputy Commissioner Matt Massman traveled with the three lawmakers to the town halls in North Mankato and St. Peter to highlight the governor’s budget proposal and review recent tax and budget histories.
“In nine of the last 11 years, the state budget forecast has projected a deficit for the state,” Massman said. He said Gov. Dayton has proposed a budget that tries to reverse that trend through a more fair and stable tax system.
The Legislature is facing a $627 million budget deficit forecast for the next biennium. While sizable, Massman noted it’s smaller than any going back to 2008.
“At least we’re in the Ms and not the Bs,” he said, referring to the shortfall being in the millions, not billions.