During this morning’s @Issue With Tom Hauser, DFL strategist Darin Broton admitted what savvy people had been thinking. There isn’t a political appetite for Gov. Dayton’s budget. Specifically, there’s a revolt against his sales tax increase, especially Gov. Dayton’s B2B sales tax increases and Gov. Dayton’s sales tax on services.

Once the budget deficit projection shrunk from $1,100,000,000 to $627,000,000, a 43% drop, DFL legislators couldn’t justify Gov. Dayton’s sales tax increases. After Gov. Dayton admitted that his sales tax initiative didn’t have the public’s support, it was just a matter of time before Gov. Dayton would be forced to admit that his entire budget would have to be scrapped.

Gov. Dayton’s budgetting abilities are questionable at best. During the 2010 campaign, he submitted his “detailed budget plan” to the Minnesota Department of Revenue 3 times. Each time, the Department of Revenue said his plan didn’t balance Minnesota’s budget. His last proposal came closest to balancing. The Department of Revenue said that plan ‘only’ had a $1,000,000,000 deficit.

In 2011, Gov. Dayton proposed massive tax increases, including a top income tax bracket of 10.95% and a 3% surcharge for people making $1,000,000 or more. When the deficit forecast was revised down from $6,200,000,000 to $5,030,000,000, Gov. Dayton immediately dropped the income tax surcharge. Eventually, the GOP majority forced him to drop his tax increases.

When Gov. Dayton submitted this biennium’s budget, it included the aforementioned sales tax increases on babysitters and lawnmowers as well as on business services. It also included a cigarette tax increase that will create an underground economy that hurts retailers. Gov. Dayton’s budget also includes raising the top individual income tax rates.

By the time Gov. Dayton delivered his State of the State address, he inadvertantly admitted that the GOP budget and reforms were working. He said that 72,000 jobs had been created under his watch, though he didn’t admit that they weren’t created as a result of his budget.

In his State of the State Address, Gov. Dayton was distancing himself from his budget faster than a man his age should be able to move. Here’s where the backpedalling started:

My proposals have already aroused considerable controversy. Such debate is healthy in our democracy.The genius of our system of governance is that no one gets to have it all her or his way. Starting with the governor. Some will characterize any legislative changes in my budget as my loss. I don’t see it that way, at all.

The winners I care about are the people of Minnesota, whose collective best interests I was elected to represent. As were you in the legislature. Whatever outcome does the most to improve the lives of the most Minnesotans makes winners of us all.

That sounds nice but it’s the prelude to Gov. Dayton caving on the sales tax increases. All that’s left from Gov. Dayton’s first budget is Gov. Dayton’s income tax and cigarette tax increases. Warming up in the bullpen is a liquor tax increase to replace Gov. Dayton’s ill-advised sales tax increase proposal.

It won’t take long to kill the cigarette tax increase. It’s virtually on life support. If history is an indicator, Sen. Bakk will help kill the liquor tax. Here’s what he said about raising the liquor tax in 2009:

Senate Taxes Committee Chairman Tom Bakk, DFL-Cook, said eliminating the current mortgage interest deduction could hurt Minnesota’s high rate of home ownership and higher alcohol taxes would drive some liquor shoppers across the Wisconsin border.

It’ll be interesting to see if this Sen. Bakk will agree with the 2009 version of Sen. Bakk. I think it’s more likely that this Sen. Bakk will do whatever Alida Messinger tells him to do.

At the end of the day, the Dayton/Messinger/DFL budget will include massive tax increases because they’re needed to pay off their political allies with taxpayers money. That said, the budget that will pass won’t look much like Gov. Dayton’s first budget.

That’s what happens with mulligan budgets.

Follow this link for more on Gov. Dayton’s mulligan budget.

Additional suggested readings:

Gov. Dayton tells babysitters they aren’t paying their fair share
Gov. Dayton uses tragedy to sell his tax increase

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5 Responses to “Dayton’s mulligan budget”

  • Rex Newman says:

    “Sin” taxes aren’t as easy to raise anymore. A, they’re plenty high already. B. Alcohol taxes hit municipal liquor stores. C. Most smokers are Democrats. D. Both reduce convenience store traffic, lowering sales tax receipts and selling fewer lottery tickets.

    But that doesn’t mean Dayton won’t try, I suppose.

  • Gary Gross says:

    Rex, Those are logical arguments, which the DFL appear to be immune to.

  • Bob J. says:

    Ah, but Rex … people are going to flock to electronic pull tabs instead of the lottery. That’s how Zygi Wilf’s new playground is going to be paid for.

    …oh, wait. Nobody’s got disposable income anymore thanks to the O-conomy.

    Goodness, wherever DID we leave all those DFL chanting points?

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