When Republicans took control of the Minnesota legislature, Minnesota had a $6,000,000,000 deficit. Thanks in large part to GOP reforms, Minnesota was able to erase that deficit without raising taxes. This morning, the final budget forecast was released. Here’s what it said:

For the coming fiscal cycle, which begins in July and lasts through 2015, the state’s deficit will be $627 million. Both are improvements over estimates from late last year. In November, economists predicted the state would have to grapple with a $1.1 billion deficit over the next two years.

That’s the headline information. Here’s the important information found further down in the article:

it also shows slight dips in projected spending, with the biggest savings coming from health and human services spending. “Savings from negotiated reductions in managed care rates for elderly and disabled basic care, adults without children, and families with children, as well as an increase in pharmacy rebates in (fiscal year) 2014-15 contributed to the reductions,” it says.

That’s another way of saying that the reforms authored by former Rep. Steve Gottwalt saved Minnesota taxpayers a significant chunk of money. The question no longer is whether Republican reforms worked. The question now shifts to being whether Gov. Dayton and the DFL legislature will significantly depart from the GOP budget blueprint. Based on Gov. Dayton’s budget and the bills getting committee hearings thus far, the answer to that question is apparently yes.

If passed as is, Gov. Dayton’s tax increase proposals will significantly hurt economic growth:

Dayton has proposed the most extensive rewriting of the state’s tax code in a generation. It would increase state taxes by $2.1 billion over the next two years, with top earners and businesses paying the brunt of the costs.

His budget would increase state spending from $35.2 billion in the current two-year cycle to $37.8 billion in the 2014-15 biennium. That’s a 7.6 percent increase.

The governor has said the state needs the extra money to erase a budget deficit, provide more money for education and property tax relief and stabilize future state budgets.

The biggest change he called for would broaden the sales tax base to include haircuts, car repairs, expensive clothes and, stirring the most controversy, business-to-business services, such as advertising, accounting and legal work that are not taxed now. In exchange, he would lower the sales tax rate from 6.875 percent to 5.5 percent.

Missing from that final paragraph is the fact that smaller cities, especially those that don’t get LGA, will get hit hardest by Gov. Dayton’s sales tax increase. Cities like Sauk Rapids and Sartell have attorneys from local law first on retainer, not on staff. The Dayton/Lenczewski/DFL tax increase bill, in its current form, would devastate smaller cities like Sauk Rapids, Sartell, Foley, St. Joe and Cold Spring.

It’s time to tell DFL legislators representing DFL legislators that it isn’t ok to vote for higher property taxes for small cities in rural Minnesota.

Tagsmaller Minnesota cities that they’ll lose their jobs if they vote for this sales tax increase. It’s time to tell these s: , , , , , , , , , , , , ,

2 Responses to “GOP recovery continues; will Dayton change direction?”

  • J. Ewing says:

    Notice that Dayton’s first reaction, upon learning that our “deficit” is $400M lower, was to wonder aloud how to spend that $400M?

  • Speed Gibson says:

    To what does the DFL attribute this good news? Obamanomics? No, there is no national recovery. State GOP policy? No, we can’t cut our way to prosperity, they held back critical investments in infrastructure, education, etc. Quite a puzzler, eh?

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