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>> I'M JULIE BARTKEY WITH
"SESSION UPDATE."
WURP JUST WATCHING THE SENATE
ENVIRONMENT AND ENERGY
COMMITTEE AND AS YOU HEARD
MEMBERS HAVE RECESSED.
THEY WILL RETURN LATER THIS
EVENING.
BUT OUR COVERAGE CONTINUES NOW
WITH A NEWS CONFERENCE FROM
EARLIER CHOOSING TO ELIMINATE
ANY SALTS TAX ON CLOTHING OR
SERVICES BUT STAUNCHLY DEFENDS
HIS FOURTH TIER INCOME TAX
PROPOSAL -- IT MAINTAINS
ROUGHLY $640 MILLION IN FUNDS
FOR EARLY CHILDHOOD EDUCATION.
BUT IT'S PROPOSED $500
HOMEOWNER REBATE IS NOW GONE.
FOR MORE DETAILS HERE'S THAT
NEWS CONFERENCE FROM EARLIER
TODAY.
>> IMPROVE STATE BUDGET
FORECAST HAS GIVEN ME THE
OPPORTUNITY TO RECALIBRATE MY
INITIAL PROPOSAL ON
JANUARY 22ND.
DURING THAT TIME, IT IS ALSO
BECOME CLEAR TO ME THAT THE
BROAD TAX REFORM WHEN I HAD
PROPOSED LACKS THE PUBLIC AND
LEGISLATIVE SUPPORT TO BE
ENACTED.
THUS AS I DISCLOSED LAST WEEK,
I AM DISCARDING THE EXTENSION
OF THE STATE SALES TAX TO
BUSINESS TO BUSINESS SERVICES,
MY PRINCIPLE OF TAIRCH
FAIRNESS THEN LEADS ME TO
ELIMINATE EXTENDING THE SALES
TAX TO ANY CONSUMER PURCHASES.
I NOW PROPOSE THAT NO CHANGE
BE MADE TO MINNESOTA'S
EXISTING SALES TAX STRUCTURE
INCLUDING NO TAXATION OF
EITHER PURCHASED SERVICES OR
CLOTHES BY FAMILIES,
INDIVIDUALS, OR BUSINESSES.
IN ADDITION TO BROAD TAX
REFORM, MY OTHER TWO PRINCIPLE
PRIORITIES HAVE BEEN, ONE, TO
MAKE THE OVERALL STATE AND
LOCAL TAX STRUCTURE FAIRER TO
MIDDLE INCOME MINNESOTA
FAMILIES AND INDIVIDUALS, AND
TWO, TO RAISE SUFFICIENT
REVENUES TO MAKE SIGNIFICANT
NEW INVESTMENTS IN AREAS WHICH
WOULD HELP GROW OUR ECONOMY
AND CREATE NEW JOBS.
I BELIEVE THIS REVISED BUDGET
PROPOSAL ACCOMPLISHES THOSE
TWO GOALS.
THE MOST PROGRESSIVE STATE AND
LOCAL TAX IS THE STATE'S
PERSONAL INCOME TAX.
THEREFORE, MY PERSISTENT
EFFORTS TO ADD A FOURTH TIER
TO THE STATE INCOME TAX WHICH
WOULD RAISE TAXES ON ONLY THE
TOP 2% OF INCOME EARNERS WOULD
REDUCE THE CURRENT UNFAIRNESS
WHEREBY MIDDLE INCOME
TAXPAYERS IN MINNESOTA PAY A
26% HIGHER SHARE OF THEIR
INCOMES IN STATE AND LOCAL
TAXES THAN DO THE TOP 1%.
MY REVISED BUDGET PROPOSAL
WOULD RETAIN THE SNOW BIRD
TAX, THE CIGARETTE TAX AND THE
ELIMINATION OF CORPORATE TAX
LOOPHOLES AS OUTLINED IN MY
INITIAL PROPOSAL.
COMBINED BY THE FOURTH TIER,
THEY WOULD RAISE AN ESTIMATED
$1,816,000,000 IN THE NEXT
BIENNIUM.
THAT ADDITIONAL REVENUE IS
INSUFFICIENT TO PERMIT THE
$500 FOR HOMEOWNER PROPERTY
TAX REBATE THAT I EARLY YORE
PROPOSED, REDUCTIONS IN THE
CORPORATE AND SALES TAX RATES,
A FREEZE IN THE STATEWIDE
PROPERTY TAX.
HOWEVER, THERE WOULD BE ENOUGH
NEW REVENUE TO ELIMINATE THE
$627 MILLION DEFICIT NOW
PROJECTED FOR THE NEXT
BIENNIUM.
AND TO FULLY FUND MY
PREVIOUSLY RECOMMENDED
INVESTMENTS IN ECONOMIC
DEVELOPMENT AND EDUCATION.
IMPROVED BUDGET FORECAST
ALLOWS ME TO REDUCE ADDITIONAL
TAX REVENUES BY $300 MILLION
WHILE ALSO INCREASING THE DEBT
SERVICE TO FINANCE A
$750 MILLION BONDING BILL,
FULLY FUND MINNESOTA CARE, AND
MAKE OTHER NEEDED
EXPENDITURES.
I BELIEVE THIS PROPOSAL IS THE
RESPONSIBLE, BALANCED BUDGET
THE PEOPLE OF MINNESOTA
DESERVE.
THERE ARE NO SHIFTS,
BORROWING, OR OTHER GIMMICKS
TO BALANCE IT.
JUST HONEST STRAIGHTFORWARD
ACCOUNTING.
WE'RE STILL PAYING OFF THOSE
PAST DEBTS.
HOWEVER, WE'RE MAKING GREAT
PROGRESS.
