House Democrats would raise taxes by $1.5 billion over the next two years, cut spending by $843 million and employ a larger accounting shift than Gov. Tim Pawlenty proposes in an effort to balance the state's budget without resorting to borrowing.
Speaker Margaret Anderson Kelliher said Thursday that House DFLers are "committed to a fair and responsible budget" and that Pawlenty's budget proposal is "balanced for the next election, but not for the next generation."
Pawlenty's plan, released this week, would not raise state taxes but would use one-time shifts and borrowing to get the state past a $4.5 billion deficit projected for 2010-11.
House DFLers say that does little to raise revenue or to revamp a state tax system that they say has tilted too heavily in favor of the wealthy.
"When you're making more money, there is an expectation that you're sharing back," said Kelliher, DFL-Minneapolis. She noted that recent studies have projected that the wealthiest Minnesotans will pay 8.8 percent of their income on state and local taxes while middle-income people will pay closer to 12 percent. "People demand that we have fair taxes in this state again," she said.
Kelliher did not offer any details on how her caucus planned to raise $1.5 billion in revenue but said that it should be done "progressively." That would seem to point toward the individual income tax, the state's most progressive because it taxes higher income at higher levels.
State Revenue Commissioner Ward Einess said that a tax increase on higher-income Minnesotans would not come close to raising the money House DFLers need. Citing an earlier proposal by Sen. Ann Rest, DFL-New Hope, Einess said that creating a fourth tax bracket starting at 8.5 percent for couples making $250,000 or more would net the state just $140 million a year.
"You're not seeing a lot of details because if you have to rely on the income tax, you quickly come to the realization that we'll end up with the highest income tax in the country," Einess said.
