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.”

  • sam

    PDF links? Pretty please? Scribd doesn’t work for me.

  • Kyle

    Well this plan is already dead in the water. The GOP won’t accept any increases.

  • Eric

    Outstanding! Makes perfect sense! All of us should contribute!

  • Jamie

    This is really disappointing. While I, as a working-class person would be able and willing to contribute a LITTLE more in taxes, “everyone” is not able to contribute to the budget solutions, and “everyone” isn’t responsible for the state of the budget, either. Most people HAVE enjoyed tax cuts for the last dozen years or so, but for many people, those cuts have been barely noticeable and have been eaten up by rising costs of food, fuel, health care, and other things. The wealthy, however, have not only enjoyed the tax cuts, but have gotten richer and richer even as the rest of us have been enduring a recession. And not only that, but where are all those jobs that were supposed to have been created over the last 10-12 years—the jobs that Republicans always claim will occur if taxes are lower? The wealthy should bear the burden of income tax increases.

  • Disco

    Absolutely no go.

    This proposal is a total joke. The cuts and tax increases outlined here fall almost totally on the working class.

    Come back with a serious proposal that was not written by the Club For Growth.

  • Deb

    At last. Some sort of compromise. A little give on both sides. Just hope the Republicans will not be so stubborn.

  • chris

    ENOUGH with only the SIN taxes…..everytime our elected officials can’t get a budget done someone always says ” Lets raise cigarette taxes”

    Don’t people realize that when enough people have quit smoking because they can’t afford it that the government will have to make that revenue up from NON-SMOKERS taxes?

    I don’t mind paying my fair share but this is becoming ridiculous. I am pretty sure that the people in Minn who DO NOT SMOKE benefit from the money collected on cigarettes the same as smokers, they just don’t pay the tax.

    Figure it out legislators, quit spending more that we have to spend!!!!

  • nikkk

    Hecckkkk no…. 4% tax increase on income? I’m already dyin’! And what would we do after the biennium, our spending demands are only going to increase over time according to the DFL. Temporary, my rear end.

    Ugh. There is no winning. Everyone is going to be upset in some way.

  • Karen

    The work of the commission is a realistic solution to a budget impasse that is devastating for our state.

    No other state has ever shutdown. Yet, this is the second shutdown for MN in the past six years. The solution is a compromise. And, it is needs to be accepted. We need to re-open the State of MN for business.

    This is not an election campaign. This is doing the work necessary to run the state. Leaders need to lead, not campaign at the expense of the people of MN. The political posturing must end.

    Representative Zellers indicates that families of the working class will suffer. I respectfully request that he consider who is most hurt by the shutdown. The answer is the 22,000 state employees that are laid off and their families – the majority of which are the working and middle class.

    Compromise and put the State back in business.

  • Jon

    Minnesotans spend about $2 billion a year on smoking-related health impacts. Raising the cigarette tax is proven to be the best way to lower the smoking rate (and therefore its consequences). Less smoking and fewer health impact costs seems ideal to me.

  • Karen

    The commission’s solution is in line with an editorial in yesterday’s New York Times. In the editorial MN Republican leaders were characterized having “the delusion that they can balance the budget entirely from cuts.”

    It is time to move forward for Minnesota.

  • Gabrielle

    Thank you to the governor and vice pres. Everyone compromise and get back to business.

    I won’t enjoy paying additional income tax but it’s better than the alternatives. Accept it and move on republicans.

  • Ali

    My position at the University of Minnesota immediately began with a pay cut. This year’s budget calls for another wage freeze and raising the cost of our health insurance. A 4% tax increase on the middle and working class is unacceptable when the wealthiest in MN are taxed at a far lower rate.

    The governor ran on trying to make the tax system more progressive. This is a regressive plan and Governor Dayton should not support it.

  • Jim

    Ok im tried of everytime a budget probrem comes up…tax the rich and tax the sinners!! I think we sould expand sales tax to food and clothing then everyone gets to help fix the budget…oh that wont work because that takes the talking points away from both partys!! And im a joe six pack person that smokes. I have a family of 4 and we make 42000 a year. Both partys need to pull there heads from there butts and fix the probrem without cutting funding to the groups that do SO much to help the poor!!!!!

  • Ralph Crammedin

    I see Speaker Kurt Zellers has moved from his previous exaggerations to flat-out lying about the Governor’s differences with the 3rd Way proposal. I guess Zellers’ not even pretending to be honest anymore marks some odd sort of progress.

  • Ron

    My hope is the legislators will stand firm against any and all who wish to increase any taxes. The state has too much revenue as it is and belt tightening is the most prudent thing to do. Will some be hurt, yes. Will they get over it, yes. Keep up the good fight legislators!

  • Linda

    A cigarette tax makes sense. After all, if it costs the state money in health related expenses from second hand smoke and smokers health problems, then that should be considered for the source of income.

