State Sen. Tom Bakk, DFL-Cook, chairman of the Minnesota Senate Taxes Committee had an interesting take on where the Legislature and the governor will go on taxes and budget in this year's session when I spoke to him by phone Monday, April. 27.
The most interesting fact: both DFL-controlled houses are proposing to cut more than the Republican governor. Gov. proposed $1.5 billion in spending cuts, DFL House is at $1.6 billion and Senate is at $2.2 billion. Bakk notes that Senate will "backfill" some of those cuts with federal stimulus money, as I'm guessing will the House and govenor, but the fact that Democrats were cutting more than Republicans kind of surprised me.
The biggest question: How will DFL proposing tax increases compromise with the governor proposing no new taxes. Bakk says the governor's plan to borrow $1 billion to balance the budget is more or less a tax...It's a tax with interest. We have to pay it back.
How might it play out? Bakk says first of all the DFL Senate planned income tax increases will "blink off" when the state budget gets back into balance. That sunset is written into the bill. But he also notes that DFL may consider "cutting some taxes" in two years after the current biennium, thereby giving governor some political cover to say over FOUR years, he did not raise taxes.
Gov. Pawlenty, speaking to The Free Press editorial board earlier this year said borrowing the $1 billion to cover in times of trouble is not unlike what a business might do when it sees a downturn in its revenue. It's one-time money, he argues, to get us through a one-time period of economic difficulty.The most interesting fact: both DFL-controlled houses are proposing to cut more than the Republican governor. Gov. proposed $1.5 billion in spending cuts, DFL House is at $1.6 billion and Senate is at $2.2 billion. Bakk notes that Senate will "backfill" some of those cuts with federal stimulus money, as I'm guessing will the House and govenor, but the fact that Democrats were cutting more than Republicans kind of surprised me.
The biggest question: How will DFL proposing tax increases compromise with the governor proposing no new taxes. Bakk says the governor's plan to borrow $1 billion to balance the budget is more or less a tax...It's a tax with interest. We have to pay it back.
How might it play out? Bakk says first of all the DFL Senate planned income tax increases will "blink off" when the state budget gets back into balance. That sunset is written into the bill. But he also notes that DFL may consider "cutting some taxes" in two years after the current biennium, thereby giving governor some political cover to say over FOUR years, he did not raise taxes.
It will be interesting to see how this plays out. Stay tuned.
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