WE'VE REPAID $1.9 BILLION OF
OUR DEBT TO THE SCHOOL
DISTRICTS IN THE LAST TWO
YEARS.
WE WILL PAY OFF THE REST.
THEN WE CAN BEGIN FUTURE
FISCAL YEARS WITH EARNED
SURPLUSES AND MOVE MINNESOTA
EVEN FARTHER AHEAD.
LIKE TO ASK NOW COMMISSIONER
SO WALTER TO WALK YOU THROUGH
THE FIRST OF THE HANDOUTS.
COMMISSIONER.
>> THANK YOU, GOVERNOR.
FOR THOSE OF YOU LOOKING AT
YOUR HANDOUTS, I'LL BE JUST
WALKING REAL BRIEFLY THROUGH
THE SLIDES THAT TAKE YOU
THROUGH THE FINANCIALS AND
SUMMARY OF THE GOVERNOR'S
SUPPLEMENTAL RECOMMENDATIONS.
FIRST SLIDE ON PAGE 1, SHOWS
YOU THE TOP LEVEL VIEW OF THE
IMOAR'S -- GOVERNOR'S
RECOMMENDED CHANGES BASED UPON
THE FEBRUARY FORECAST.
AS YOU'LL SEE, THE REVENUE
CHANGES, THE EXPENDITURE
CHANGES LEAVE US WITH A
BUDGETARY BALANCE OF
$8 MILLION ON THE BOTTOM LINE
AS THE GOVERNOR UNDERSCORED IN
HIS REMARKS, THERE'S NO
SHIFTS, NO GIMMICKS, AND I'LL
WALK YOU THROUGH SOME OF THE
PIECES OF THAT.
ON PAGE 2, YOU'LL SEE THE
CHANGES REALLY BETWEEN THE
GOVERNOR'S INITIAL
RECOMMENDATIONS AND WHAT ARE
HERE IN THE MARCH SUPPLEMENTAL
RECOMMENDATIONS.
AT THE TOP YOU'LL SEE THAT THE
FORECAST IMPROVED THE
BUDGETARY PICTURE ABOUT
$323 MILLION.
UNDER FORECAST REVENUES, YOU
GO TO THE RIGHT HAND SIDES OF
THAT COLUMN, SO THE REVENUES
INCREASED AS PART OF THAT
OVERARCHING BUDGET CHANGE.
THE OTHER PART OF THE FORECAST
CHANGE IS SHOWN BELOW UNDER
FORECAST SPENDING WHERE YOU
SEE A REDUCTION IN FORECAST
SPENDING.
LAYERED INTO THAT NOW ARE
REPRICED GOVERNOR'S
RECOMMENDATIONS BECAUSE WE'RE
BASING THEM ON THIS NEW
ESTIMATE OF ECONOMIC CASE LOAD
INFORMATION THAT WE HAVE FROM
THE FEBRUARY FORECAST ALONG
WITH ANY POLICY CHANGES THAT
ARE INCLUDED.
TOGETHER, THEY GET YOU TO A
CHANGE THAT IS VERY SMALL FROM
HIS INITIAL RECOMMENDATIONS,
OF JUST $2 MILLION DIFFERENT.
INCLUDED IN THAT ON THE NEXT
PAGE, IS A MORE DETAILED
LISTING OF THE PROVISIONS THAT
THE GOVERNOR WALKED THROUGH AT
THE -- AND HERE YOU SEE THEM
AT THE AGGREGATE LEVELS AND
THE NUMBERS.
ON THE INDIVIDUAL INCOME TAX,
IT'S NOT A CHANGE IN HIS
RECOMMENDATIONS.
WHAT YOU SEE HERE IS THE
IMPACT OF THE -- IMPACT OF THE
FORECAST WHICH IMPROVED
REVENUES BETWEEN LAST NOVEMBER
AND PRESENTLY PLUS THE
WITHDRAWAL OF THE PROPERTY TAX
CREDITS.
IF YOU RECALL, THAT WAS ABOUT
$1.4 BILLION.
THAT WAS NETTED AGAINST THE
INDIVIDUAL INCOME TAX REVENUE
SO THAT PLUS THE FORECAST
CHANGE EQUALS THE $1.7 BILLION
CHANGE THAT YOU SEE THERE.
ON THE OTHER -- GO DOWN A
COUPLE OTHER LINES, WHAT YOU
SEE IS THE SALES TAX CHANGES,
AND WHAT YOU WOULD ANTICIPATE
THERE IS A DECREASE IN
REVENUES DUE TO THE
ELIMINATION OF THE SALES TAX
BROADENING.
BOTH ON BUSINESSES AND ON
CONSUMERS.
PUT THOSE TOGETHER WITH THE
OTHER CHANGES THAT YOU SEE
HERE, MOST OF THE OTHER
CHANGES THAT YOU SEE ON THIS
CHANGE SHEET, BY THE WAY, ARE
RELATED TO THE FORECAST, NOT
NECESSARILY PROPOSALS CHANGING
ON A NET BASIS FOR THE
GOVERNOR'S REHABILITATIONS,
AND YOU SEE THAT TOTAL REVENUE
PICTURE CHANGES BY
$26 MILLION.
THAT IS PAIRED WITH CHANGES TO
THE GOVERNOR'S SPENDING
RECOMMENDATIONS.
ON THE NEXT PAGE.
HERE AGAIN YOU SEE THE IMPACT
OF THE FORECAST PLUS CHANGES
AND RECOMMENDATIONS ON THE
FIRST LINE YOU SEE CHANGES IN
THE EDUCATION SPENDING.
THAT IS REALLY ALMOST ENTIRELY
$9 MILLION IN FORECAST CHANGE.
$13 MILLION CHANGE IN HIGHER
EDUCATION IS A DEFICIENCY
REQUEST.
