Minnesota Gov. Mark Dayton's $38 billion budget plan drew a mixed response from Dakota County legislators this week, with Republicans decrying proposed tax and spending increases, while Democrats lauded Dayton's focus on school funding.
Released Tuesday, the two-year budget plan raises roughly $2.1 billion in revenue by implementing sales taxes on haircuts, car repairs and high-end clothing sales, among other specific products and services. An income tax hike for married filers making more than $250,000 of taxable income annually and single filers earning more than $150,000 is also included in the proposal, as is a tax hike on cigarettes.
But corporate taxes would drop 14 percent under the proposal, and all homeowners would get a $500 rebate on their property taxes starting in 2014, according to Dayton's plan. The overall sales tax rate would also fall from 6.875 percent to 5.5 percent.
Nevertheless, Burnsville-Savage Rep. Pam Myhra (GOP) strongly criticized the proposal as "the largest tax increase ever put forward by a Minnesota governor." Myhra said that the tax package—specifically a broadening of the sales tax—would "stifle economic growth and job creation."
"These taxes are regressive in nature and will hit families hard. Under the governor's plan, sales tax will be charged on car repairs, haircuts, over-the-counter drugs, clothes over $100, online purchases, digital downloads, and much more," Myhra wrote in a press release. "Additionally, the governor's tax increases will make it even more costly to do business in Minnesota by adding sales tax on business-to-business transactions like accounting, advertising, and legal services. I believe the cumulative impact of the governor's tax increases will drive our job creators to relocate in neighboring states, like Wisconsin and North Dakota, which have more competitive business climates."
Myhra's words were echoed by freshman Rep. Anna Wills (R-Apple Valley and Rosemount), who issued a very similar statement.
"Governor Dayton has talked about a balanced approach to our state's budget. Instead of working to streamline government and reduce spending in a meaningful way, he is asking middle class families to foot the bill for billions of dollars in new spending," Wills said. "He is proposing a budget that will tax haircuts, car repairs, over-the-counter medicines, and for the first time ever, clothing."
Predictably, the measure got a better reception on the other side of the aisle. Dayton's plans for school funding that earned the praise of Senate District 51 Sen. Jim Carlson (DFL), who represents portions of Eagan and Burnsville.
Under Dayton's proposal, the state would funnel $300 million during the next biennium to K-12 schools and $240 million to higher education, plus $92 million for early learning programs and scholarships.
"A solid economy starts with a solid education," Carlson wrote in a news release. "We need to continue to invest in our economic future by ensuring our children attend good schools."
Dayton's proposed education funding increase would result in $52 in new money for every student, Carlson said.
Still, Carlson said, Dayton's proposal was only a "starting point."