Governor Dayton’s Blown Opportunity

Written by Jeff Johnson on March 17, 2013. Posted in General

Below is a commentary I wrote in Sunday’s Pioneer Press:

Who would have thought that Gov. Dayton’s tax proposal could possibly get worse when he presented his revised plan this past week? Unfortunately, at least from the perspective of someone who was hoping for some level of reform of Minnesota’s antiquated tax system, the governor’s proposal did get worse.

In his initial proposal, Gov. Dayton would have dramatically increased taxes and spending, offering up a tidbit of tax reform in return. In his new proposal, the governor still dramatically increases taxes and spending but offers up absolutely no tax reform in return.

Unfortunately, the governor has now twice passed on an amazing opportunity to truly reform Minnesota’s tax system and instead has given us the same old proposals we’ve been getting from the left for decades.

Dayton’s original proposal included a huge income tax increase, a huge tobacco tax increase, a huge sales tax increase, a bizarre new tax on the income snowbirds make in other states, a huge spending increase, a familiar accounting gimmick and almost no reform or solutions at all.

His revised budget is no better.

I’m a Republican, but I was genuinely hopeful that Gov. Dayton might propose something bold with respect to Minnesota’s tax system. Reform of our tax structure is long overdue, and many of the principles involved in such reform cross party lines.

The governor has been talking about tax reform for over a year and has had his revenue commissioner traveling the state for months explaining to Minnesotans how desperately we need significant reform.

Then, last November, the governor received an unexpected political gift — a very friendly all-DFL legislature — making it look likely that his talk of reform would become a reality. The opportunity to do something transformative was sitting before him on a silver platter.

But then … he released his budget proposal. Unfortunately, he chose to essentially pass on this amazing opportunity for reform.

The governor did propose a controversial, but wise, change to Minnesota’s sales tax. Many of us have believed for some time that we should lower the sales tax rate and expand the base to better reflect other states in our region. The governor’s proposal did that and I applauded him for it. He extended the principle too far with his damaging business-to-business tax, but he at least set forth a sound principle that should have moved forward in some form.

That sales tax change, however, represented the extent of any real tax “reform” in his original proposal — and he completely eliminated it in his revised proposal.

In his new proposal, he keeps the massive increases in income and tobacco taxes and clings to that snowbird tax that even Democrats aren’t taking seriously.

And that leaves us with property taxes

We’ve been wringing our hands for years about property taxes. Everyone seems to agree that they are too high and that fundamental property tax reform is needed.

And what do we get in Gov. Dayton’s proposal? Absolutely nothing.

There is not one iota of property tax reform in his entire plan. Unfortunately, the governor has decided to pass on this golden opportunity to make the property tax fairer and simpler for Minnesotans.

We’re also told that this budget does not contain the accounting shifts and gimmicks of budgets past — apparently referring to the school shift of 2011 that delayed payments to Minnesota schools (to which Gov. Dayton agreed at the time). In reality, the governor’s proposal relies upon that same school shift to balance his budget.

Despite raising billions in new revenue and dramatically increasing biennial spending, the governor does not pay off a penny of the school shift over the next two years, instead spending all the new money elsewhere.

The governor’s original proposal was under fire from every direction, and the preferred story was that he was a victim of special interests opposing meaningful tax reform. The real problem, however, was not that there was too much reform but that there was practically none at all. And now, with his new proposal, we can take out the word “practically” and say there is absolutely none at all.

It just might be the biggest blown opportunity we’ve seen in Minnesota politics in a long while.

 

 

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