AND THERE'S A NET BASIS VERY
SMALL CHANGES TO THE PACKAGE
OF RECOMMENDATIONS THAT THE
GOVERNOR PUT FORWARD IN
JANUARY.
INCLUDED IN THAT IS AN
INCREASE IN DEBT SERVICE,
$22 MILLION TO SUPPORT THE
LARGER CAPITAL BUDGET
RECOMMENDATIONS THAT THE
GOVERNOR RECOMMENDED -- OR
MENTIONED EARLIER.
FOR A TOTAL NET CHANGE OF
SPENDING OF $47 MILLION.
AS WITH HIS INITIAL PACKAGE,
THIS SET OF RECOMMENDATIONS
BOTH BALANCES THE CURRENT
BIENNIUM, SO WITHOUT ANY
SHIFTS, WITHOUT ANY ONE-TIME
ACTIONS AND IT ALSO GOES INTO
THE NEXT BIENNIUM IN A
SUSTAINED FASHION.
ON THE LAST CHART YOU'LL SEE
THE CHANGES TO THE BUDGET AS
WE GO INTO FISCAL YEAR '16
AND '17.
STRUCTURAL BALANCE IN THOSE
BIENNIUM -- IN THAT BIENNIUM
IS $305 MILLION.
WHAT IT DOES NOT INCLUDE OF
COURSE IS THE GROWTH IN THE
SALES TAX EXPANSION WHICH
WOULD HAVE SIGNIFICANTLY
IMPROVED THE BALANCE IN THOSE
FUTURE YEARS AND WOULD HAVE
BEEN DESIGNATED TO PAY OFF THE
COUNTRY PAI. -- K-12 PAYMENT
SHIFT.
AND AS THE GOVERNOR NOTED, WE
ARE CERTAINLY MAKING PROGRESS
WITH EACH SUCCESSIVE FORECAST
EITHER WAY.
AS USUAL, M.M.B. WILL BE
PROVIDING DETAILED ITEM BY
ITEM ARE DESCRIPTIONS OF
CHANGED, WE WILL PUT THOSE ON
OUR WEBSITE FOR YOU TO BE
LOOKING AT AND GOING THROUGH
AND ANTICIPATE AGENCIES
WORKING WITH THE LEGISLATURE
TO TALK ABOUT THESE CHANGES.
ON A NET BASIS THOUGH, THIS
PROVIDES A SUMMARY OF THE HIGH
LEVEL EXPENDITURE AND CHANGE
HE'S IN THE SUPPLEMENTAL
RECOMMENDATIONS.
>> I JUST WANT TO CLOSE BY SAY
ING THAT SOME PEOPLE SAID
WELL, YOU DON'T NEED ANY DIN
REVENUES TO BE ABLE TO BALANCE
THE BUDGET.
WHAT THEY DON'T SAY IS THERE'S
A $627 MILLION DEFICIT THAT
THEN WOULD HAVE TO BE MADE UP
WITH FURTHER CUTS IN THE
EXISTING BUDGET FORECAST.
AND JUST SAY NO TO TAX
INCREASES IS NOT A BUDGET
PLAN.
IT'S NOT RESPONSIBLE.
IF PEOPLE DON'T WANT RAISE ANY
ADDITIONAL REVENUES, THEN THEY
NEED TO CUT $627 MILLION OUT
OF BUDGET AND IT'S THEIR
RESPONSIBILITY TO TELL US
WHERE.
WHERE THEY'RE GONNA CUT, HOW
MUCH, WHO'S GONNA AFFECTED AND
WHO'S GONNA BE HURT.
WE WENT THROUGH THIS THE LAST
TWO YEARS WHERE IT COULDN'T
GET THEN MAJORITY IN THE
LEGISLATURE TO COME FORTH
HONESTLY AND SAY, WHERE ARE
YOU GONNA CUT?
AND THE SAME PRINCIPLE APPLIES
AND I CHALLENGE THEM IF
THEY'RE GONNA TAKE THAT TACK,
WHICH I EXPECT THEY WILL, TO
EL US SPECIFICALLY WHERE ARE
YOU GONNA CUT?
FURTHERMORE, I THINK THESE
ADDITIONAL INVESTMENTS IN
EDUCATION ARE CRUCIAL TO
MOVING MINNESOTA FORWARD.
AND I FOUND THAT EVEN AMONG
THOSE WHO DON'T WANT TO PAY
TAXES TO SUPPORT THEM, THERE'S
GENERALLY VERY, VERY BROAD
SUPPORT FOR UNDERTAKING THE
NEW INITIATIVES IN ERRED
CHILDHOOD EDUCATION, CREATE A
CONTINUUM THROUGH OPTIONAL ALL
DAY KINDERGARTEN, READ BY THE
THIRD GRADE, LINKING HIGHER --
HIGH SCHOOL TO HIGHER
EDUCATION, TRAINING, OUR YOUNG
PEOPLE FOR THE YOBS OF THE
FUTURE RATHER THAN IS A THE
PAC EYE SO THOSE INVESTMENTS
ARE ALL ONES THAT I THINK HAVE
WIDE SPREAD SUPPORT AND THAT
THE EXPERTS TELL US ARE GONNA
BE THE CRUCIAL TO THE ECONOMIC
SIS OF OUR STATE IN THE
FUTURE.
SO I THINK IT'S A BALANCED
APPROACH.
AS I'VE SAID BEFORE, IT'S A
BALANCE OF SELECTIVE REVENUE
INCREASES, RAISES TAXES ONLY
ON THE WEATHERIEST -- SO GLAD
TO RESPOND TO QUESTIONS ON
THIS TOPIC.
