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Several GOP legislators seem open to 'alternative' revenue proposals to solve budget impasse

"Alternative" revenue proposals have been floating at the fringe of budget discussions since session began, often disregarded as unlikely considering the GOP's insistence on tackling state spending and blocking tax hikes.

But, now, 11 days into Minnesota's government shutdown, it's become likely that revenue increases in some form will have to factor into a solution to the state's $5 billion budget deficit.

The first serious offers rolled in the day before the shutdown began.

There was a plan first suggested by the Republican legislative leadership to move up payments from Minnesota's tobacco settlement through bonds to bridge the gap with Gov. Mark Dayton,

Then, Dayton offered a revised plan that would have limited an increase in income taxes to only the extremely wealthy. He also proposed raising the tax on individual packs of cigarettes by $1, but the GOP quickly rejected both ideas.

Several seem open to non-income tax revenue boosts

And, while the GOP caucus's commitment to oppose any tax increase might not truly be lessening, there are at least some Republicans who have expressed openness to using some new revenue to reach a deal with Dayton.

The revenue ideas have ranged from increased gambling (racinos at the metro area's two horse tracks or a casino in the Minneapolis Block E complex) to expanding the state sales tax to online purchases to capping HMO profits.

It's difficult for the proposals to make headway publicly, because individual Republicans are being careful not to contradict the leadership's public stand on budget negotiations.

But at least some Republicans — in contrast with their "not a penny more" colleagues — are open to increased revenue to win a deal and put 23,000 state employees back to work.

The patchwork of individuals isn't unified in the way those wearing penny pins are, but they could play an equally important role in solving Minnesota's budget crisis.

Sen. Doug Magnus
Sen. Doug Magnus

"I think there's some support for additional revenue," said Sen. Doug Magnus of Slayton, the author of a proposal to install a casino in Block E. "It just depends where the revenue goes."

Gambling funds still could be in play
Rep. Bob Gunther of Fairmont, who sponsored racino legislation this session, said he would consider anything that will allow a compromise and get Minnesota's government running again.

"I don't care what they do if it helps end this thing," Gunther said of modest revenue increases. He has also discussed with DFL Rep. Terry Morrow of St. Peter tax increases on Minnesotans who purchase a second home.

Gambling groups estimate that allowing racinos could net the state up to $250 million each budget cycle. Although Gunther's proposal centers on job creation initiatives (he's the House Jobs and Economic Development chairman), the lawmaker said he's flexible with how the money is spent.

He also thinks the proposal is a good bargaining chip to span the roughly $1.4 billion divide between Dayton and the Republican leadership.

Rep. Bob Gunther
Rep. Bob Gunther

"It's there as something that both sides have mentioned," Gunther said. "It's there as something to potentially end this logjam we're having."

Dayton said last week that he's had about four meetings related to expanded gaming. The governor has previously expressed more support for racinos and a Minneapolis casino than for a proposal allowing slot machines in bars.

Magnus, who presented the Block E legislation, reacted similarly to Gunther.

Although Magnus fervently supports putting the projected $250 million biennial state tax revenue from the Block E project into a transportation infrastructure program that leverages local, state and private funds, he said he was open to a one-time diversion of the funds as part of budget negotiations with Dayton. That's as long as the money doesn't go into entitlement programs or welfare.

Magnus wants to create "tens of thousands of jobs" with the proposal, he said. "I don' t want to see it create more social worker jobs to pay out entitlements."

Alternative plans floating out there, too
Other plans, such as expanding the state sales tax to online purchases, are also under consideration. Sen. Julianne Ortman of Chanhassen, chairwoman of the Senate Taxes Committee, began discussing the new $30 million to $50 million revenue stream earlier this session.

Ortman confirmed that the measure has been part of budget negotiations but remained tight-lipped on whether she would support it.

"It certainly is something that has been heard in both houses," Ortman said, adding that it's now up to the collective caucuses to decide if they'll support the increase.

Rep. Greg Davids
Rep. Greg Davids

Rep. Greg Davids of Preston, chairman of the House Taxes Committee, previously proposed capping HMO profits on state business at 6 percent and earning the state $300 million in the process.

"What I'm looking at is balancing the budget without increasing taxes," Davids, who was unavailable for comment, told the Star Tribune in March

All these proposals, however, are relatively small, compared with roughly $700 million in revenue that Dayton's income tax would raise. It's still unclear where they'll fall into the negotiations, and with no budget discussions scheduled, pressure will continue to build for lawmakers to reach a resolution.

"It's amazing nobody's been yelling at me yet," Gunther said, referring to his constituents during a telephone interview from his home.

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Comments (11)

to extend the tired but maybe useful "kitchen table" analogy, I feel like I'm in a dysfunctional family that knows it's broke but has decided for ideological reasons that mom can't go out and find a job. She has to stay home because dad (Grover Norquist) says its wrong for mom to work.
And we'd rather loose the house to the bank rather than do what all the sensible people on our block are doing.

