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DFL legislative ‘unity’ may be hard to keep with likely tax and spending fights

Sen. Scott Dibble
State Sen. Scott Dibble

For the moment, almost all DFL legislators seem to be reading from the same script when talking of the upcoming session.

“Get off the (fiscal) roller coaster,” says Sen. Katie Sieben, DFL-Newport.

“Deal with the meat and potatoes,” says rookie Rep. Mike Sundin, DFL-Esko.

“Straighten out the fiscal imbalance,” says Sen. Scott Dibble, DFL-Minneapolis.

Budget, budget, budget.

Easy to say, hard to do

It’s so easy to say, so easy an issue to campaign on, but keeping all DFLers on the same story line will be difficult once the session begins.

DFLers campaigned on a handful of basics during their campaigns.

Lowering property taxes and reviving the homestead credit were huge issues, especially in rural Minnesota. Paying back schools (the $2 billion fund shift to balance the budget) and upping aid to schools were big issues across the state.  Governing the state and handling the budget in a responsible way — without constant bickering and shutdowns — were the third leg of the DFL campaign.

There’s conflict, though within the promises

How do you lower revenue and pay back debt to schools and balance the budget and do so many of the other things DFLers would like to do, such as fix roads, fund the Southwest Corridor light rail, offer more support to state colleges, refuel local government aid and on and on?

Sieben, the new deputy majority leader, acknowledges the difficulty. DFLers currently are saying they’ll find a balance that GOPers never could through a combo package of cuts in government spending and additional revenues.

“But we know that more cuts will cause other needs to pop up,” she said.

Republicans, of course, already have begun the next campaign. The GOP sent out a fundraising letter to its membership that read in part:

“Now Democrats have gained both the state house and the state senate, we know that tax increases and wasteful government spending will be in order with Governor Dayton calling the shots. We have two short years to put together the effort to replace the Democrat house majority, Governor Dayton and Senator Al Franken. …”

The minority leadership selected by the surviving Republican senators is even more ominous.  Sen. David Hann, R-Eden Prairie, was elected by his peers to be the new minority leader. He’s of the just-say-no end of the GOP spectrum.

That means that anything DFLers hope to accomplish, especially in the Senate, will have to be accomplished without GOP support.

Will tax changes produce more revenue?

The big DFL dream is that tax reform will lead to new revenue. But that means much screaming and shouting from both inside and outside the chamber.

Charlie Weaver
Charlie Weaver

Charlie Weaver, who heads the Minnesota Business Partnership, says reform — no matter how reasonable it seems on paper — typically will lead to pushback.

The one reform that likely will pass, with bipartisan support, is placing a sales tax on Internet retailers. That idea is supported by the big-box stores and small, Main Street businesses as well. Why, bricks-and-mortar retailers wonder, should outfits such as Amazon have a 6.5 percent tax advantage?

There was a push last April for the tax, which is supported by the state Chamber and the Business Partnership,   but it was stymied by hard-line GOP legislators who saw it as a tax increase, rather than a tax fairness issue.

“It will pass this year,” predicted Weaver.

But the result, in the short term, will yield only about $5 million to the state. That’s hardly a fix to the budget issues, but it’s one area where you can expect some bipartisan agreement.

After that, though, all forms of tax “reform” get dicey, Weaver said.

Many in the business community find such reforms as expanding the sales tax “interesting.”

But how do you do that without offending major blocks of people?

If you expand the sales tax to cover clothes, for example, a combination of interests ranging from the Mall of America to advocates of the poor will cry foul, Weaver said.

If you expand the sales tax to include food, progressives across the state will turn red with rage.

Same thing holds true with heating oil.

So what about services?  Who would protest if sales taxes were applied to services rendered by lawyers and accountants and advertising agencies?

Weaver would, saying that would be “a job killer … Suddenly that work would be done in another state.”

The way Weaver sees it, there’s only one service group that could be hit with a sales tax with only minimal negative response.

“Tattoo artists,’’ he said. “I don’t think tattoo artists are organized enough to fight back — too much.”

