DFL plan to balance the budget angers GOP

03/24/2005

Patricia Lopez, Star Tribune
March 24, 2005

The first phase of a controversial two-step plan to use budget cuts and revenue increases to accomplish an early balancing of the state’s budget cleared the Minnesota Senate on Wednesday on a mostly party-line vote of 35 to 30.

The bill would erase the $466 million deficit projected for 2006-07 and lock in place the existing state budget for two more years. The move has prompted criticism from Republicans, who say the budget would have essentially flat funding for K-12 schools while allowing an 18 percent increase in health and human services spending.

Senate DFLers say the purpose of their budget-balancing bill is twofold. By extending the state’s existing budget, they would eliminate any possibility of a government shutdown should legislative negotiations run past June 30, when the state’s 2004-05 budget period ends. And erasing the deficit, they say, paves the way for a cleaner, more focused discussion on new spending for education, health care, transportation, environment and other needs, and how to pay for it.

Republicans say they fear trickery by the Senate DFL majority. After continuing the existing budget, Republicans say, DFLers might walk away from difficult negotiations and blame any lack of school funding increases on Republicans and Gov. Tim Pawlenty.

“You’re saying ‘trust us’?” an incredulous Senate Minority Leader Dick Day, R-Owatonna, said during Wednesday’s floor debate. “The DFL majority hasn’t solved anything in recent years. How are Minnesotans going to trust you?”

Sen. Linda Berglin, DFL-Minneapolis, called the bill “an honest effort” to balance the budget using “the things we can agree on.”

The bill and a companion tax bill that passed on a 36 to 29 vote rely almost completely on measures proposed by Pawlenty to achieve budget balance.

The two bills would raise revenue by about $259 million and cut spending about $207 million to erase the projected deficit. Cuts include reductions of about 3 percent for state agencies and departments, and minor reductions in most areas of state spending, including a $3 million cut for the Education Department. Extra revenue would come chiefly through extending higher sales taxes on liquor and rental cars. Taxes on both had been scheduled to fall to the statewide average of 7 percent.

The bills now head to the Republican-led House, where chances for passage are said to be slim.

‘Kind of a sideshow’

Republicans have complained that even though the Senate DFL plan uses the governor’s recommendations, it ignores the totality of his budget proposal, which includes higher funding for education and more restrained spending on state health care programs.

Pawlenty told reporters later that “I was stunned to see a DFL caucus vote to cut education. It’s very odd to us. I don’t think it advances the ball at all. It’s kind of a sideshow.”

Senate Majority Leader Dean Johnson, DFL-Willmar, said that when DFLers return from the Legislature’s Easter break, his members will be ready “for an honest discussion” of how to finance new spending.

“Are the people of Minnesota willing to have their taxes raised for education? Will they support legislators who support that? That’s the begging question,” Johnson said.

Johnson noted that a proposal to raise cigarette taxes by $1 a pack for health care has drawn bipartisan support, as has a gasoline tax increase for transportation.

Taxes have already risen, he said. “Property taxes are going up by double digits in some parts of the state,” he said. “We would ask whether the state should slow down property tax increases to consider others.”

$500,000 campaign

Businesses have already moved to answer that question. A coalition including real estate agents, builders, contractors, bankers, truckers, the Minnesota Business Partnership, the Minnesota Chamber of Commerce on Wednesday launched a $500,000 print, radio and TV ad campaign to persuade lawmakers to stick with Pawlenty’s pledge not to increase taxes.

Charlie Weaver, executive director of the Business Partnership, said that “for three months, legislators have been inundated with those who want to raise taxes.” But tax increases will kill economic growth, he contended. “If you raise taxes, you hurt growth.”

The two-week campaign will urge legislators to adopt a strategy that shuns “tax and spend” in favor of “grow and spend.”

Glenn Dorfman, of the Minnesota Association of Realtors, said that tax increases would jeopardize job growth and “anything that jeopardizes jobs hurts home values.”

DFLers have argued not only that property tax increases do the same kind of damage but that the property tax is among the most hated taxes because it is the least tied to ability to pay.