>> GOVERNOR, DID YOU BRIEF
THIS WITH THE LEGISLATORS AND
THEIR --
>> TALK WITH THEM ABOUT IT IN
GENERAL, BUT I HAVE NOT --
STAFF MAY HAVE SHARED IT THIS
MORNING IN THE DETAILS THAT
YOU HAVE HERE NOW, BUT TALKED
ABOUT THE GENERAL OUTLINES OF
IT.
YOU HAVE TO ASK THEM WHETHER
THEY SUPPORT IT OR NOT.
I BELIEVE SO.
>> GOVERNOR, WOULD YOU VETO
ANY SALES TAX REFORM,
BROADENING SALES TAX, CLOTHING
TAX?
>> NO, I'M NOT GONNA INTO, YOU
KNOW, VETO -- I'M NOT GONNA
USE THAT WORD AT THIS POINT IN
THE LEGISLATIVE SESSION.
I DON'T SUPPORT IN INCREASE OR
CHANGE IN THE SALES TAX AS IT
RELATED TO ANYBODY.
THAT'S MY POSITION.
I THINK THAT'S SOUND FISCAL
POLICY, AND GOOD PUBLIC
POLICY, AND, YOU KNOW, I'LL
TRY TO PERSUADE ANY
LEGISLATORS WHO THINK
OTHERWISE, THE WISDOM OF THAT.
>> MAINTAIN THE METRO SALES
TAX FOR TRANSPORTATION.
>> YES, THAT GOES ON BECAUSE
YOU GET A DEDICATED FOR
SPECIFIC PURPOSE THERE.
>> [Talking at the same
TIME]
>> THERE'S SOMETHING QUESTION
BECAUSE IT WAS CAPITAL CAN YOU
LITED ON THE BASIS ON THE
BROAD SALES TAX BASE.
WHETHER IT NEEDS TO BE A HALF
CENT OR A QUARTER CENT WHICH
THEY'RE THRASHING OUT IN LOCAL
GOVERNMENT AFFAIRS COMMITTEE.
SO I DON'T KNOW THE ANSWER TO
THAT ONE.
>> GOVERNOR, BUSINESS TO
BUSINESS SALES TAX -- MAKE
MINNESOTA ANTICOMPETITIVE.
THE SAME THING'S GOING TO BE
SAID ABOUT THIS HIGHER INCOME
TAX RATE.
>> AGAIN, I THINK IT'S
INCUMBENT ON THOSE WHO DON'T
OUR INCOME TAX RATE ARE
PROBABLY GONNA OPPOSE CLOSING
THE CORPORATE TAX LOOPHOLES TO
TELL US, YOU KNOW, WHAT'S
THEIR ALTERNATIVE?
YOU KNOW, I MEAN, IF WE DIDN'T
HAVE ALL THESE PAC DEBTS TO
PAY OFF, WE COULD HAVE TAKEN
THAT $1.89 BILLION OF
SURPLUSES OVER THE PAST TWO
YEARS AND CARRY THAT FORWARD
AS YOU WOULD NORMALLY, WE'D
START THE BIENNIUM WITH A
1.3 BILLION SURPLUS RATHER
THAN A $628 MILLION DEFICIT
AND WE WOULDN'T NEED TO RAISE
ANYBODY TAXES.
BUT THAT'S NOT THE SITUATION
WE INHERITED FROM THE PAST.
IF YOU'RE NOT GONNA RAISE
INCOME TAXES, YOU'RE NOT GONNA
RAISE CORPORATE TAXES, THEN
WHERE ARE YOU GONNA GET THE
ADDITIONAL REVENUES OR WHERE
ARE YOU GONNA CUT?
AND THAT'S WHAT EVERYBODY
LEAVES OUT.
THIS IS PART OF A PACKAGE TO
BALANCE THE BUDGET AND MAKE
NEW INVESTMENTS THAT WE NEED
FOR A BETTER FUTURE, AND THOSE
WHO DON'T WANT TO PAY A SINGLE
DOLLAR MORE IN TAXES NEED TO
OWN UP THE RESPONSIBILITY TO
TELL US WHAT ARE THE
CONSEQUENCES OF THAT.
>> GOVERNOR --
[Talking at the same time]
>> MAJORITY LEADER CALLED THIS
BOLD.
IS IT STILL BOLD?
>> WELL, IT'S NOT AS BOLD AS
IT WAS BEFORE.
[ Laughter ]
IT'S -- I TAKED -- TALKED
ABOUT PLAN A, B, AND C, THIS
IS PLAN B-PLUS I'D SAY.
I THINK IT'S ONE THAT CAN HAVE
LEGISLATIVE SUPPORT, PUBLIC
SUPPORT AND ACCOMPLISHES THE
OTHER TWO OBJECTIVES.
AS I SAID IT MAKES OUR TAX
SYSTEM MORE PROGRESSIVE
OVERALL, LESS REGRESSIVE, I
SHOULD SAY, AND IT GENERATES
ENOUGH ADDITIONAL REVENUE
ALONG WITH THE IMPROVED
FORECAST TO BE ABLE TO FUND
THE PRIORITIES THAT I HAVE
MADE IN EDUCATION AND ECONOMIC
DEVELOPMENT INCENTIVES.
[Talking at the same time]
>> CHAMBER FEEL FORTUNATE THAT
THEY AREN'T GETTING THE
BUSINESS TO BUSINESS TAX AND
THAT THEY SHOULD, QUOTE, SUCK
IT UP AND STOP LOBBYING
AGAINST THE TOP BRACKET --
>> THAT'S BEEN THEIR POSITION,
NO ADDITIONAL TAXES, AND
THEY'VE HAD A RIGHT TO THAT
DECISION, AND AGAIN, MACHINE
ISSUE THERE -- MACHINE ISSUE
THERE IS IT THAT A, THEY DON'T
RECOGNIZE THE FACT THAT STATE
SPENDING HAS BEEN REDUCED
SIGNIFICANTLY BOTH IN REAL AND
RELEVANT TERMS, SO WE'RE NOT
TALKING ABOUT REDUCING AN
INCREASE.
