House GOP tosses a budget surprise: a tax cut for lower-income and middle-class Minnesotans

House Republicans, in an apparent bid to change the narrative of this legislative session, this afternoon announced that their budget-balancing plan would include tax cuts for lower-income and middle-class Minnesotans.

The size of the cuts — $300 million is the target — is small.

But at a time when GOP legislators have been hammered for protecting the rich from tax increases that Gov. Mark Dayton wants and protecting only business interests, the tax cut proposal may give Republicans a bit of a shield.

The surprising proposal, which Republican leadership described as “progressive,” came as Republican House leaders unveiled their budget targets as they move forward in attempting to balance the state’s $5 billion deficit without raising taxes.

Not surprisingly, the governor’s office didn’t seem impressed.

“Based on spreadsheets put out today, it appears those [Republican] values and priorities are about cutting education, cutting health care, cutting jobs, cutting veterans and raising property taxes,” Dayton’s press secretary, Katherine Tinucci, said in a statement.

And not surprisingly, DFL legislative leaders were quick to say that the House Republican tax-cut plan is not what it appears.

House Minority Leader Paul Thissen said that Republicans are playing “classic misdirection. It’s like putting money in one pocket while taking twice as much out of the other pocket.”

DFL says budget plan would cause other increases
Thissen and Senate Minority Leader Tom Bakk argued that the Republican budget goals will force increases in everything from property taxes to college tuitions.

Indeed, higher education does take extremely hard hits in both the House targets and the Senate version, which was released this morning. The Republican House budget calls for a cut of $400 million from higher-ed spending in the current biennium.

DFL Sen. Dick Cohen said that if you add the cuts to higher ed that Republicans now seek with the $200 million in cuts Gov. Tim Pawlenty took out of higher-ed funding four years ago, it can be argued that higher ed has lost nearly 20 percent of its state support in the last four years.

House Speaker Kurt Zellers said that the legislative higher-ed committees would do “everything they can” to protect grants that help low-income students stay afloat among rising tuition costs. Additionally, he said the House committee on higher ed is working closely with MNSCU to come up with “reforms” that would help soften the blows of the cuts.

Reform was a word frequently used by House Republican leadership when it announced the targets it will use to create balance the budget at $34 billion with no new taxes. 

In fact, in addition to the $300 million in income tax cuts to low- and middle-income families, House leaders vowed to also create business tax cuts.

They were vague as to how much those cuts would total.

Like their Senate counterparts, House leaders also were extremely vague when talking about cuts to such programs as Local Government Aid.

House leaders say they will let the appropriate committees work out the details of how much LGA should be cut.

It’s believed that LGA is a hot-button issue within the caucus, with rural Republican legislators wanting to hold onto as much of the program as possible while their suburban counterparts have little empathy for the 30-year-old program.

Zellers agreed with Senate leaders in saying that the House and Senate proposals are “are fundamentally in lockstep.”

Of course, the targets announced today are fundamentally out of step with Dayton’s approach to solving the budget deficit.

The session had begun with both the governor and Republican legislative leaders saying that this entire session was about “jobs, jobs, jobs.”

Yet, Republicans in both the House and Senate proposed massive cuts in the office of jobs and economic development.

How can that be?

Zellers say emphasis is on private jobs
“We’re talking about private sector jobs, jobs, jobs,” said Zeller. “The object is putting more people back to work.”

Rep. Mary Liz Holberg said that Republican leadership had achieved its goal with the targets it proposed today.

“Setting the targets was by no means an easy task,” she said. “Our budget lives within the state’s means. It makes structural change that lays the foundation necessary for long-term reforms.”

Bakk, the DFL leader, said targets really mean little. He noted that in the past, the subject of committee targets was hardly the big press event that it was this year.

What matters, Bakk said, are the details that are worked out by the committees, which are expected to live within the targeted goals.

Those details usually are agreed to only after long, often passionate, public hearings.

“It’s easy to come up with a spreadsheet,” said Bakk, holding up the sheet of paper that showed the Republican targets. “But it’s not so easy when you see that these numbers reflect real people and can inflict real pain.”

He is concerned that the Republicans’ tight timeline between announcing targets today and promising to unveil a detailed budget by March 25 leaves little time for public participation.

Both Thissen and Bakk expressed surprised that Republicans now are using the $34 billion figure as the amount available for the next biennium. That figure, $1 billion higher than the forecast, includes “carry-forward” money from the current biennium, which includes cash the state keeps on hand for emergencies, such as the floods that most forecasters say will deluge Minnesota this spring.

“We’d better be prepared,” said Bakk.

Doug Grow writes about public affairs, state politics and other topics. He can be reached at dgrow [at] minnpost [dot] com.

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Comments (6)

  1. Submitted by Bill Coleman on 03/10/2011 - 05:08 pm.

    No GOP leader will answer the question “Why should moderate income Minnesotans pay 12% of the income for state and local taxes while the richest pay 9%?

    Progressives should keep asking that question, over and over and over!

  2. Submitted by craig furguson on 03/11/2011 - 07:21 am.

    A $100 per year tax cut is unlikely to get me too excited. House another homeless person for a few days in emergency shelter please in the winter please. An basing budgets on“carry-forward” money is bad fiscal policy whoever does it. That’s just the amount you’ll be short the next session.

  3. Submitted by Neal Rovick on 03/11/2011 - 07:34 am.

    If that billion or so in “carry-forward” and “emergency” money were plausible sources of funding they would have been stripped by Pawlenty in previous budgets.

    I’m not seeing “jobs, jobs, jobs” anywhere in this budget. Cutting spending is cutting jobs–both public and private.

  4. Submitted by Paul Udstrand on 03/11/2011 - 07:54 am.

    Like I’ve said before, the Republicans like deficits, they maintain perpetual climate of crises. They create deficits, and tax cuts have been their most effective technique for doing so. No one should be surprised that they’re building yet another deficit guarantee into the budget.

  5. Submitted by Nate Pete on 03/11/2011 - 09:53 am.

    Great, I get a $100 income tax cut, but my property taxes will increase by 10% because of cuts to LGA. What a dog and pony show. Add another tax bracket for those who make over $150,000. Problem solved.

  6. Submitted by will lynott on 03/14/2011 - 11:20 am.

    Q: “The session had begun with both the governor and Republican legislative leaders saying that this entire session was about “jobs, jobs, jobs.”Yet, Republicans in both the House and Senate proposed massive cuts in the office of jobs and economic development.

    How can that be?” –Doug Grow

    A: “Zellers say (sic) emphasis is on private jobs
    “We’re talking about private sector jobs, jobs, jobs,” said Zeller. “The object is putting more people back to work.” Should have called him on that one, Doug.

    Zellers doesn’t know his government very well. If his top priority really were “jobs, jobs’ jobs,” he wouldn’t be cutting the very agency tasked with helping people find work.

    There’s no such thing as an office of jobs and economic development in Minnesota. Private sector employment assistance is provided by the Department of Employment and Economic Development. Cuts to the latter mean a reduced ability to do what the Republicans campaigned on–“jobs, jobs,jobs.” But if you’re obsessed with starving the beast, that’s what you do, I guess. Makes perfect sense–if you will do literally anything to avoid restoring fair and realistic income tax rates.

    Let us not forget that this train wreck began when Pawlenty and Ventura slashed taxes twice at the turn of the century. Let’s also not forget that the economy was good back then, BEFORE the tax cuts. Arne Carlson turned over a structural surplus situation to Ventura, who then cut taxes with majority leader Pawlenty’s help, thus beginning the structural deficit situation we’ve been in ever since.

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