Dayton’s eagerly awaited budget proposal touted as a ‘historical shift’

Everyone is eagerly awaiting Gov. Mark Dayton’s budget proposal, which will contain his proposed tax changes and increases that will be at the heart of legislative debates.

The governor’s proposal won’t come until Jan. 22, but there were hints Friday that the governor won’t be just tweaking the tax system.

“We will see a historical shift on the 22nd,” said Bob Hume, a representative of Dayton’s office. Legislative leaders and Hume spoke to members of the Minnesota Council of Nonprofits, whose members clearly leaned to the DFL side of the political spectrum.

He offered no specifics but was clear that the budget proposal would include both program cuts and tax increases. Hume — who was filling in for the governor, who still is recuperating from back surgery — also indicated that the Dayton proposal won’t necessarily be embraced by a substantial number of DFLers.

“The budget proposal will be a jumping-off point,’’ Hume said, signaling that even the governor doesn’t expect his plan to sail through the DFL-controlled Legislature.

Senate Majority Leader Tom Bakk and House Speaker Paul Thissen represented the DFL, and Deputy Senate Minority Leader Dave Thompson and Assistant House Minority Leader Jennifer Loon spoke for Republicans.

Each of the leaders spoke at different times, meaning there were shades of differences between what Bakk and Thissen said they consider important in this session. Even Loon and Thompson had different tones as they offered their views on the budget and other state issues.

Loon offered a softer tone, which was in keeping with the view that Republican House members will be a bit more moderate than their Senate colleagues.

But back to the budget, because all four legislative leaders were in agreement that it is the No. 1 priority.

DFL cooperation, if not acceptance

Although Dayton doesn’t expect universal acceptance of his plan, the governor is counting on a sense of cooperation among DFL legislators and his office when it’s time to iron out details of a budget. That sort of cooperation hasn’t existed in more than a decade.

Dayton, Hume said, is very hopeful that substantial changes will ultimately be made in the tax code. The fundamentals guiding those changes, Hume said, will be a sense of “progressivity” in the Minnesota system.

He described the Jan. 22 proposal as the governor’s “first ideas — let’s sit down and talk about them.”

All, though, should understand one thing: “The tax system is old and broken and is in need of repair,” Hume said.

Although the scope of Dayton’s proposal is unknown, Thompson and Loon did get nods of approval from the crowd when they both talked about how the deduction for charitable giving should not be removed from the tax code. (The nonprofits, of course, depend mightily on charitable giving.)

Thompson, one of the most no-new-taxes conservatives in the Legislature, used the nods of approval to make a point: Everybody wants somebody else to pay higher taxes.

“Tax the other guy, don’t tax me,” said Thompson. “Don’t subsidize the other guy, subsidize me.’’

This led to a bit of a protest from at least one person in the audience.

“Your narrative is interesting, but it doesn’t jive with my experiences,’’ the man said. He went on to say that in his “faith community” there are large numbers of people willing to pay higher taxes.

Thompson was mellow in response: “That may be true. But in my experience, I’ve never had someone come into my office and say, ‘Tax me more.’ I hear it in theory, but I’ve never had it happen in practice.’’

The senator received polite applause — from most in the room — when his portion of the program was completed.

There was much more enthusiasm for Bakk and Thissen, although both urged patience about the process that began with the election of new majorities.

Difference in tone, priorities

What was interesting about the Bakk-Thissen presentations — remember, they spoke at separate times — were the differences in tone. When Republicans took control of the Legislature two years ago, there was a big effort for the House and Senate to speak from the same script.

This time around, it appears that there will be some differences between the two chambers.

Bakk, for example, was very specific in laying out Senate priorities, beyond the budget:

    1. Complete a health exchange bill by late March.
    2. Fund all-day kindergarten.
    3. Raise the state’s minimum wage.
    4. Raise the threshold for getting amendments to the ballot from simple legislative majority to “a super majority” of 60 percent. (Under a 60 percent rule, neither of the two amendments that Minnesotans defeated in November would have made the ballot.)

Mostly, though, what Bakk talked about was patience. “My job is to manage your expectations,” he told the crowd.