WE'RE TALKING ABOUT TRYING TO
TURN THE CORNER ON WHAT IS NOW
THE LOWEST LEVEL OF STATE
SUPPORT FOR HIGHER EDUCATION
SINCE OVER 30 YEARS AGO IN
REAL DOLLARS.
AND SECONDLY, THAT THEY DON'T
OFFER ANY EXPLANATION FOR THAT
WHR THAT $627 MILLION CUT
WOULD HAVE TO COME FROM TO
OFFSET THE PROJECTED DEFICIT.
BUT THEY STILL HAVE A RIGHT TO
ARTICULATE WHATEVER POSITION
THEY WANT.
>> [ Inaudible ]
>> I'LL LEAVE THAT
COMMISSIONER FRANZ HERE.
BUT YOU WANT TO GO AHEAD
AND --
>> WE WOULD ESSENTIALLY HAVE
THE SAME CORPORATE LOOPHOLES
IN THE ORIGINAL PACKAGE, THE
FOREIGN OPERATING DEDUCTION
AND SOME OTHER MINOR ONES THAT
ARE LISTED IN THE HANDOUT
PAPERS.
IT IS THE SAME PACKAGE THAT WE
HAD BEFORE.
BUT WE COULD CONTINUE TO ASK
THE AFFILIATE NEXUS BE CHANGED
SO THOSE COMPANIES ARE TELL
SELL ACE OUT OF STATE IN
MINNESOTA WOULD HAVE TO
COLLECT A SALES TAX.
SO WITH WOULD ADD THAT
AFFILIATE NEXUS TO THE
CORPORATE REFORM AREA AS WELL.
>> GOVERNOR, I KNOW YOU
HESITATE TO GIVE OUT DEMANDS.
--
>> I'M OPEN TO ALTERNATIVES.
AND YOU KNOW, THE LEGISLATIVE
PROCESS IN TERMS OF THE TAX
AND SPEANING SIDE HAS REALLY
JUST BEGUN.
TARGETS ARE GONNA BE ISSUED I
THINK NEXT WEEK AND AND THEN
AFTER THE EASTER RECESS.
AND THEN WE'LL GET A FOCUS ON
WHAT THE LEVELS OF SPENDING
THEY ARE PROPOSING, AND HOW
ABOUT SPENDING WILL BE
ALLOCATED, AND THEN WE'LL SEE
WHAT KIND OF TAX PROPOSAL THEY
HAVE TO RAISE REVENUES TO
BALANCE THE BUDGET.
THEY'LL HAVE SOMETHING TO TALK
ABOUT, SO FAR WE'VE HAD MY
PROPOSAL NUMBER ONE, NOW MY
PROPOSE NUMBER TWO, AND
THEY'LL LEARNED TWO YEARS AGO,
UNTIL THERE'S SOMETHING TO
COMPARE THAT WITH, COMING FROM
THE LEGISLATURE, IT'S HARD TO
HAVE A FOCUSED DISCUSSION.
SO WE'LL GET THERE SOON
ENOUGH.
>> GOVERNOR, SNOW BIRD TAX IS
GONNA DRIVE SOME WEALTHIER
MINNESOTANS OUT OF THE STATE?
>> NO, I THINK IT'S GONNA MAKE
THEM PAY THEIR FAIR SHARE OF
TAXES THEY WANT TO SPEND TIME
WITH THEIR CHILDREN AND GRAND
CHILDREN.
THE PRACTICAL DIFFICULTY WITH
THE HOSPITALITY INDUSTRY AND
AREAS LIKE BRAINERD LAKES AND
OTHERS WHERE PEOPLE COME HAVE
ESSENTIALLY SECOND HOMES, I
DON'T KNOW HOW MANY PEOPLE
THERE ARE IN THAT CATEGORY,
BUT THAT'S A CONCERN THAT'S
EXPRESSED, AND I DON'T KNOW
HOW TO WORK AROUND THAT.
BUT I JUST BELIEVE IN THE
PRINCIPLE OF TAX FAIRNESS.
YOU PAY ACCORDING TO YOUR
INCOME, YOUR WEALTH, AND IF
YOU'RE GONNA BE HERE FOR FIVE
MONTHS AND 29 DAYS, USING THE
SERVICES THAT ALL THE REST OF
PAY TAXES TO SUPPORT, THEN YOU
OUGHT TO PAY A PRO PORESSATE
SHARE FOR DOING SO.
TO ME THAT'S SIMPLE FAIRNESS.
THIS ATTITUDE THAT PEOPLE WANT
TO MAKE MORE AND MORE MONEY
AND PAY LESS AND LESS TAXES OR
GET A REBATE IS JUST
REDISSTRESSING BECAUSE THIS
SOCIETY WON'T BE SUCCESSFUL IF
THAT'S COMES TO THE PREVALENT
ETHIC GOING FORWARD.
>> GOVERNOR, TOIMENT YOU
ACKNOWLEDGE THAT SNOW
BIFERREDS MAY NOT LIKELY NOT
PASSION?
>> I DON'T THINK IT'LL PASS
UNLESS WE'RE GONNA WORK OUT
THIS HOSPITALITY ISSUE.
AGAIN, I DON'T KNOW HOW MANY
PEOPLE ARE AFFECTED BY THAT.
AND, YOU KNOW, WHAT THEIR
OPTIONS MIGHT BE.
BUT THAT'S A STICKING POINT.
>> GOVERNOR, ARE YOU MORE
COMFORTABLE WITH THIS?