A focus on a few priorities

All of this merely shows how difficult a task lies ahead for the DFL.

But it doesn’t mean that there can’t be progress made in solving the state’s perpetual budget mess and moving forward on some other favorite DFL projects, such as light rail.

One of the keys, however, will be keeping focused on a few high priorities.

Dibble heads the Senate’s Transportation and Public Safety Committee.  He also still is coming down from the high of being a leader in the fight to reject the marriage amendment.

Will the legalization of gay marriage be an issue in this session?

“Better sooner than later,” said Dibble, which presumably means there will be a bill this session that would legalize gay marriage.

Yet, at the same time, Dibble understands what the Republicans did to themselves by bringing forward controversial issues at a time when they claimed the economy was the No. 1 issue.

“I don’t want marriage to be the issue that ate the session,” said Dibble. “I don’t want it to be like the Vikings stadium. Every time there’d be a news conference, the questions would end up being about the stadium.”

Between a bonding bill and normal transportation revenues, Dibble does believe that his committee can move the stalled light-rail project forward. That will require labor, local governments and business leaders to all get on board, he said.

Dibble also believes that such issues as light rail and, of course, education tie directly to DFL vows to focus on the budget and the economy.

“We have to turn around the dis-investment in the state that we had with Pawlenty and the Republicans,’’ Dibble said.  “We must invest now, or we pay later.”

But invest with what?

The governor wants to “tax the rich.” Most of the DFL progressives easily buy into that plan. It remains to be seen how the new batch of DFL moderates, many who come from prosperous suburbs, feel about a new income tax tier.

The unanimity of DFL legislators will almost certainly disappear quickly once the session begins. DFLers are far more philosophically diverse than the Republicans were.

Northern-tier DFLers, for example, have a vastly different world view than many of their tree-hugging metro peers.

Sundin, the new guy from Esko, put it this way: “We are not the backyard for Minneapolis.”

Soon enough, the only thing that most pols will agree on is that tattoo artists should be taxed.

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Comments (14)

Did someone think this was going to be easy?

After more than 10 years of budget nonsense - one-time infusions, the rare "fees" and kicking the can down the road - the Legislature has a REAL TOUGH job. Of course it's not going to be easy. But if legislators of both parties want to fix what is wrong - in other words do the hard work that needs doing - they better work together. If Haan is just going to insist that the Republicans "just say no" the GOP could successfully continue to keep Minnesota on a downward spiral.

I think what the DFL has going for it is: the last legislature did such a crappy job that what needs to be fixed is perfectly clear. How it is fixed is still up in the air. But when you can see - or are willing to see - the problem, it's easier to fix than pretending you don't have one, like the GOP did by campaigning that they "balanced" the budget.

The Big Difference

between what the Democrats in the legislature and Governor Dayton are going to do and what was happening through the days of Jesse Ventura, Tim Pawlenty, and Koch/Brodkorb/et al,...

is that the Democrats are going to agree, disagree, cajole, and argue with each other, and various interest groups, but they'll come to compromises and get things done.

Then they'll forgive each other and set out to tell the people what they did and why no one region, no one interest group, no one politician got everything they might have wanted.

The Democrats will not automatically reject good ideas just because of who brought them forward. The Republicans will be welcome to contribute whatever they care to contribute. If their ideas make sense for the people of Minnesota, they'll be adopted into the bills that are passed.

It's called "politics" and it's not a sin. It's the way government works.

Of course the Republicans will then go out and try to tear it all apart in order to seek electoral advantage. When that happens, I hope the citizens of the State of Minnesota will recognize that they're being fed nothing of nutritional substance in those attacks, but only massively sour grapes.

Black or white

I'm not certain why so many revenue possibilities need to be viewed as black or white. For example, while it's nice that there are no sales taxes on clothing, why all clothing? Why not assess sales tax on individual items over a certain amount, say $200? That way, spending $50 on a pair of tennis shoes or $100 on a winter jacket is still not taxed, while forking out $250 on a sparkly dress or a pair of fine leather boots is. I can see where it still might hit necessities (e.g., that expensive pair of steel-toed work boots), but for the most part, it shouldn't affect the poor.

