It came in a non-union machine shop on Labor Day: Republican gubernatorial candidate Tom Emmer unveiled a tax reduction plan that adds up to more than $600 million in cuts for businesses — what he bills as a “job-creation agenda.”
In the process, he began to roll out his vision for a new kind of state budget.
Emmer reiterated a major thesis about the state’s budget over how to pay for these substantial tax cuts in the face of a looming $6 billion state deficit: Trust him — there will be enough revenue to cover the costs of doing the state’s business over the next two-year cycle.
As he said this morning, at a gubernatorial candidates’ debate in Duluth, “In reality, the [state budget] deficit doesn’t exist if you’re living within your means.”
Meanwhile, in these days of what seems to me a nearly daily game of opposition research, there was a “gotcha” flap Monday that Emmer’s campaign seemed to unexpectedly walk into. Hours before he unveiled the first part of his long-awaited budget plan, the DFL released what it called a “spoiler alert.”
It asserted that Permac Industries, the woman-owned host company for Emmer’s jobs-plan unveiling, had received funding from the Obama administration’s Recovery and Reinvestment Act — the so-called “stimulus package.” Of course, Emmer has been opposed to that.
The kerfuffle caused his campaign to click into scramble mode even as Emmer himself was touting his jobs plan.
The Emmer plan
Emmer insisted that the combination of cutting state business taxes and the state’s general property tax while expanding the state Research and Development Tax Credit and tax credits for investors would create jobs.
“By growing jobs, you will drive revenues,” he said, which, he believes, would begin to balance the state’s budget, which faces a $6 billion deficit.
His entire program and release can be found here.
Highlights of the Emmer jobs plan include:
• Cutting the business tax of 9.8 percent in stages so that it is eventually repealed by 2015;
• Expanding small-business tax relief;
• Cutting the state general property tax;
• Expanding a research and development tax credit and a tax credit for investors in new businesses;
• Changing the method of refunding capital equipment sales taxes to businesses;
• And seeking a “reform [of] state regulation,” which reads like reduce state regulation.
Of proposed tax increases by DFL candidate Mark Dayton and Independence Party candidate Tom Horner, “They don’t get it.”
Emmer restated what he has been saying for the past couple of weeks: If the state “lives within its means,” it can cover its expenses. He asserted that the state will have nearly 8 percent more revenues — $2.8 billion — in the coming biennium than it did over the past two years.
“We are budgeting from the point that we have today, rather than what government wants to spend,” Emmer said. “The $5.8 billion deficit is actually what government wants to spend. It wants to spend roughly $38 billion in the next biennium … We will have almost 7.8 percent more in revenue to spend in the next biennium, but it’s about $5.8 billion short of what government wants. In reality, if we did not spend a nickel, if we agreed we weren’t going to change a thing, then theoretically two years from now Minnesota would have a surplus, not a deficit.”
Emmer’s view of the budget has been calmly questioned by Bill Marx, the chief fiscal analyst of the Minnesota House. He recently and, in understandable terms, walked the Star Tribune’s Lori Sturdevant through the complexities of state budgeting and the deficit.
Among the key issues that any new governor must address will be the loss of more than $2 billion in federal stimulus money. That’s cash that has helped the state, but that will go away. Emmer has been opposed to the stimulus package.
The Permac controversy
That opposition led to Monday’s dustup. The DFL tossed its firebomb in the morning with its release to embarrass Emmer and Permac CEO Darlene Miller.
(Note: It was hard not to feel sorry for Miller, who seemed to be a hardworking entrepreneur and employer but who got whipsawed by the political reality of an apparent contradiction during a vigorous political campaign. Lesson: Hosting a campaign event can draw scrutiny these days.)
On the one hand, the headline on the DFL’s release was a bit of a reach: “Tom Emmer to Hold Press Conference at Company Saved by the Recovery Act Funding He Opposes.”
No, Miller said, her company wasn’t “saved” by the stimulus package. Permac has long used the Dakota Scott County Workforce Center and recently hired one employee through that program, she said.
But in a release from a Washington think tank, Miller was quoted just last week for seemingly praising the stimulus plan. Miller and Emmer denied that Permac benefited from any federal subsidies.
Dakota-Scott County Workforce Center director Mark Jacobs told MinnPost this morning that his agency, like other workforce centers statewide, receives state and federal funding. In 2009, the Dakota-Scott center, like others statewide, did receive funds from the Obama stimulus plan, Jacobs said. It generally aids dislocated workers.
Miller, who has accompanied Gov. Tim Pawlenty on some overseas trade missions, said that any previous government benefits she received came from President George W. Bush’s earlier programs that reduced business taxes. (Permac is referenced near the bottom of this document.)
“The jobs we have here have not come through the federal stimulus plan,” Miller said. “We have not received any federal stimulus money for employees.”
DFL spokeswoman Kristin Sosanie told MinnPost: “It’s clear that their company was aided by the Recovery Act funds. That’s a fact, even if it’s not politically convenient for Tom Emmer.
Emmer communications director Carl Kuhl said “Workforce Development Centers have been around since — I want to say the 1960s . . . Did they get additional funding in the most recent stimulus package, I can’t tell you … Permac Industries has received absolutely no federal dollars.”
It does raise a central issue in the gubernatorial campaign: What is the balance between government and the private sector in growing jobs and balancing the budget? Emmer and his opponents seem to differ on that.
Opponents not impressed
After the Emmer news conference, the DFL called the Emmer plan “smoke and mirrors.” Today in Duluth, Dayton, noting that Emmer’s proposed tax cuts actually would increase the deficit, wondered when Emmer was going to address “the hard part” of the budget.
Independence Party candidate Tom Horner issued a statement claiming some of Emmer’s tax reforms proposals were previously recommended by the state’s 21st Century Tax Reform Commission. In Duluth today, Horner reiterated that those proposals are ones that he embraces, proclaiming to Emmer: “Congratulations!” [PDF]
The commission’s report, however, was rejected by Gov. Tim Pawlenty and the GOP House Caucus, of which Emmer as a Delano legislator is a member. There are a collection of recommendations from that group that appear in Emmer’s jobs creation agenda.
That commission, however, also recommended broadening the sales tax base — a Horner plan — and increasing cigarette taxes, another part of Horner’s budget-balancing proposal.
Horner said to Emmer today: “The reality is you have to have a responsible budget.”
Emmer insisted that growing jobs will increase revenues to the state to cover services Minnesotans have come to expect.
As for other parts of his budget plan — and when it will be forthcoming and what programs he plans to cut, and his vision for educational and government reform — Emmer told the assembled media, they’re coming.
He chastised Dayton and Horner for their “so-called plans,” and said to the journalists, “You guys are so impatient. I’ll give all of you a hug before you go, but it’s coming . . . We’re going to give you specifics all the way through.”