TAXING THE RICH AND YOUR
CAMPAIGNING, YOU'RE AGAINST
SALES TAX INCREASES.
ARE YOU MORE COMFORTABLE IN
YOUR SOUL WITH THIS BUDGET
THAN YOU WERE BEFORE?
>> WELL THE DEPARTMENT OF
REVENUE MODELED OVER 100
DIFFERENT SCENARIOS WITH
DIFFERENT FAMILIES, DIFFERENT
INCOME GROUPS, INDIVIDUALS,
DIFFERENT PARTS OF THE STATE
ON THE SALES TAX, AND IT CAME
OUT REVENUE NEUTRAL OVERALL
AND BASICALLY REVENUE NEUTRAL
FOR INDIVIDUAL -- FAMILIES OR
INDIVIDUALS IN TERMS OF PAYING
SALES TOX ON MORE ITEMS,
SERVICES, AND CLOTHING, BUT
PAYING A LOWER RATE.
WE DROPPED THE RATE 20%.
WE DROPPED THE RATE FROM 7TH
HIGHEST IN THE COUNTRY TO 27TH
HIGHEST IN THE COUNTRY.
SO THAT CAME OUT EIGHTEEN.
AND THEN MOST OF THOSE
FAMILIES WOULD GET A $500
PROPERTY TAX REBATE EVERY YEAR
ONGOING.
SO MY VIEW OF MOST
MINNESOTANS, THE MIDDLE INCOME
MINNESOTAN EASE CAME OUT
PAYING LESS TAXES STATE AND
LOCAL, NO MORE AT THE STATE
LEAF STATE LEVEL AT ALL.
SO I CONSIDER THAT CONSISTENT
WITH MY PRINCIPLES.
I MEAN, IT'S A DIFFERENT WAY
OF GETTING THERE, BUT IT
CERTAINLY ACCOMPLISHED THAT.
AND NOW THIS IS NOT GONNA
PROVIDE THE PROPERTY TAX
RELIEF AND THE LEGISLATURE
I'VE ENCOURAGED THEM TO LOOK
ATWAYS THEY CAN DO SO.
IT'LL BE MORE LIMITED WITH THE
AMOUNT OF REVENUE BUT I STILL
THINK PROPERTY TAX RELIEF IS
IMPORTANT.
SO THIS DOESN'T IS A ALLOW US
TO DO AS MANY THINGS AS WE
WOULD DO WITH THE BROADER
REFORM, BUT THAT'S THE WAY IT
IS.
>> AGAIN, YOU WERE JUST WAYING
A PORTION OF THE GOVERNOR'S
NEWS CONFERENCE EARLIER WHERE
HE PROVIDED AN OVERVIEW OF HIS
REVISED BUDGET PLAN.
IT'S A PLAN THE REPUBLICANS
CONTINUE TO DISCLICK.
TAX YA PA LOSE YA THE TERM
DAVID HANN USED.
>> MANY OF TAXES THAT GOVERNOR
HAS SAID IS NOT IN HIS
PROPOSAL IS NOT ON THE TABLE.
SO WE ARE NOT SURE WHERE
THEY'RE AT.
WE ARE VERY CONCERNED ABOUT
THIS.
WE DON'T THINK THIS IS RIGHT
FOR THE PEOPLE OF MINNESOTA.
IT'S KIND OF GOVERNMENT GONNA
WILD DOWN HERE.
WE'RE GETTING CLOSE TO SPRING
BREAK, TAX-A-PA-LOOZA, THE
DIRECTION OUR BUDGET TWO YEARS
WHERE WE SAID LET'S OFFER SOME
RESTRAINT, TRY TO LIVE WITHIN
THE MEANS THAT THE PEOPLE OF
MINNESOTA HAVE OFFERED TO THE
GOVERNMENT AND TRY TO RESTRAIN
THE SPENDING GROWTH.
WE THIIVELG THAT WORKS.
IS A THAT HAS GENERATED
REVENUE.
NOT ADDITIONAL TAX BURDENS ON
THE ECONOMY AND LET'S MAKE
SURE IF WE'RE GONNA SPEND
MONEY WE GET REAL REFORM AND
EFFECTIVE SPENDING AND
EFFECTIVE RUTS.
>> WE'RE WAITING TO SEE KIND
OF FINAL PROPOSAL.
WE EXPECT THOSE NUMBERS WILL
BE OUT IN AN HOUR OR SO.
INITIALLY OUR REACTION
OBVIOUSLY I'M HAPPY TO SEE THE
GOVERNOR HAS REELED BACK SOME
OF THE TAX PROPOSALS THAT HE'S
PUT FORWARD.
WE KNOW THAT THOSE ARE GONNA
BE DAMAGING TO MINNESOTA'S
ECONOMY.
WE FEEL MINNESOTA'S ECONOMY IS
HEADED IN THE RIGHT DIRECTION.
UNEMPLOYMENT IS DOWN.
PEOPLE FEEL LIKE THE ECONOMY'S
RECOVERING.
AND PEOPLE REALLY UNDERSTAND
RIGHT NOW THAT TAXES ARE THE
WRONG DIRECTION.
AND IT WAS INTERESTING TO SEE
IN RECENT POLLING THAT PEOPLE
REALLY UNDERSTOOD THAT TAXING
MINNESOTA BUSINESSES WOULD
MAKE THEM LESS COMPETITIVE AND
HOW UNPOPULAR THAT ACTUALLY
WAS THE PUBLIC.
THE IMOAR'S TAX PROPOSALS WERE
GONNA BE HARMFUL TO THE
ECONOMY.
I'M A LITTLE DISMAYED TO SEE
THAT THE GOVERNOR HASN'T
COMPLETELY REALIZED THAT TAXES
ARE GONNA BE BAD FOR
MINNESOTA'S ECONOMY.
