The 2013 legislative session is underway in St. Paul and the incoming DFL majorities in the House and Senate have been handed a balanced state budget by Republicans that controlled both bodies in 2011 and 2012. After facing a $6 billion deficit when we took office in 2010, my colleagues and I successfully balanced the budget of the state without raising taxes on families or job creators.
During this fragile economic recovery, I believe creating good paying jobs and accelerating growth should be a priority — which also brings in revenue to further balance the budget in years to come.
Since passing the 2011 budget, larger-than-anticipated revenues have created a $2.5 billion surplus that will be used to pay back borrowed money and to refill the state reserve account. We’re also using the funding to pay back all of the 2011 aid borrowed from Minnesota’s school districts by June of this year, including Franconia, Chisago Lakes, Forest Lake and Stillwater school districts. Minnesota’s budget is on the right track due to fiscal discipline and limited government principles.
For the 2013-2014 biennium (which we take up this spring), there is a projected $1.1 billion shortfall. While far smaller than the deficit our caucus faced two years ago, the state still needs to rein in spending.
One topic emerging from the DFL caucus is the idea of tax increases, including the possibility of income, sales and property tax changes. This is one of only a few ideas that could drastically slow Minnesota’s economic comeback or even reverse the gains we’ve seen these last two years. Secretary of State Mark Ritchie reported this week that 60,827 new businesses were filed in 2012 due to our great business climate. This is an 18 percent increase over the previous year and the second highest number of new filings in our state’s history. Tax increases that discourage innovation and investment could impede the momentum we’re experiencing from Minnesota’s small businesses.
Minnesota’s current tax rates keep us at, or near the top, of national rankings on how much we take from individuals and businesses, especially when compared to the rest of the Midwest. The 2013 Tax Foundation’s State Business Tax Climate Index ranks Minnesota 45th. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes and taxes on property, including residential and commercial property.
Gov. Mark Dayton has been a public advocate for higher taxes on wealthy individuals, but according to his Department of Revenue, these taxes will be felt across all income levels through a ripple effect. It’s also important to note that the wealthiest individuals just had their taxes increased by the federal government on Jan. 1.
The truth is, more revenue will only mean more spending by legislators in St. Paul on new and bigger programs that are subject to economic turmoil in the future. Our deficits will only grow larger and more unpredictable as the size and scope of state government expands.
I urge my DFL colleagues to follow our lead on balancing the budget this year and put Minnesota families and job growth first.
Rep. Bob Dettmer, R-Forest Lake, represents District 39A in the Minnesota House of Representatives.