Gov. Mark Dayton is following through on his campaign promise to tax the rich. On Tuesday morning, Dayton proposed solving the state’s $6.2 billion budget deficit by raising $4.1 billion in new taxes, including roughly $2.9 billion in new income taxes on the state’s richest 5 percent of residents.
The first term DFL governor wants to increase the state’s top tax bracket temporarily to 13.95 percent — the highest level in the nation. Dayton stressed that 95 percent of the state’s residents would not see any tax hike under his proposal and that the top tier would drop to 10.95 percent after two years.
“”This is a very tough budget for very hard economic times,” Dayton said in announcing the budget blueprint at the Minnesota Department of Revenue. “For the time being, it’s the best I can do under these difficult circumstances.”
Dayton’s budget also relies on continuing the $1.4 billion K-12 education accounting shift that was part of the budget solution at the close of the 2010 legislative session.
In addition, Dayton is proposing roughly $950 million in cuts, a figure offset by $465 million in new spending that brings the governor’s net budget cuts to $485 million. Those cuts include a 6 percent reduction in the state workforce and the cutting of approximately 7,200 individuals from the state health care rolls.
“I’m not willing to make barbaric cuts in the essential services that affect people’s lives,” Dayton said. “Others who want to go deeper into cuts than I’ve proposed will have to justify their decisions.”
Republican legislative leaders have vowed to close the state’s budget deficit without any tax increases. Not surprisingly they reacted unenthusiastically to Dayton’s proposal.
“I don’t want to say this is dead on arrival,” said Sen. Geoff Michel, R-Edina, at a press conference to respond to the budget proposal. “But I don’t think it’s got much of a heartbeat.”
House Speaker Kurt Zellers, R-Maple Grove, characterized it as a “pathetic and feeble attempt” to deal with the state’s systemic budget problems.
Dayton proposed increasing K-12 education funding by approximately $37 million, and spared aid to city and county governments from any cuts. In addition, spending on public safety and veterans services was largely held harmless.
Dayton’s largest proposed reductions were aimed at health and human services programs, which makes up roughly 30 percent of the state’s budget. He suggested cutting $680 million in such programs, including a 4.5 percent reduction in payments to home-care providers and a 2 percent cut in reimbursements to nursing homes. Dayton also proposed cutting payments to the state’s two higher education systems — the University of Minnesota and Minnesota State Colleges and Universities — by 6 percent from current-law 2012-13 figures, a total reduction of $171 million.
Despite the vast philosophical differences between Dayton and the Republican-controlled Legislature, the DFL governor once again vowed to settle the budget deficit prior to the close of the legislative session. “Not an option,” Dayton said of a possible government shutdown. “May 23 is the constitutionally set date for adjournment.”