HE'S STILL Mr. PROPOSING ABOUT
$1.9 BILLION OF TAXES AND
THAT'S GONNA BE ABOUT
$2.8 BILLION OF ADDITIONAL
SPENDING IN THE NEXT BIENNIUM
FROM THE LAST.
AGAIN MINNESOTA'S ECONOMY HAS
GROWN OVER THE LAST TWO YEARS.
THE UNEMPLOYMENT RATE IS DOWN.
AND WE FEEL LIKE THINGS ARE
HEADED IN THE RIGHT DIRECTION.
AND WE KNOW THAT MINNESOTANS
UNDERSTAND THAT RAISING TAXES
IN A FRAGILE ECONOMY WILL
ACTUALLY HURT MINNESOTA'S
ECONOMY AND HURT JOB GROWTH IN
MINNESOTA.
WE ALSO ARE A LITTLE CONCERNED
THAT WE HAVEN'T HEARD FROM THE
LEGISLATIVE LEADERS, THE
DEMOCRAT LEADERS OF THE HOUSE
AND THE SENATE THAT THE TAX
PROPOSALS THAT WE'RE TALKING
ABOUT IN THE LEGISLATURE, THAT
THEY HAVEN'T RETRACTED THOSE
AND PULLED THOSE OFF THE
TABLE.
WE'RE TALKING ABOUT HUGE GAS
TAX INCREASES, YOU KNOW,
CONTINUE TO TALK ABOUT SALES
TAXES AND THOSE KINDS OF
THINGS.
THE GOVERNOR DID NOT GIVE AN
INDICATION TODAY THAT HE WOULD
VETO A SALES TAX.
SO WE'RE A BIT CONCERNED ABOUT
SOME OF THOSE THINGS.
BOTH LEGISLATIVE LEADERS SAID
A FEW WEEKS AGO THAT THEY
THOUGHT THAT AT LEAST A
PARTIAL BUSINESS TO BUSINESS
TAX WOULD BE PART OF THE FINAL
DEAL AND WE KNOW HOW DAMAGING
THAT WOULD BE ON MINNESOTA'S
ECONOMY.
SO WE CONTINUE TO STAND
OPPOSED TO THAT.
BUT WE REALLY WANT TO STAND
FOR WHAT WE'VE SEEN OVER THE
LAST COUPLE YEARS WHICH HAS
BEEN GROWTH IN MINNESOTA'S
ECONOMY, A REDUCTION IN
UNEMPLOYMENT AND WE KNOW THAT
ALL MINNESOTANS WIN WHEN
MINNESOTA'S ECONOMY GROWS.
SO THAT'S WHAT WE WANT TO
ACCOMPLISH AND WE STAND READY
TO WORK THE IMOAR AND THE
LEGISLATIVE LEADERS TO
ACCOMPLISH THAT.
>> [ Inaudible ]
>> YOU KNOW, WE OBVIOUSLY
HANDLED A $6.2 BILLION DEFICIT
OVER THE LAST BIENNIUM AND WE
DID THAT BY FINDING
EFFICIENCIES AND I THINK
THERE'S MORE THAT WE CAN
CONTINUE TO FIND THERE.
WE'RE COMMITTED TO FINDING A
GOVERNMENT THAT WORKS BETTER.
AND NOT A GOVERNMENT THAT'S
JUST MORE EXPENSIVE.
AND WE THINK THAT'S THE
ANSWER.
SO WE CONTINUE TO FIND
EFFICIENCIES, BUT WE'VE ALSO
SEEN THE ECONOMY GROW, AND
WE'VE GOT ABOUT BE -- SO WE
KNOW THAT BY LETS MINNESOTA'S
ECONOMY GROW THAT WE'LL
ACTUALLY SEE SENATOR REVENUE
TO THE STATE.
SO WE DON'T HAVE TO RAISE
TANFS.
WE CAN ACTUALLY LET
MINNESOTA'S ECONOMY GROW AND
WE'LL ACCOMPLISH JUST EXACTLY
THAT.
>> [ Inaudible ]
>> WE THINK THAT HE'S BEEN OUT
TRYING IT GET SUPPORT.
I DON'T THINK THE PEOPLE OF
MINNESOTA WERE RESPONDING TO
THAT EFFORT.
I DON'T KNOW THAT THERE WAS A
LOT OF SUPPORT IN THE
LEGISLATURE, CLEARLY NONE FROM
OUR SIDE AS REPRESENTATIVE
DAUDT MENTIONED, THE
LEGISLATIVE LEADERS ON THE
OTHER SIDE DID TALK FAVORABLY
WILL SOME ELEMENTS OF THE
GOVERNOR'S PLAN.
BUT WE DON'T THINK THE PEOPLE
OF MINNESOTA BROADLY SUPPORTED
WHAT THE GOVERNOR WAS TALKING
ABOUT.
ALL I HEARD ACROSS THE STATE
WAS CRITICISM OF THIS PLAN.
>> I'LL ECHO THAT.
OBVIOUSLY THE GOVERNOR'S
ORIGINAL PLAN DIDN'T HAVE A
LOT OF LEGISLATIVE SUPPORT,
REALLY FRANKLY FROM EITHER
SIDE OF THE AISLE.
AND IT SAYS SOMETHING WHEN NOT
EVEN DEMOCRATS IN THE
LEGISLATURE ARE SUPPORTING A
TAX PLAN.
SO OBVIOUSLY WE THINK THAT
THERE'S AN APPETITE FOR
SPENDING WITH THE D.F.L. IN
THE LEGISLATURE, AND WE'RE A
LITTLE AFRAID OF WHERE WE'RE
GONNA TRY TO FIND THE KIND OF
REVENUE THAT WE THINK TO
ACCOMPLISH THE KIND OF
SPENDING THAT THEY WANT.