Taxes

Broadening the sales tax is a must. Studies have shown that doing so not only raises revenue, it makes the sales tax more progressive. Either we're all in this together or we aren't.

Better yet, we could lower the overall rate and still get more revenue.

It's particularly necessary to tax services. As usual Charlie Weaver wants to protect the rich by eliminating this option. I hope by this point Minnesotans will be able to see his obstruction for what it is. The DFL really has no reason to listen to him.

As for food, I think there is value in levying a tax on certain kinds of unhealthful food. That's common sense to cover the medical costs.

Agreed

Including food and clothing in the sales tax will increase revenues quite a bit. I would think that the tax on a package of dollar hot dogs and two dollar socks is a larger percentage of a poor person's budget than a rich person's but that's progressive I guess. At least keep the tax even unlike the above post that only wants the sales tax to apply to the rich. Either we're all in this together or we aren't.

To keep it from being progressive . . . .

maybe sales tax could be structured not like a flat tax, but set up in brackets in much the same way as is done for income taxes. That way it would have less impact on lower dollar value purchases than on higher dollar value purchases, and yet, we'd still be "all in this together".

I'm sure there are problems with this idea, too - but then, as far as I know, the perfect problem-free system has not yet been devised.

"that's progressive I guess"?

It's the opposite of progressive. It's regressive. Go ahead and tax interstate sales, services, and luxury clothing -- and create that high-end income tax bracket -- but don't tax basic necessities such as groceries and basic clothing. It's not about being "all in this together". The poor already pay plenty of taxes, relative to their ability to pay. The rich can afford to pay more -- both in terms of how much their well being will be affected, and in terms of how the economy will be affected.

Agreed.

The original poster claimed that broadening the sales tax made it more progressive according to some studies. I disagree, hence my obvious demonstration of how that might not be true. Writer Berg didn't ask for cites on the studies so I guess we must assume that the original statement is fact. Having a progressive sales tax would be interesting. How much is this item? It depends, how much do you make? We all just carry around our previous year 1040 and our sales tax is calculated from that. Will my debit card still speed up the purchasing process then?

Cites?

I was just tossing out an "off the top of my head" idea that occurred to me as I was reading the comments. I wasn't assuming any "statements of fact".

Don't read more into it than was there.

raising revenue will be difficult

We will have a fight with our friends to raise revenue and not be too timid. It wasn't encouraging to hear Senator Bakk come out after the elections and say his first call was into the Chamber of Commerce. Thanks Tom I'm really glad Labor did the heavy lifting and the first thing you do is call the Chamber- I'm sure did a lot of work for DFL candidates.
So- we will be running a revenue campaign to raise taxes on the rich and to make the system fair for working class people.

Oh No!

"So what about services? Who would protest if sales taxes were applied to services rendered by lawyers and accountants and advertising agencies?

Weaver would, saying that would be “a job killer … Suddenly that work would be done in another state.”

I shudder when I envision this dystopic, lawyerless hellscape.

Who said anything about lowering revenue?

That's NOT a Democratic objective. If it is, we're all screwed and wasted our votes. The difference between Republicans and Democrats is new revenue. And if you people think we can dig out of this fiscal hole without paying for it, you're being silly. We've been cutting services for ten years, and the government is nowhere near as inefficient as most people seem to believe. We need to raise taxes and restore spending in order to stabilize and extend our infrastructure, repair our education system, and make tuitions affordable. This is what Democrats have been talking about doing for over a decade now, if this falls apart they will fail to produce results, and start losing elections agains.

Where is all the money going?

The Governor and Legislature keep cutting services but continue to increase spending every biennium. It can't all be for stadiums.

Where is all the money going?

Tom do you think you can have government for free? You know who's got a really cheap government? Somalia. If you want to know how the money's being spent you can look at the budget: http://www.mmb.state.mn.us/doc/budget/report-fba/mar12-detail.pdf