Thissen, who used such old liberal phrases as “social justice,” offered a different list of post-budget priorities:

1. Education.
2. Workforce development.
3. Housing.
4. Energy policy.

He also said that immigration and issues surrounding aging need to be dealt with by the Legislature.

But mostly, between now and Jan. 22, legislators will be waiting for the Dayton budget proposal.

“I’m seeing an excitement in Mark Dayton I haven’t seen before,” said Hume. “This is our moment.”

Comments (4)

  1. Submitted by Richard Schulze on 01/11/2013 - 10:02 pm.

    All this talk of regressive taxation gets back to a very American problem. The American benefit model is to rely heavily on graduated income taxes, which are referred to as “progressive”, and to offer the majority government benefits universally, i.e. irrespective of need. The European model uses far more flat taxes, such as the VAT or a flat tax on earnings, but offers benefits to those that most need it (universal healthcare being the partial exception). This is why Europe sees it’s system as being more fair despite taxes that American liberals label ‘regressive’. Economically, the European system is much more efficient. ‘Progressive’ taxes discourage work and encourage evasion., and serves a political purpose.

    That political purpose is key. American liberals since FDR have been trying to sell the message that government services, which we should all want because they are equally for all, can be expanded while only taxing the rich. This doesn’t work of course, and the middle class ends up paying money to the government in hopes of seeing some of it come back in the form of services that the middle class could have bought for itself, had it not been taxed. To a large degree, the success of the American right in keeping tax rates low has been because of the dissatisfaction of the American middle class with the inefficient system of progressive taxes and universal benefits, which repeatedly make American liberals seem economically incompetent. Only in those countries where there are flat taxes and progressive benefits has the scope of government services been able to expand to the level desired by American liberals.

  2. Submitted by Tom Anderson on 01/12/2013 - 09:25 pm.

    Thissen forgot “world peace”

    At least Sen. Bakk has sort of specific goals although there are no monetary figures.

  3. Submitted by Chris Shepard on 01/13/2013 - 04:23 pm.

    Let’s make the progressive tax system work

    This is a very interesting (and well thought-out) comment. I’ve never heard an argument FOR a flat tax put so well. With that said, I’m not sure that a flat tax could ever be considered more fair than the graduated tax model. Low-income earners simply cannot handle the same income tax rate as a high-income earner, especially since relative wages for the middle and lower classes have stagnated over the last several decades.
    Regardless, the part of your comment that points toward the American notion of “fairness” is an interesting one. It’s true that the rich don’t pay their fair share of taxes, mostly due to the fact that they have the resources to avoid them. And, it’s the wealthy’s desire to avoid their fair share of taxes that is the true problem in America. This is more of a cultural issue than a political one, but I still feel like there could be a political solution. My experience with wealthy people tells me that they would be more apt to help pay for a government that offers a greater return on their investment. Investments in our public infrastructure (roads, bridges, wi-fi, etc.) and our public education are obvious no-brainers, even for those on the right. MinnCare, on the other hand, which represents about a third of our State budget doesn’t offer the clear ROI of the others. MinnCare is one of the finest examples of a government-driven health care system in the country, and is truly the “right thing to do” for those who can’t handle current healthcare prices. However, it’s not a foundation upon which we grow our economy. It’s also hugely unpopular on the right, and there’s little direct benefit for wealthy Minnesotan’s who help pay for the system. Moreover, the federal government is in much better position to afford health care for those in need (and Obama care goes a long way toward making that a reality).
    I believe that if the left capitulated on health care (settling for a voucher system that is heavily favored by conservatives), and shift the surplus revenue toward budget items with a more clear return on investment, wealthy Minnesotans would be more apt to accept our “progressive” tax system.

  4. Submitted by Bob Petersen on 01/14/2013 - 09:44 am.

    This ‘Historical Shift’ = More Status Quo

    Remember, it is the high earners that get taxed to no end. The wealthy have their money. If you think about it, a punitive tax structure actually keeps the rich to stay rich and is a tremendous barrier for those that have little or none to have the ability to be rich. Many of the wealthy are high income earners. But these are the ones that say it is okay to tax them more because they already have more than enough to be forever comfortable. It is the small business owners and middle class trying to advance themselves to the higher bracket that get hit the hardest. Dayton and the DFL are going to ensure they remain hard hit.

Leave a Reply