DFL offers to scale back income tax plan

06/24/2005

Brian Bakst,
Associated Press
June 25, 2005

Senate Democrats offered Friday to scale back their income tax plan and to accept the 75-cent per pack cigarette charge proposed by Gov. Tim Pawlenty, but the sides still remained far apart with a partial government shutdown inching closer.

“It’s more than a baby step,’’ said Senate Majority Leader Dean Johnson, DFL-Willmar.

Pawlenty and the Legislature have until next Thursday to approve a new budget or a stop-gap spending plan. Lacking that, some government services will cease.

Even with the new offer, the DFL-led Senate remains at least $830 million apart from spending levels suggested by Pawlenty and an allied House GOP majority.

The latest proposal still contains an income tax increase for the wealthiest Minnesotans, something Pawlenty has vowed to block. But the new fourth-tier tax rate, which would kick in on taxable income above $250,000 for married filers, would be 8.9 percent instead of the originally proposed 10.65 percent.

On the spending side, the Senate said it would agree to an education budget that boosts funding by $867 million for preschool through high school. They said it puts them on par with Pawlenty’s recommended spending increases.

And on spending for government-sponsored health programs, Johnson said the DFL would cut their proposal by an additional $45 million. He said that money would come from reimbursements to hospitals and pharmacies and wouldn’t bump people off of the MinnesotaCare insurance program.

Pawlenty didn’t immediately react to the plan.

Meanwhile, planning for a July 1 shutdown continued.

Employee Relations Commissioner Cal Ludeman told state agencies to hold off on hiring new employees until after a shutdown. The hiring restrictions would apply to all state agencies, including those that already have a budget in place past June 30.

Ludeman said he’d make only limited exceptions for workers needed to perform the most critical functions of state government, such as protecting health and safety.

On Thursday, a judge ordered government leaders to provide the core services. He appointed retired Supreme Court Justice Edward Stringer to mediate disputes over what services get the special protection.

Stringer met Friday with officials from Pawlenty’s administration and Attorney General Mike Hatch as he settled into the Captiol office he’ll occupy during shutdown deliberations. He plans to begin hearing requests on Monday morning.

Stringer said he will abide by a judge’s definition of core services and won’t be there to rescue all programs.

“It isn’t my position to say `Fund this and fund that because it’s a good program,’’’ he said.