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Dayton delivers second state budget proposal

Mark Dayton revised his state budget proposal Tuesday, reducing the expected take from his "tax the rich" proposal and adding a variety of other revenue enhancers and budget cuts.

The Democratic Minnesota governor candidate said he would raise taxes and other revenues $3.6 billion and cut spending

$1.2 billion, leaving a $1 billion gap in Minnesota's budget that has a projected $6 billion deficit.

He relies on several smaller tax increases rather than the "tax the rich" proposal he has emphasized for months.

The change comes after the state Revenue Department looked over his plan and said it would not raise as much from the rich as he wanted. The new plan varies little from one he released before the Revenue Department analysis, but does attach specific figures to more provisions and adds new tax increases and spending cuts.

The Dayton campaign will continue to work on plugging the remaining $1 billion budget gap, said his spokeswoman, Katharine Tinucci, but she could not promise a plan will be in place before the Nov. 2 election.

Dayton would spend about

$38 billion in the next two-year budget, while Republican Tom Emmer's proposal comes in close to $32 billion. A plan advanced by Tom Horner of the Independence Party falls in between.

Emmer would not raise taxes, and he would trim budgets. Horner would expand the sales tax to clothes and add other taxes while also making cuts.

Minnesota's top Republican said Dayton has attacked Emmer for weeks for not producing a full plan, but the Democrat himself still does not have one.

"In spite of massive job-killing tax increases, today's plan from Dayton confirms that he is still

$1 billion short in balancing the budget," said GOP Chairman Tony Sutton.

Horner said Dayton's plan would hurt job creation.

"Mark Dayton's plan continues to suffer from the same shortcoming as before - the false promise that most Minnesotans will get a free ride for the next four years by shifting the cost of the state's

$6 billion shortfall to job creators," Horner said.

Before getting specific figures, Dayton said his income and property tax increases would bring in $4 billion. But under his new plan, those increases account for $2.8 billion.

Dayton increased other revenues $828 million, instead of the $685 million he had planned. He also suggested deeper cuts than in his earlier plan but still fell $1 billion short of balancing the budget.

Some key parts of the Dayton plan for the next two-year budget include:

- Add a fourth tier to the income tax, charging 10.95 percent on individuals earning at least $130,000 annually and couples earning $150,000. That would raise nearly $1.9 billion.

- Add a third property tax bracket to homes valued at more than $1 million, to raise $95.4 million.

- Eliminate a "snowbird tax loophole" of $500 million that now allows people who live away from Minnesota more than six months to escape Minnesota income tax.

- "Possible addition" of a state-owned casino near the Mall of America or at Minneapolis-St. Paul International Airport to bring in $300 million. (No change from his earlier plan.)

- Reduce private contracting by state agencies to save $425 million.

- Charge credit card companies with interest rates higher than 15 percent, raising $212.7 million.

- Reduce health care costs $307 million.

- Cut highly paid Minnesota State Colleges and Universities system workers by $10 million.