Good article. Doug Magnus is typical of the Republicans-they show lack of respect for anyone associated with government and that prevents them from being analytical and creative. Magnus should know that social workers solve problems they don't hand out entitlements. County financial workers do that on behalf of the state. How can you be part of running a government if you don't know what government workers do?

The question is how many Republicans are NOT completely whacko, and which ones will have the guts to vote for revenue?

I absolutely support extending the sales tax to mail-order and internet purchases. It is long overdue. Our local retailers should not have to compete on an unfair playing field.

I know all about the interstate commerce arguments. But California and other states are doing it. We already have a use tax but few actually pay it. There is no practical difference between a use tax and the extended sales tax as proposed across the country.

As for gambling, I am very wary of Rep. Magnus' insistence that it be dedicated to transportation. "Transportation" in Republican parlance means roads only. To put a casino in downtown Minneapolis and then say the revenue can't be used to fund transit would be the height of idiocy.

Whatever the merits of their current proposals, it's good to see the Rs doing some creative thinking for a change. They apparently also realize some other things--such as we ain't getting out of this without new revenue, and our Governor had the right idea when he said a few days ago that the next proposal has to come from them He's been the only one coming up with ideas so far. Now it's their turn.

Good article.

Sorry to say, Mr. Nord, that by publicly calling attention to these few Republican legislators who are willing to consider revenue enhancements, you've probably brought down on their heads a massive attack by the angry hornets who worship at the altar of Norquistian politically dysfonic thought and behavior.

It will be political suicide (at least in 2012) for ANY Republican legislator to compromise with Gov. Dayton (they will lose their party endorsement).

But the question still lingers in the air, with such a substantial majority of the citizens of Minnesota against the Republicans, are there NO moderate Republicans left with the political courage to do what's needed for their fellow citizens,...

And, if necessary, bring about the birth of a "new" Republican Party, which will really be the return of the OLD MN Republican Party made up of fiscally conservative, socially moderate, kind-hearted-but-careful-with-money people who used to participate in making our state the "state that works,..."

Instead of just trying to tear down the whole thing because that American Satanic Rasputin, Mr. Norquist, says that's what they have to do?

Last time I checked, NO ONE voted to elect Mr. Norquist as a shadow Governor of our state. Why is the current Republican leadership allowing this "Wormtongue" to exercise control over everything they do?

John Boehner just said at a press conference that under NO circumstances would anything that could be called a tax be considered by his party during the current negotiations with the President.

More revenue, says John, would not affect the deficit.

Disturbing to hear from the other side, the president is apparently open to discussing cuts to entitlements, although he did remind the Press that Social Security is self-funded and never affects the deficit.

i WOULD JUST LIKE TO BE CLEAR ON THIS...THEY are proposing? When do we see some actual work being done? This state is closed for business because of their intransigent behaviour. When do they stop receiving their salaries and per diem? They should be suffering right along with the rest of us! As of today Monday the 11th...my wife and I have lost 50% of our income (from her workers comp claim that was approved over 5 years ago)! If we pay the 600 dollars in outstanding bills at the end of the month we will have zero money to live on for August. And there is no assurance that my military pension and VA benefits will becoming on 1 August....if they do we will pay the 600 in bills we have and that effectively reduces us to 0 for August income as well as July. This state is savaging people who can ill afford it and we are suffering bcause of their political gaming at the capital. Let me be quite clear on this come next election I will be voting for the ABT ticket any body but them

@Dennis

The "ABT" ticket is naive. Please look closely at who is trying to forge a compromise and who is not. Dayton is being flexible, the Republicans are not.

I hope everyone gets clear on this and votes appropriately.

JUudge Gearin has made an arbitrary and inexplicable decision to keepthe tracks closed down with the state. She allowed the zoo, which had been grouped with the tracks for consideration for reopening, to be reopened even though they do receive some state funding. She then refused the tracks,which are TOTALLY self financing,their requests to reopen. In fact, the tracks are responsible for a great deal of money going to the state and head up the equine industry in Minnesota valued at about $2 billion per year in economic activity. The tracks, private businesses, even provide the salaries of the officials required by the state. It was determined that there was no annual review of legislation necessary to provide dispersal of the money payed in advance and escrowed by the state so there is no government activity required except to receive the money earned by the state through the state's takeout share. By refusing to allow the tracks to open, Judge Gearin has made an arbitrary decision to close a private business and denied it and its dependencies the right to make a living. The ruling has opened the state to lawsuits against the depriving of private citizens the right to make a living in a legal manner and the constitutionality of usurping the powers of the Legislative and Executive branches of the government by the Judicial branch.

The only Republicans that will offer some sort of compromise are those planning on not running for reelection. Those planning on running again remember well the eight Republicans that crossed lines to override Pawlenty’s veto of a badly needed transportation bill. A State audit of the state’s transportation system following the 35W bridge collapse stated that funds didn’t even exist to inspect the state bridges, let alone repair. The ax fell quickly. Stripped of committee chairmanships, staff, and party backing most of the eight chose not to run again. If anything the rigid party control is tighter now.