Gov. Mark Dayton’s revised budget plan relies on higher income taxes for the state’s top earners and an increased cigarette tax to erase a projected deficit and increase spending for education.
The DFL governor announced details of his revised plan today.
It does not include a sales tax on services and does away with Dayton’s earlier $1.4 billion plan to give homeowners a $500 property tax credit. The new plan also does away with a tax cut for businesses the governor had originally proposed in January.
Increasing taxes on the wealthy is a matter of fairness, Dayton said at a Capitol news conference.
“The most regressive state and local tax is the state’s personal income tax,” he said. “Therefore my persistent efforts to add a forth tier to the state income tax, which would raise taxes only the top 2 percent of earners, would reduce the current unfairness whereby middle income taxpayers in Minnesota pay a 26 percent higher share of their incomes in state and local taxes than do the top 1 percent.”
Republicans are criticizing Dayton’s call for increased taxes. They said Dayton should cut spending to address the projected $627 million two-year budget shortfall.
“I think it’s time for the people of Minnesota to weigh in on all of the taxes and just ask the question, do you need high taxes to grow the economy? We don’t believe so,” said Senate Minority Leader David Hann, R- Eden Prairie.
Dayton said if Republicans have an alternative they should lay out exactly what they would cut.
Dayton’s budget proposes spending an additional $640 million in education. He said his plan would provide access to early education for 10,000 young children, fund all-day kindergarten for 46,000 kids, and increase school funding for every district in the state.
His budget would also increase direct student aid for post-secondary students, and increase funding for the MnSCU system and the University of Minnesota.
Dayton’s plan also increases spending for economic development programs by $86.5 million.