  • Elizaberth

    Do any of our elected officials – and I mean 100% of them – realize what this state shut down is costing the Minnesota tax payers? Do they care? It seems they do not. I am embarrassed to be from Minnesota! Get your act together Republicans and Democrats. You make me realize my vote for Tom Hoerner was spot on. You are harming the citizens who elected you. And one more thing – you should NOT be paid for doing a lousy job! There is no job out there that receives a paycheck for ineffective, childish and inept activity!

    Should I pay my taxes while not receiving what I pay for? I think not!

  • Jim

    Wow, THANK YOU! to MPR for running the story and keeping us updated.

    THANK YOU to the Mondale/Carlson commission for their service

    And even a THANK YOU to some of the informative comments here. I am really grateful that our state has this resource (in educated people and in MPR itself)!

    Now let’s see, if our state was so gluttonously awash with tax money would we really have had the incident of a major BRIDGE COLLAPSE a few years ago? NOBODY wanted that –I don’t care what political stripe.

    And what about the need for government regulations? Does anyone remember the near collapse of the banks and other institutions because of DE-REGULATION and ideals of “smaller government” –only to be bailed out at the last minute by pots and pots of money (to the wealthy –not the poor)?!

    We need the government, and the government needs money. They cannot get money by cuts alone.

    There have been 8 years of contorted “belt tightening” . As stated in a previous comment (and many other times) the governor ran on a platform for making a progressive tax –and we the people voted him in.

    On the other hand I cannot support the idea of paying a single mother welfare after having EIGHT children (a previous news story). I mean, REALLY?? There should be (better) rules around this sort of thing as well.

    There IS a time to cut support for abusing the system by BOTH the wealthy AND the poor. This requires oversight –and of course money.

    Although I don’t smoke, and drink little, a “sin” tax (or whatever) still does not seem to be a BALANCED approach (maybe in medical costs it balances –as claimed?).

    The problem seems to be a deep erosion of trust. Can’t trust “the politicians”, or “the rich”, and “big business”, or “the poor”, and certainly not “the immigrants”.

    We need oversight friends, and oversight we can trust.

    In the end, cutting taxes DOES NOT create jobs –just ask the people who are out of a job today because of the inflexibility of the legislature. If government jobs DON”T COUNT as JOBS then either volunteer & do yours for free or give your seat to someone who will WORK for all Minnesotans!

  • Diane barnett

    I agree with the commission and Governor Dayton that we need to blend revenue increase and spending cuts to balance the budget. Spending cuts alone will be too deep. The Republicans have been given choices for the revenue increase; now they have to package a compromise.

  • Mary Larson

    I thank the dignified members of the panel for their input. I have mixed reactions to that big chunk of cigarette tax increase. The behavior is a major health problem (don’t shoot me, I was a long time smoker, I miss and and smokers are some of my favorite people). The problem is that it is going to be very regressive…. falling hardest on strapped poor/working class families. We elected Dayton because we are tired of poor, working poor and middle class continuing to absorb all the sacrifice for the past 8 years. Polls show Minnesotans support a tax on the very wealthiest rather than kicking gramma out of her nursing home.

    Recent reports of entire district GOP delegations skipping out on constituent meetings (e.g Edina, tonight), not returning emails, or returning them with derisive and unprofessional comments is concerning regarding the level of disrespect for democracy and constituents it indicates.

    Clearly freshmen GOP legislators got in over their heads, not realizing they weren’t going to march in and get their way on every single demand their benefactors expect. Thank heavens it’s the GOP up for defeat in 2012.

    I support Dayton for his many reasonable proposals that don’t make a butcher shop of services for the elderly and disabled.

  • Pat

    The citizens of Mn have elected a divided government for the last eight years. Governor Dayton and this commission report have presented a balanced solution for the budget going forward. It is the Republican legislature leaders who are missing in action. The mantra of NO NEW TAXES is keeping them from facing this reality.

    As consitutional leaders , the Republicans are showing that they cannot lead for the benefit of all Minnesotans. If Zeller and Amy K. can’t show leadership in this crises then they should resign immediately!

  • DOT IT Guy

    Zellers should get off his recliner and pull Palin’s remote out of his hind end. It’s so irritating when Zellers stonewalls with empty campaign slogans, so he can continue his paid vacation. What a tool.

  • Steven Csargo

    This Mn. State shutdown is a Disgrace to not only Minnesotan’s, but to the entire country and the world, which is showing how Ineffective Democracy is in functionality of Government. The Rich control and are voted in as leaders of the Government. They don’t have a clue as what it means to be Middle and lower class citizen hardship. Every one of them should be voted out come election time! That is the only Power that we have as Citizens. It is time for us to All pay attention at Election time. Don’t vote the Rich back in office. Look for all those Abraham Lincolns out there that can truly represent us. A Special Session is needed Right Now to solve and End this shutdown! It is hurting the people and the State in Revenue. Politics should be put aside to solve this issue. Fair and Equitable taxes should be put in place. Cuts could also be put on people that are receiving $3K a month that never made that in their life and are receiving social security benefits. Political retirees being paid after service should also be cut. When you retire from your job, no one still gets their pay for not working. We need reform. End this Shutdown Now! No Pay, No time off until this is resolved!