DFL budget plan: $2 billion in new tax revenue

9:36 AM, May 13, 2013   |    comments
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ST. PAUL, Minn. - In a rare Sunday afternoon press conference, Gov. Mark Dayton and the Legislature's top Democrats announced a budget deal that includes income tax increases on wealthier Minnesotans and a cigarette tax increase.

The plan aims to provide property tax relief while boosting spending for public schools, state colleges and other programs, and what DFL leaders call an historic investment in education, which provides funding for all day kindergarten for Minnesota students.

"I think this is a budget for the future of Minnesota and it is one that fulfills the promises we made last November that we were going to have a balanced budget, eliminate the gains and the gimmicks," said Governor Dayton.

The deal calls for raising about $2 billion in new tax revenue in the next two years. That's offset by about $400 million in state aid to cities and counties meant to relieve pressure on property taxes. The deal also calls for fully repaying back an $860 million debt to schools from delayed aid payments over the next two years. There will not be a sales tax on clothing.

"It is going to create a more fair tax system in Minnesota, going to have some better tax policy for Minnesota going forward and it's going to invest in the priorities I think all Minnesotans share," said Senate Majority Leader Tom Bakk, DFL-Cook.

DFL leaders say that's possible by increasing taxes on the highest paid 2 percent of Minnesotans by creating a fourth tier tax bracket on incomes of married couples above $250,000 and above $150,000 for individual taxpayers.

DFL lawmakers say alcohol and gas tax increases are still possible, and pay raises for legislators are still on the table too, but they vow this plan will be balanced with the middle class in mind, pointing to the property tax issue.

"With 86 percent increase in property taxes over the last decade. College tuition rates that have doubled. Class sizes that are growing bigger and even with all of that we have solved our budget problems. This reverses all of those trends," said . House Speaker Paul Thissen, DFL-Minneapolis.

Republican leaders were quick to call the DFL budget plan a Mother's Day disappointment.

"Their gift for every hardworking mother in the state of Minessota is going to be more than a 2 billion dollar tax increase, we were hoping some of these plans were going to be scaled back. Everything we feared is still on the table," said House Minority Leader Kurt Daudt, R-Crown.

A tax committee will now work out deals and compromises with the budget plan in the last week of the legislative session.

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