MARSHALL - Gov. Mark Dayton on Tuesday made it clear he intends to follow through on his campaign pledge to raise taxes on the state's wealthiest residents in order to generate revenue for the state. And a local GOP lawmaker made it just as clear Wednesday Dayton's proposal has more misses than hits.
Under Dayton's plan - which includes a property tax reduction (estimated at 10.4 percent in Lyon County, according to Dayton's office) property tax relief for all homeowners and farmers in the form of a $500 tax rebate and an overall property tax reduction for businesses (2 percent in Lyon County) - cigarettes would cost more, as would over-the-counter medications, high-end clothing would be taxed, and the corporate sales tax and the state sales tax rate would both fall. And then there is Dayton's pet tax reform goal - a new fourth tax rate of 9.85 percent on those earning more than $150,000 ($250,000 for couples).
"I think we all knew the governor was going to ask for tax increases - we heard a lot of talk about tax reform, but we knew we really weren't talking about tax reform, we were talking about tax increases," said District 16 Sen. Gary Dahms, R-Redwood Falls. "His proposal hits many areas that want to increase revenue. I think it's an unfortunate situation - we're really not out of this recession yet and we really need to be growing jobs, yet we're increasing spending. Considering the $1.1 billion deficit that's being projected, we're raising an awful lot of taxes and increasing spending under his proposal, and I think we need to hold off on that."
Dayton says his proposal is built around "common-sense" changes that will benefit the "vast majority of people" in Minnesota.
Dahms called Dayton's fourth-tier tax rate a concern when it comes to the opportunity to create jobs. He said he doesn't think the plan will do anything to encourage entrepreneurship in Minnesota.
Tax reform aside, education looks to come out a winner under Dayton's "no excuses, no exceptions" education plan, as the budget provides $80 million for the two-year budget period for the State Grant Program, which would, the governor's office said, affect more than 880 Southwest Minnesota State University students, and $80 million for MnSCU. The governor's budget also increases E (early childhood)-12 funding by an average of $72 per student in FY2014 and an average increase of $339 per student in FY2015 through investments such as $125 million for special education, $44 million for early childhood education scholarships, $40 million for all-day kindergarten, $8.9 million for English language learning and $1 million for bullying prevention. The funding increase for Marshall Public Schools would amount to $232 per student, and the total funding increase for MPS would be $520,000
Also, the budget supports teachers in the form of $10 million for a new teacher evaluation system. A sum of $4.5 million allocated for regional centers of excellence will help the state's most struggling schools with a focus on greater Minnesota, the governor's office said.
Dahms likes the fact that more money will go toward early childhood education and all-day kindergarten but said while the regional centers of excellence piece may do some good for greater Minnesota schools, the state must do more to address what he calls inequities between metro and rural schools.
He said Dayton's education plan doesn't level out the playing field.
"We need more equity across the board," he said. "We need more equity in the formula so we get rated more fairly in rural Minnesota education. The way to do that is addressing the formula. I'm not saying the regional excellence portion won't help Minnesota, but we need to do more than that."
DFL District 17 Sen. Lyle Koenen called Dayton's proposal "structurally sound" and said "it takes care of the structural deficit. There's no one-time money in it, and it balances the budget in the upcoming biennium and also the next one. I think it's straightforward and balanced."
On the income tax hike, Koenen said he would personally like to see the $250,000 and $150,000 standards a bit higher. He also said the proposed tax on high-end clothing is less regressive since the overall sales tax rate would be lowered.