Gov. Dayton is scheduled to propose his revised budget plan
tomorrow. Update: Dayton’s spokeswoman says he will not release his budget plan tomorrow. She says it will be released later this week.
Over the past week, he’s discussed some of his plans and hinted at others. Here’s a handy cheat sheet for those wondering what he’ll continue to back and what’s either getting dropped or likely will be dropped.
The sales tax expansion is gone.
Dayton announced last week that he’s scrapping his plan to expand the sales tax to business services. He confirmed to reporters today that he’s also dropping his entire sales tax plan. It would have also expanded the sales tax to consumer services while lowering the overall rate.
“It’s going to be gone from my proposal,” Dayton told reporters. ” I don’t think it’s fair to tax consumers if you’re not taxing businesses. We treat them equally now for the sales tax application so I don’t think we should change that.”
Top earners will pay more in income taxes
Dayton has repeatedly said that his plan to raise income taxes on the top 2 percent of Minnesota’s earners will stay in his budget. It’s no surprise, since it was a major part of his campaign for governor in 2010. He told reporters that he’ll keep the new income tax bracket at 9.85 percent for individuals with more than $150,000 of taxable income, and couples with more than $250,000.
Smokers will pay more
Dayton also confirmed today that his budget plan will continue to increase taxes on tobacco. His initial plan included a 94-cent increase in the tax on a pack of cigarettes. Dayton said he doesn’t like the tax but said he was convinced by public health officials who said higher tobacco prices would reduce the number of people who smoke.
Some spending will stay the same.
Dayton says he’s committed to keeping the same level of spending for education and economic development.
“We’re going to be able to make the same level of investments in education, economic development and the like because the net revenues in this configuration come out a couple hundred million dollars less than previously,” Dayton said.
It isn’t clear whether Dayton will continue to push for increased spending in other areas (like aid to cities and counties).
The property tax rebate is in trouble
Dayton wouldn’t confirm that his $500 property tax rebate is gone from his budget plan, but he suggested as much to reporters.
“You can look at the numbers and see that a big part of the funding for the property tax reductions came from other parts of it,” Dayton said. “If those aren’t there, it’s going to be hard to do.”
The plan aimed to give each homeowner a $500 rebate to help pay their property tax bill. But the plan’s $1.4 billion cost may be too high without the sales tax expansion.
Bonding bill will be $750 million
Dayton says he plans to release a bonding bill proposal next week that borrows $750 million for public works projects across Minnesota. He says the plan will include funds to renovate the Minneapolis Veterans Home, the expansion of civic centers in Mankato, Rochester and St. Cloud and the State Capitol renovation.
Lawmakers will rely on Dayton’s budget plan and the latest revenue forecast as they craft their own budget plan. The state faces a $627 million projected budget deficit in the next biennium.
DFL legislative leaders say they plan to release their spending targets next week.