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Job one: Fix the budget

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ST. PAUL -- Governor candidates tell voters they want to improve education, expand health care, create jobs and do a myriad of other things.

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The trouble is, nearly everything they want depends on money, and Minnesota is hurting in that area. Badly hurting. Most estimates put the next budget deficit at about $6 billion.

So there is no argument that fixing the budget is the most important job for the next governor, and the three major Democratic-Farmer-Labor Party candidates see the solution slightly differently.

All three -- Mark Dayton, Matt Entenza and Margaret Anderson Kelliher -- would raise taxes at some point, but do not agree on how and when to do that. However, most of their tax increases would hit the richest Minnesotans.

The Democrats are unanimous in not liking Republican Gov. Tim Pawlenty's budget. They all criticize it as lacking new revenue and hitting school districts too hard by delaying $1.8 billion in payments.

Dayton claims he offers the most complete budget plan, although it is the most criticized.

The former U.S. senator offers as the backbone of his plan higher taxes on Minnesotans earning more than $150,000 annually.

Kelliher and Entenza say that legislators never would accept the Dayton plan because it would raise taxes too much.

Dayton was critical of opponents who list things they would like to do without saying how they would be funded: "Without the money to pay for what we are talking about, they are just words in thin air."

He would raise revenues, mostly income and property taxes, by $5 billion in his first two-year budget. Another $1 billion would come in spending cuts.

Most of his new revenue, $4 billion, would come from higher income taxes. Another $675 million is slated to come from other tax increases, such as the property tax.

Dayton said he has $649 million pegged for cuts so far.

"So I am still short of the $5.8 billion target, but I am far closer than anyone else," Dayton said.

Dayton acknowledged that many do not like his tax plan, but said he is willing to negotiate.

"If I propose $5 billion in revenue and $1 billion in cuts and someone else says that is too much revenue, I will say, 'OK, what is your solution?'" Dayton said.

Entenza often uses lines normally heard from Republicans, saying large tax increases like Dayton proposes would hurt business.

"I intend to follow the same model that middle-of-the-road Republicans and Democrats call a balanced approach: a third, a third, a third," Entenza said.

The former state representative said that balancing cuts, delaying payments and raising taxes on "high end" Minnesotans is the best way to serve the state.

The economy will not be good enough next year to repay delayed school payments, he said, forcing the state to live with them.

Entenza proposed reversing income tax breaks lawmakers passed in 1998, mostly for people earning more than $250,000 a year. Entenza voted for the tax cuts at the time.

Those tax changes would raise "somewhere short of a billion," he said.

Entenza wants the state to begin collecting sales tax on on-line purchases.

He calls for combining some state departments to save money. For instance, he would merge the state Education Department with the Office of Higher Education.

"We have a 1950s, 1960s style of government," Entenza said. "We are going to streamline that down."

His goal is to chop about $1.5 billion in spending, including getting more people who receive state-paid health care to make regular doctor visits instead of going to expensive emergency rooms for medical care.

Kelliher's idea, similar to Entenza, is to raise income taxes on those earning more than $250,000 a year.

The House speaker said she would get money for the state by doing a better job of making sure Minnesotans who owe taxes to actually pay them, although current state officials say they already are doing that.

She also would close tax loopholes and end what she calls "sweetheart deals" that benefit some companies' tax returns.

The speaker's most publicized action would be her first after being sworn in as governor in January: sign an executive order to change a health-care program, bringing $1.4 billion into Minnesota and creating 30,000 jobs. Pawlenty disputes the value of making the change and opted against signing up for the federal program, although Kelliher said that taking the step would return money that Minnesotans have sent to Washington.

Kelliher calls for an auditor to look into Human Services Department fraud and inefficiencies.

As the most costly department, Kelliher said, there are places to save. She estimated that $100 million could be quickly gained.

The speaker, like other DFLers, was critical of Pawlenty's budgets and warns it will be tough to develop a good budget plan: "Eight years of kicking the can down the road; it is going to take a lot of hard work to get that first budget balanced up."

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