Dayton shares 2012-13 state budget proposal

Democratic Gov. Mark Dayton, on Tuesday, Feb. 15, presented his proposed
2012-13 state budget — one that he himself isn’t thrilled with —
calling it a tough budget for hard times.

By T.W. Budig
ECM Capitol reporter

Democratic Gov. Mark Dayton, on Tuesday, Feb. 15, presented his proposed 2012-13 state budget — one that he himself isn’t thrilled with — calling it a tough budget for hard times.

“I’m critical of my budget. It’s not the budget I would have presented had I inherited a responsible financial situation from my predecessor — I did not,” said Dayton, referring to former Republican governor Tim Pawlenty.

“(But) I’m not willing to make barbaric cuts in the  essential services that affect people’s lives,” said Dayton.

Those who want to cut deeper can explain why they want to hurt the middle-class while sparing the wealthy, he explained.

While Dayton’s budget finds more money for education, proposes no cuts to local government aid (LGA), it envisions trimming about 800 state employee positions and includes some $2.9 billion in tax increase on the wealthy.

These include a fourth-tier income tax, a three-year temporary surcharge on incomes over $500,000 — Dayton give his word it will be temporary— plus a property tax increase on homes valued at over $1 million.

Dayton argues his tax approach correct the regressive nature of Minnesota taxes — lower income people paying a greater proportion of their income in taxes than the rich.

Ninety-five percent of Minnesotans would see no tax increase at all under the governor’s proposal, according to the administration

Dayton does not believe, he indicated, that having the highest tax rate in the nation would cause wealthy Minnesotans to flee the state.

“I think the wealthiest people in the state are better than that,” said Dayton.

Republican legislative leaders blasted Dayton’s proposed budget as extremist.

House Speaker Kurt Zellers, R-Maple Grove, styled the tax increases it contains as “epic” in scope.

Assistant Senate Majority Leader Geoff Michel, R-Edina, did not want to proclaim the Dayton budget dead-on-arrival, he explained.

“(But) I don’t think it has much of a heart beat,” he said.

Republican leaders indicated that while they were willing to compromise within the framework of a $32 billion general fund state budget — Dayton’s proposed general funding spending is about $5 billion more — they strongly suggested tax increases were unacceptable.

Zellers spoke of upholding their “fundamental principles.”

Even so, Dayton indicated that a budget solution will be reached during the regular legislative session.

Indeed, having a special session was not an option, said Dayton.

Democrats spoke favorably of Dayton’s budget proposal.

“I think he delivered on what he said,”  said Senate Minority Leader Tom Bakk, DFL-Cook, of Dayton making good his campaign promises.

But Bakk and House Minority Leader Paul Thissen, DFL-Minneapolis, would not flatly state that they supported the governor’s proposal.

The Democrats spoke of the need to study it further.

While Dayton says his budget reflects about a 7.5 percent biannual growth in spending, Republican charge it’s actually a multiple higher when federal stimulus dollars from last session are factored out.

In the area of education, Dayton proposes a gradual buy-back of the more than $1 billion K-12 funding shift crafted last session —  buy-back would begin in 2014.

Dayton slates about $52 million in new money towards K-12 education — his budget provides funding for optional all-day kindergarten, among other goals.

Dayton Education Commissioner Brenda Cassellius called it a “proven fallacy” that education can be bettered without additional resources.

Dayton’s budget proposes cutting higher education funding by about six percent, but administration officials argued the impact on tuition should be minimal.

Dayton proposes no reductions to the projected growth in LGA — he argues the proposed Republican LGA “freeze” in the Republican budget bill he vetoed last week would have increased the property tax burden by more than $425 million.

Republicans counter that it’s insulting to local government officials to assume their response to LGA reductions would be to automatically tax more.

In human services, the Dayton Administration seeks to protect the core safety net for those most vulnerable — health care coverage is maintained for all but 7,200 adults currently on public health care programs.

Dayton proposes increasing the Medical Assistance surcharge to health care providers to net an additional $627 million.

He proposes cutting nursing facility rates by two percent, home and community-based service rates by more than four percent.

The governor human service proposal seeks to “jump-start” Minnesota’s Health  Benefits Exchange by leverage federal dollars.

Health and human services spending accounts for about 30 percent of the Dayton’s general fund budget, 40 percent of all state expenditures in the proposed two-year budget.

Dayton’s budget proposal calls for about a six percent reductions in the number of state employee positions — about 800 in total.

The governor indicated their would likely be state employee lay-offs, but offered no solid numbers on the number of actual lay-offs versus position eliminated through attrition.

In the area of veterans affairs, Dayton’s budget increases funding Minnesota National Guard tuition reimbursements and higher education veterans program.

It includes funds for an adult day care facility at the Minneapolis Veterans Home.

Dayton makes about $1 billion in permanent spending cuts overall in his proposed budget.

“I have always said that a budget is about values and priorities, as well as dollars and cents,” he said.

Dayton said he realized that the final state budget worked out between himself and the Republican-controlled Legislature will likely look significantly different the budget he was proposing.

The governor and lawmakers are confronting about a projected $6 billion state budget deficit.