Republicans are showing increasing signs of frustration over their inability to get their budget message of no new taxes out to the people of Minnesota.
At the third meeting of the Legislative Commission on Planning and Fiscal Policy Thursday morning, Republican legislators repeatedly bemoaned the fact that Gov. Mark Dayton has said he’s come “halfway” in meeting Republicans with a mid-May proposal that calls for $1.8 billion in cuts and $1.8 billion in new tax revenue.
He’s being vague and hasn’t really come halfway, they insisted.
But even in complaining about the governor, the Republicans showed how much more difficult their position may be to sell.
‘Halfway point’ debate continues
For example, Rep. Mary Liz Holberg, head of the House Ways and Means Committee who Thursday filled in for House Speaker Kurt Zeller at the commission meeting, said, “At most, the governor has moved 25 per cent of the way.”
Her point was filled with insider nuance.
The governor, she notes, is saying he’ll “settle” for $1.8 billion in tax increases. But in his March budget proposal, he also outlined nearly $1 billion in money the state would collect from a variety of fees and health care surcharges. That means, by Holberg’s thinking, the governor actually wants $2.8 billion in new revenue, not $1.8 billion.
And that means he’s really come only 25 percent of the way to the Republicans’ bottom-line position of a spending cap of $34 billion, not 50 percent of the way.
But assuming Holberg’s position doesn’t glaze over the eyes of Minnesotans, it creates a public relations problem for Republicans. She does credit Dayton with moving “25 percent.”
Republicans, meantime, are trying to convince people they’ve made major concessions by showing a willingness to spend more on education than was shown their session-ending budget. But they haven’t said what part of their budget they’ll trim more to find the new education funding. They haven’t budged from their $34 billion target.
“Your feet are stuck in cement” is how Rep. Paul Thissen, one of just three DFLers who showed up for the Thursday meeting, put it.
All messages the Republicans try to get out to the public are proving to be difficult.
In part, that’s because Dayton enjoys the advantage that all governors have in these budget showdowns. He’s the governor, and he’s got the bully pulpit.
Additionally, though, Dayton has become as adept at the simple message as Republicans have been for years: “Tax the rich.” Under his new proposal, 98 percent of Minnesotans wouldn’t see a tax increase.
“I’ve met them halfway,” the governor says, noting that he has dropped billions of dollars from his initial budget in February.
Republicans are left to attack the governor’s seemingly simple position at the margins.
GOP blasts Dayton’s ‘lack of specifics’
Of late, they’ve taken to blasting Dayton’s May compromise because it lacks specifics.
The Republican charge is true. The compromise is remarkably simple. The governor essentially says, “I’ll drop $1.8 billion from my March budget proposal, you add $1.8 billion in new revenues and we’ll meet halfway between your $34 billion budget and my $37.6 budget.”
Republicans on the commission kept asking two of Dayton’s commissioners, Jim Schowalter of Management and Budget, and Myron Frans of Revenue, for specifics.
“Where would he cut the $1.8 billion?” they were asked.
“What would he do with the $1.8 billion increase?” they were asked.
“One side has a full [budget] picture,” said Rep. Steve Drazkowski, advocating the GOP plan. “And the governor is fixated on a tax increase for a minority of Minnesotans. How can we negotiate? It’s abnormal behavior.”
Schowalter, who also worked under Gov. Tim Pawlenty, said there’s nothing “abnormal” about Dayton’s negotiating position.
“It is normal,” he replied, calmly, to Drazkowski. “You start with a big picture. Then, you work down to the details.”
The governor, Schowalter explained, needs to know the Republicans will add $1.8 billion to their bottom line so detail work can begin.
But that, of course, takes Republicans right to their line-in-the-sand position: Not just no new taxes, but no new revenue as well.
That baseline creates some interesting, perhaps even ironic, arguments from Republicans.
Throughout the session, labor organizations claimed that the Republicans were jamming all sorts of anti-worker bills through the process.
But Thursday, Rep. Doug Wardlaw, one of those gung-ho conservative freshmen, sounded like the best friend a workin’ person ever had.
A small corporate tax that Dayton has proposed would raise about $270 million.
“Where does that [increase] land?” Wardlaw asked Frans. “A number of studies show it’s difficult to pass an increase to consumers because of global competition.”
“You’re right to suggest it [a tax increase] is passed on,” Frans replied, saying higher prices, lower wages, lower profits and outsourcing are all ways to deal with a tax increase.
“But,” Frans continued, “we really don’t have information on what Minnesota corporations will do.” He added the corporate tax Dayton proposes is “modest.”
Wardlaw, though, went to war for the working person.
“Luckily,” he said, “there are a lot of studies. The Tax Foundation has studies showing that every $1 in tax results in a $2 reduction in wages. Is this something the governor has analyzed? … His proposal would be a $550 million burden on labor. That’s not fair!”
(The Tax Foundation is known to be a pro-business think tank.)
“I appreciate your concerns about labor” said Frans.
Sen. Keith Langseth, a DFLer on the commission, dryly noted that South Dakota has no corporate taxes and decidedly lower wages than Minnesota.
Republicans keep trying to come up with new ways to say it: More taxes are bad. But even that argument isn’t so simple as you might think.
GOP legislators, for example, have argued that if any Dayton tax increase were to be passed this session, Minnesota would be one of just three states in which that has happened.
Where Minnesota stands in national tax picture
Sen. Geoff Michel again tried to argue that a “tax increase would be a bad message” to the job creators of the nation.
“Really, only three states — California, Minnesota and Connecticut — are seeking increases,” he said.
But it was quickly pointed out to Michel that most other states already had dealt with the problem Minnesota has long avoided.
A half-dozen other states had enacted revenue increases a year ago, including Illinois, which is collecting $3.1 billion with an income tax surcharge. Still another 11 states had increased taxes in 2009, in the wake of the recession which began in 2008.
In all, Thissen said, 39 states have raised taxes since 2008 to “resolve budget deficits.'”
All the while, Minnesota, under Pawlenty, didn’t raise state taxes.
“Many of the governors who raised taxes are no longer with us,” said Michel, in an effort to bolster his no-taxes argument. “Americans are sending a message.”
But even that message isn’t so simple to sell in Minnesota.
Langseth responded to Michel’s comment about the “message Americans sent” in November.
“We had a Republican governor and now a Democrat,” Langseth said. “A message was sent.”
Doug Grow writes about public affairs, state politics and other topics. He can be reached at dgrow [at] minnpost [dot] com.