Details of Dayton’s revised budget plan

Democratic candidate for governor Mark Dayton released his revised budget plan. A Department of Revenue run showed Dayton’s income tax plan coming up nearly $2 billion short. Here’s the details:

1. Add a 4th Income Tax Bracket of 10.95% on taxable income above $130,000/year for individuals and above $150,000/year for married couples, filing jointly.

2. Add a third Property Tax bracket of 2% on the value of homes over $1 million. Raises an additional $95.4 million for the biennium, according to the Department of Revenue.

3. Eliminate the “Snowbird” tax loophole that allows people to live outside Minnesota for six months and one day of the year, and pay no personal income taxes in this state. Raises estimated revenues of $500 million for the biennium.

4. Increase Enforcement to Crack Down on Tax Evaders raises (net) $339.9 million in additional biennial revenues.

New sources:

1. Adopt a Corporate Throwback Rule. 25 states of the 45 with corporate income taxes have a throwback rule for corporations that sell their products in more than one state. Such a rule would produce revenues of $39.7 million for the next biennium, according to the MN Department of Revenue’s 2010 Tax Expenditure Report.

2. Elimination of MN Subtractions for Foreign Operating Companies & Royalties. Estimated additional revenues for the next biennium would be $276.1 million.

3. Tax on Predatory Credit Card Companies. In 2009, the Minnesota House passed a bill that would have taxed credit card companies on profits they received when charging interest rates in excess of 15%. The measure would generate $212.7 million in the FY12-13 biennium, according to House and Senate Fiscal Analysts.

4. Possible addition of one state-owned and operated casino at or near the Mall of America or at the MSP airport. In 2003, the authors of similar legislation estimated revenues to the state at $300 million for the biennium.

Spending cuts:

1. Re-negotiate leases for overpriced state office buildings. A 10% reduction in lease costs would save $12 million of the $120 million in office space leases.

2. End Expensive Leasing of Office Space for Storage. Similarly, state agencies spend thousands of dollars a year, using expensive office space for storage purposes. . Estimated savings: $2 million for the biennium.

3. Reduce Private Contracting. State agencies spent over $850 million on outsourced professional and technical services during the 2008-09 biennium. Cutting this outsourcing in half would thus save $425 million.

4. MAPE estimates that its proposal to limit agency supervisory/managerial personnel to no more than 15% of state agencies’ general workforce would save $110 million in the biennium.

5. Eliminate the MN Trade Office. Since I am not running for President, I will not need a Trade Office to support my international trade junkets, aimed at improving my presidential “gravitas.” Biennial savings: $3 million.

6. Require the MN Department of Commerce’s Market Assurance Program, which regulates the insurance, real estate, and securities industries to be entirely funded by those industries. Savings: $11.9 million.

7. Reduce and Reform Excessive K-12 Education Testing. Currently the MN Department of Education administers 61 standardized tests on Minnesota’s schoolchildren. I will charge my Commissioner of Education and the 2011 MN Legislature with reviewing and eliminating excessive and non-productive student testing. Est. Savings: $ 8 million. Est. Savings of Student and Teacher anguish: “Priceless”!

8. Reform Charter School Lease Aid Program to eliminate Star Tribune documented abuses. Est. Savings $20 million (out of biennial cost of $85 million).

9. Adopt and Implement Education Minnesota Health Insurance Pool Bill. This legislation, which would pool MN School Districts’ health insurance purchasing to reduce their insurance costs, (and provide their employees with better coverage) was vetoed twice by Gov. Pawlenty. The legislative author estimates such a plan would save $88 million for the FY12-13 biennium.

10. Coordinate Purchasing to Lower Costs. Minnesota’s procurement process needs to be streamlined and re-tooled in order to maximize savings. Currently, the bid process is not transparent, and often the state does not award the contract to the lowest bidder. Minnesota could readily save an estimated $100 million.

11. Establish a Voluntary Framework for Regional School Transportation. Many school districts maintain not only their own school bus fleet but also their own fueling depot, maintenance depot, and repair personnel.

12. Administrative Efficiencies at MnSCU. Currently, 302 MnSCU employees – mostly administrators – receive higher salaries than the Governor. The highest paid employees in MnSCU should receive a modest 5% pay cut – the same amount cut from the systems overall – during this fiscal crisis. That would reduce state spending by $10 million for the biennium.

13. Reduce Health Care Bureaucracy and Eliminate Excessive Paperwork. Estimated savings for the biennium: $81.6 million.

14. Reduce Bureaucracy and Prevent Unnecessary Hospitalization with Electronic Health Management. By reducing Adverse Drug Events by just 15% in the first two years while also providing more electronic options for health care service delivery would produce estimated savings of $57.3 million over two years.

15. Using Technology and Continuity of Care to Reduce Costs and Improve Care. Many elderly & disabled Minnesotans could receive better care, in non-institutional settings, at reduced costs. Projected state funding for Medical Assistance for both Elderly & Disabled Care and for Long-Term Care Waivers totals $5.59 billion for the biennium. D 3% savings in those two areas would reduce state spending by $167.7 million while providing better and more flexible care.

16. Elimination of JOBZ Subtractions & Credits. Would save $68.9 million in tax expenditures in the next biennium. (Tax Expenditure Budget 2010).

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