Gov. Mark Dayton and Senate Democrats appear to have switched places — at least when it comes to tax policy — as lawmakers prepare to offer their counterproposal to his budget plan for the next two years.
The governor — who released his updated budget recommendation on Thursday — dropped his massive $2 billion sales-tax reform efforts because the proposal, he said, “lacks the broad public and legislative support to be enacted.”
But a top Senate Democrat confirmed Friday that lawmakers are still considering an extension of the state sales tax to some services. Senate Majority Leader Tom Bakk has said that it’s an option as the House and Senate prepare to outline their budget targets next week.
“I wouldn’t be surprised if those proposals continue to move forward in the Senate, because I think there was strong support for some of the governor’s proposals,” Assistant Senate Majority Leader Katie Sieben told reporters on Friday.
House Speaker Paul Thissen appeared less enthused about the sales tax plan. He said House members expressed “some discomfort” about the measure with Dayton — particularly on taxing business-to-business services. That was likely one reason the governor dropped it.
Although Dayton said on Thursday that he no longer supports the sales tax overhaul, the governor wouldn’t speculate on whether he would veto the measure if parts of his sales tax plan landed on his desk.
“I’m not going to use that word at this point in the legislative session,” Dayton said at a press conference where he unveiled his updated budget.
Republicans on Thursday celebrated Dayton’s decision to drop his sales tax proposal, but Senate Minority Leader David Hann also criticized DFLers for not completely taking off the table efforts to increase revenue through a sales tax restructuring.
The DFL leaders didn’t offer many details about their budget plans, other than to say that both chambers would be within the governor’s $37.9 billion “ballpark.”
They also confirmed their budgets would aim to achieve more “tax fairness,” which is coded support for Dayton’s proposed income tax hike on the wealthiest 2 percent of Minnesotans. That plan would raise an estimated $1.1 billion, although there’s no indication that legislators are set on that target.
“I think there is broad consensus within our Senate DFL caucus that we do support the governor’s vision to make the tax code more progressive and fair for middle-class Minnesotans,” Sieben added.
While DFLers have been nominally behind Dayton since he launched his initial budget proposal in January, they appeared more squarely in line on Friday.
They echoed his calls for tax fairness and almost took verbatim his plug for investments in education, economic development and property tax relief.
But there’s still room for disagreement.
House lawmakers from both parties have been agitating to pay back the money that lawmakers borrowed from the state’s schools to balance the state budget. Dayton’s plan would pay back that money in four years, but House Democrats have proposed legislation to do so in the next biennium.
“We’ve said from the beginning that we want to address the shift in this upcoming biennium and we’re still working on that,” Thissen said. “That may be where we have a little bit of difference in terms of timing with the governor.”
The death of Dayton’s sales tax plan also signaled the end to $1.4 billion in proposed property tax relief in the governor’s budget. The House has its own homestead and renters’ credit property tax relief plan, and Thissen said a similar measure would be included in the House budget.
Hann said Senate Republicans would propose a “framework” after DFLers release their budget “that will demonstrate in a little more detail things that could be done with a more responsible approach to the budget.”
House Minority Leader Kurt Daudt reaffirmed that he’d like to work with Democrats to craft a single bipartisan budget, but said he may take a similar approach if negotiations don’t pan out.
It Will Be Interesting to See If
Our state’s MOST financially comfortable citizens many of whom are in leadership at the state Chamber of Commerce decide that, indeed, as Gov. Dayton originally proposed,…
they would rather have the services they provide to other businesses taxed, and pay taxes on the service they hire, at least some of which is likely to be a business expense write off,…
or if they’d rather have their own personal incomes taxed.
The reality is, of course, they can afford either one. They won’t miss it. But they ARE going to pay more.
Which will it be?
New Sheriff In Town
You can tell the GOP isn’t running the show. If these guys operated like the Republicans, they’d have half of their agenda rammed through now. By June, progressives may well be wondering why the were so pumped up last November.
It calls to mind the Will Rogers quote, “I’m not a member of an organized political party, I’m a Democrat.”
Funny!
But actually the gun and gay marriage bills are just about ready for floor votes and the Governor’s desk. The health exchange is also a done deal. With the House and Senate almost ready to start proposing their budgets by April 1st, it seems like the pace is the same as the last two years and hopefully the final budget will be finished late in the evening (like the rest of these earlier mentioned bills) on the last day of the regular session forcing the Governor to sign them.
B2B taxes
Business-to-business would fall most heavily on small businesses, as they are most likely to have to outsource these services e.g. for legal advice, tax preparation, whilst large businesses are more likely to be able to do these in-house and avoid the B2B tax.