Governor Dayton and legislative leaders have agreed to a one-day special session on Sept. 9 to pass needed storm damage relief funding for 18 counties hit by storms, high winds and flooding in June. Unfortunately, the governor and DFL leaders did not agree to use this opportunity to repeal very harmful business-to-business sales taxes that were passed on the last day of the 2013 session. These same leaders even agreed earlier this summer that the taxes were a “very bad mistake” and needed fixing.
I opposed these new hits on hardworking farmers and businesses as they are now penalized for farm equipment and business machinery repairs as well as warehousing services. Many Democrats have joined Republicans in calling for the repeal of these harmful taxes which will slow down investment, threaten jobs and limit competition. I was disappointed to see the state’s Democrat leadership could not agree on a way to repeal them during the upcoming special session.
We now know the first month of the new DFL state budget was a let-down. In the first month that the new taxes and higher spending went into effect, the state reported a shortage in tax collections of around $21 million less than projected.
Keep in mind, the DFL is counting on several months of surplus, not shortage, to pay back the schools for a shift they extended and enlarged this year.
Proponents claim the new taxes and higher spending is “gimmick-free” and didn’t include any shifts or borrowing. What they fail to mention is that a major IOU to Minnesota’s public schools was pushed off to be dealt with later. Hundreds of millions owed to Minnesota’s schools thanks to a K-12 education funding shift were not paid off through the general fund, a cornerstone campaign promise from Minnesota’s Democrats last fall. In fact, putting off payment on this funding borrowed from our children actually grew the total amount by another $50 million. In other words, instead of eliminating the school shift, the Democrats added to it.
Because the 2011 Republican budget has been so successful, much of the school shift has been paid back with excess revenue from taxpayers. However, some funding borrowed by Democrats in 2009 is still unpaid. We should have addressed past-due commitments this session rather than growing spending and raising taxes.
All Minnesotans will pay for the runaway budget spending in various ways. Locally, our school boards no longer have to seek voter approval before they can levy hundreds in additional taxes from home and property owners thanks to the Omnibus Tax Bill (HF677). That same bill also raised taxes on small business owners and imposed a gift tax on families and farmers that hand down property. Smokers will pay more than twice as much in cigarette taxes and many ag-related businesses will be hurt by new farm equipment repair and warehousing taxes. Many of our communities along the South Dakota border will feel a loss in business thanks to the huge discrepancy in taxes.
When I served in the Majority during the 2011-2012 biennium, we successfully passed huge increases in funding for our kids, by a statewide average of $444 per pupil, while balancing our books and not raising taxes. Hardworking families have to live within their means every month, and so must our elected leaders in St. Paul. I opposed the move to push off repayments to our schools of outstanding funding and hope to see better results in the future.