Dear Neighbor,
Greetings from the House, where this week the governor’s state budget proposal and energy policies have been notable topics of discussion.
Let’s touch on the governor’s budget first. The plan he put out earlier this week includes $1.7 billion in tax increases, including:
- A 15% increase to Minnesota's business (corporate) tax rate (9.8%->11.25%) which would make Minnesota to #2 in the nation, second only to Iowa (12%).
- A 10% increase to the top income-tax bracket, creating a fifth tier and give Minnesota the third highest income tax rate in the nation.
The governor is framing his plan as one to “tax the rich” to make them pay their “fair share.” Those phrases may match his talking points, but they do not tell the whole story. The Minnesota Department of Revenue confirms corporate taxes result in increased taxes on low- and middle-income families, with 43% falling on Minnesota consumers through higher prices, 43% on other state consumers/employees, and 5% on employees (layoffs, wage reductions, reduction of hours, etc). Or, simply: corporate tax increase end up falling only 9% on the company (owners/shareholders) and 91% on consumers and employees.
The governor also proposes raising regressive taxes on cigarettes and vaping products, which Minnesota Management & Budget estimates show impact low-income Minnesotans the most. In fact, $941 million of his $1.7 billion tax increases are regressive taxes that will impact Minnesotans of every income level.
Any way you slice it, during a pandemic, the governor is trying to raise taxes that will deal another blow to many of the workers who already are suffering great losses under the unilateral shutdowns and other restrictions he imposed on businesses in our state. I am most concerned his budget would be especially damaging to those who can least afford another setback.
The governor has been well aware of the dip in our economy – some of which was caused by his own actions – yet he failed to take mitigating action over the last several months. Instead, the governor did the exact opposite by spending more of our tax dollars, adding to the challenge of erasing a shortfall that was last projected to be north of $1 billion.
The governor has given lip service to some cost-cutting measures for the state, such as announcing a government hiring freeze last April. That may have been a good idea as just one way the state can share the people’s burden, but it hasn’t been taken seriously. Turns out there are more full-time employees on our government's payroll now than there were before the hiring “freeze.”
The good news is we can pretty much disregard the numbers in the governor’s budget plan because the House and Senate also will be assembling their own proposals. And the governor himself will need to revise his figures based on new information provided in the February economic forecast.
Numbers aside, maybe the biggest thing we can take away from the governor’s initial plan is that he would rather balance the budget through tax increases and divide Minnesotans against one another on economic grounds than have the state put skin in the game. It would be nice if he were to start working with Minnesotans so they can once again earn a full living and provide the state with added revenue instead of pounding on their door for more tax dollars.
As for the subject of energy policy, the House Climate and Energy Committee conducted a hearing this week for a bill (H.F. 278) which creates a new “carbon-free” electricity mandate with a requirement for 100 percent carbon-free electricity in our state taking effect in 2050 (2045 for Xcel Energy).
While I fully support reasonable measures and practices to be good stewards of our planet and its resources, the alarmists at work in the House are going overboard with extreme proposals. It is unrealistic and prohibitive to be pushing radical changes before technology is ready.
Energy costs already are crippling family budgets and wreaking havoc with small businesses. This, once again, is a double-whammy for people who can least afford it – driving up both their utility bills and raising prices on goods and services they need every day.
And, now, I see liberal legislators from Minnesota are pleading with President Biden to stop progress on Line 3. We can’t just flip a switch and eliminate the necessity for diverse energy sources and grinding Line 3 to a halt would do nothing more than make us more vulnerable by continuing to operate the deteriorating, outdated existing line.
Until next time, have a good weekend and stay in touch.
Sincerely,
Matt