BUT THE THING THAT I THOUGHT
WAS MOST INTERESTING IS THE
PUBLIC DIDN'T RESPOND TO THE
GOVERNOR'S TAX INCREASES.
SO WE'RE SEEING SIGNS THAT THE
PUBLIC REALLY UNDERSTANDS THAT
WHAT'S GONNA BE GOOD FOR
MINNESOTA IS TO GROW
MINNESOTA'S ECONOMY AND THEY
SEE THAT TAX INCREASE HE'S
STOP THAT FROM HAPPENING.
>> [ Inaudible ]
>> THAT'S UNCLEAR TO ME IF
THEY'VE RESPONDED TO THAT OR
NOT.
I THINK THAT'S PART OF THE
WHOLE PLAN TO BE PROPOSED BUT
MOST OF THE DISCUSSION HAS
AROUND THE SALES TAX, BUSINESS
TO BUSINESS TAX.
WE'LL SEE WHAT HAPPENS IN THE
NEXT FEW WEEKS.
BUT I THINK THE KEY IS, THE
TAXES ARE TO SUPPORT
SOMETHING.
WHAT IS IT SUPPORTING?
IT'S SUPPORTING A SPENDING
REGISTER MINUTE.
WHAT THE SPENDING FOR?
WHEN YOU LOOK AT THE AMOUNT OF
SPENDING HE'S PROPOSING AND
WHAT IS IT ACCOMPLISHING?
THERE'S NO REFORM.
THAT'S WHAT WE NEED TO FOCUS
ON.
WHAT ARE WE GONNA ACCOMPLISH
WITH THE MONEY?
>> [ Inaudible ]
>> WELL, ALL I WOULD SAY IS
THAT I KNOW MOST OF THE FOCUS
IN THE LAST COUPLE OF WEEKS
HAS BEEN ON THE BUSINESS TO
BUSINESS TAXES.
WE'LL SEE THAT NOW THAT IS OFF
THE TABLE WHAT THE FOCUS TURNS
TO.
I DO KNOW THAT A LOT OF PEOPLE
THAT ARE GONNA BE HIT BY THIS
FOURTH TIER ARE NOT
NECESSARILY INDIVIDUALS BUT
SMALL BUSINESSES.
>> [ Inaudible ]
>> WELL, I THINK IT'LL BE TIME
TOMORROW THE PUBLIC TO WEIGH
IN.
WE DIDN'T HAVE THE VOTES TO
STOP THE SALES TAXES AND THE
BUSINESS TO BUSINESS TAX, BUT
I THINK THE PEOPLE OF
MINNESOTA SAID VERY LOUDLY AND
CLEARLY THIS IS NOT GOOD FOR
THE ECONOMY AND I THINK THE
GOVERNOR HAS SAID THAT HIGH
TAXES HURT THE ECONOMY.
AND SO I THINK IT'S TIME FOR
THE PEOPLE OF MINNESOTA TO
WEIGH IN ALL THE TAXES.
WE DON'T BELIEVE SO.
>> [ Inaudible ]
>> THE QUESTION IN MY MIND
ISN'T ABOUT VOTES.
IT'S ABOUT DO HIGHER TAXES
HELP GROW THE ECONOMY OR DO
THEY HURT THE ECONOMY?
THAT'S GONNA BE THE DEBATE.
THAT'S WHAT THE PEOPLE OF
MINNESOTA NEED TO WEIGH IN
OCTOBER.
>> I THINK THE INTERESTING
THING ABOUT IN, THE TOP TIER
TAX, THE RECENT POLLING HAS
BEEN FAR LOWER THAN IT HAS
BEEN IN THE PAST.
SO WE KNOW THAT PEOPLE ARE
UNDERSTANDING THAT RAISING
TAXES IS GONNA BE HARMFUL TO
MINNESOTA'S ECONOMY.
THE GOVERNOR'S ORIGINAL BUDGET
FELL FLAT.
PEOPLE DIDN'T LIKE IT.
HE'S REEXTRACTED THAT.
WE'RE GLAD TO SEE THAT.
BUT THIS NEW TAX PROPOSAL
CONTINUES TO BE A TAX ON THE
MIDDLE CLASS.
THERE'S VERY REGRESSIVE TAXES
ON CIGARETTES.
HE'S ACTUALLY CONTINUING THAT
IN HIS CURRENT BUDGET.
WE THINK THAT OUT OF THE
LEGISLATURE WE'LL CONTINUE TO
SEE OTHER REGRESSIVE TAXES AND
WE THINK THAT'S THE WRONG MOVE
FOR MINNESOTA.
>> [ Inaudible ].
>> I DON'T KNOW AND THAT'S
OBVIOUSLY UP TO THE DEMOCRATS
IN THE LEGISLATURE BUT WE HOPE
THAT PEOPLE WHO ARE CONCERNED
ABOUT TAXES NEGATIVELY
AFFECTING MINNESOTA'S
ECONOMY --
>> [ Inaudible ]
>> YOU KNOW, WE HAVEN'T
DETERMINED THAT YET.
WE'LL CERTAINLY TALK ABOUT
THAT, BUT RIGHT NOW WE HOPE
THAT WE CAN STILL ROLL UP OUR
SLEEVES AND WORK THE DEMOCRATS
TO COME UP WITH A BIPARTISAN
BUDGET.
BUT WE THINK THIS ONE FALLS
SHORT OF THAT.
>> THANK YOU.
>> YOU WERE JUST WATCHING NEW
CONFERENCES FROM EARLIER TODAY
ON THE GOVERNOR'S SUPPLEMENTAL
BUDGET.
THE HOUSE AND SENATE