Mondale/Carlson Commission: Tax cigs, alcohol and income

A commission formed by former Vice President Walter Mondale and former Gov. Arne Carlson issued its recommendations today.

The plan calls for $2.2 billion in permanent spending cuts and $1.4 billion in tax increases. That includes a tobacco tax increase of $1.29 per pack of cigarettes, a Medicaid surcharge on hospitals, an alcohol tax increase and a temporary income tax increase on every Minnesotan.

The six-member commission says in the long term, the state sales tax should be broadened and the rate lowered. The plan calls for an overall two-year budget of $35.6 billion. Republican legislative leaders say the budget should be no more than 34 billion.

Mondale and Carlson created the commission with the hopes of finding a third way to break the budget impasse between Democratic Gov. Mark Dayton and GOP legislative leaders.

Here’s the report:

Framework for a State Budget Solution

Here’s the powerpoint:

Framework for a State Budget Solution

Update: Here’s a statement from Dayton:

“I thank Vice President Mondale and Governor Carlson for their important initiative to help resolve the state’s current budget impasse. I also thank former legislative leaders Steve Dille and Wayne Simoneau and the other very distinguished members of their committee who worked so hard, so swiftly, and so well to develop their recommendations.

“I note that most of the Committee’s recommendations parallel my own proposals. They recommend $2.2 billion in permanent spending cuts; I have detailed almost $2.1 billion in spending reductions. They recommend $700 million in increased revenues from increased alcohol and tobacco taxes and a human service surcharge; yesterday I proposed raising $700 million from a tobacco tax increase, other tax reforms, and health care surcharges.

“I respectfully differ with the Committee on their recommendation of a 4% temporary income tax surcharge on all Minnesota taxpayers. My goal has consistently been to protect most Minnesotans from either an income tax increase or a property tax increase, by raising state income taxes on only the wealthiest 2% of Minnesotans. Most other Minnesotans are already over-taxed, due primarily to the 75% increase in property taxes statewide during the previous eight years.

“Unfortunately, Republican Legislators remain adamantly opposed to making our state tax system fairer. That is why I reluctantly proposed an additional $700 million in delayed school aid payments, which further reduces state spending by that amount in the biennium.

“The Republicans in the State Legislature have received three compromise proposals in the past 24 hours: two from me and one from this very distinguished Committee. Now it is their responsibility either to accept one of them, or else to present their own alternative proposal. It will take both them and me to resolve this budget impasse. I have offered yet another compromise; now it is their turn to offer their compromise.”

Update: Here’s a statement from GOP House Speaker Kurt Zellers:

“The 3rd Way Budget Commission recommendation raises income taxes on every Minnesotan. It also taxes Joe Six Pack’s six pack and makes those who smoke pay more. Like Governor Dayton’s offer yesterday, this again shows that it’s no longer about wanting a tax increase on the rich, it’s about raising whatever taxes he can in order to spend more. Families across Minnesota are already struggling to make ends meet. This is not a solution. It is a retread of failed tax and spend policies. Republicans will not raise taxes to pay for unsustainable government growth.”

Here’s a statement from DFL House Minority Leader Paul Thissen:

I appreciate the work of the Mondale-Carlson Budget Commission, though like the Governor, I disagree with taxing all Minnesotans. Vice President Mondale, Governor Carlson, and the commission members have given tremendous service to our state both in this time of shutdown and throughout their careers.

Today’s recommendations have merit, as have the seven budget compromises that Governor Dayton has proposed to the Republican legislative leaders. However, the fact remains that Republicans are utterly unwilling to listen to those who have served our great state, to reason, or even to the people of Minnesota in order to solve this budget impasse.

The Mondale-Carlson Commission outlined a framework of a $1.4 billion shift, $2.2 billion in budget cuts, and $1.4 billion in revenue. The fact is that the Republicans last week prior to shutdown agreed we need more than $1 billion in additional revenue to prevent the most damaging budget cuts from harming our state. They also agreed to take their divisive policy proposals off the bargaining table and focus on the task at hand – solving the budget deficit. All that remains is to agree on how we fix that billion dollar hole in the budget.

It is shameful that Republicans are continuing this devastating shutdown by continually refusing proposal after proposal. They have failed to lead at every step and shut down our state. Leaders listen, and it is time for Republicans to learn to listen and lead.

DFL Senate Minority Leader Tom Bakk issued this statement:

“I want to thank Vice President Mondale and former Governor Carlson, along with the rest of the Democratic and Republican members of the “third way” budget group, for their hard work in crafting their own framework for ending the state government shutdown and solving the biggest budget deficit in state history.

The report from this bipartisan, independent commission makes one thing perfectly clear: we should not fix the biggest budget deficit in state history simply by slashing funding for schools, colleges, hospitals, nursing homes, and public safety. The Republican’s all-cuts budget plan would slash funding for special education, take away health care coverage to 140,000 Minnesotans, make the biggest funding cuts to colleges and universities in state history, and devastate services for seniors and the disabled. This is an unacceptable outcome.

The bipartisan commission agrees that we need a balanced budget approach that combines responsible spending cuts and smart reforms with new, permanent revenue that allows us to protect our key priorities. This is also the position of Gov. Dayton, Democrats, many moderate Republicans, the vast majority of Minnesotans, and even the state’s economist.

The Governor has made it perfectly clear that he’s willing to compromise, but will not capitulate to the extreme, all-cuts Republican budget proposal. It’s time for Sen. Koch and Speaker Zellers to get serious about ending this impasse, and come forward with a real compromise offer.”