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Dayton-Senate DFL ‘switcheroo’? Lawmakers may consider some of his dropped sales-tax provisions

Assistant Majority Leader Sen. Katie Sieben confirmed Friday that there’s interest in possibly extending the state sales tax to some services.

“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,” saud Assistant Senate Majority Leader Katie Sieben.
MinnPost file photo by James Nord

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.

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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.

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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.