Wednesday, April 22, 2009 By Aaron Brown
The governor's proposal, as expected, raises no income taxes for anyone and relies instead on a variety of sin taxes and the premature emptying of the tobacco settlement. The rest comes from the largest amount of cuts proposed so far. The House DFL budget seems to rest in the middle. They would raise the top tier of the income tax, do the tobacco shift, raise sin taxes, and then cut less than the governor. The Senate DFL budget is the one that sounds the "worst" politically speaking. They return tax rates back to pre-Pawlenty levels which, from another perspective, means tax increases for most Minnesotans. They also cut services, but the least of the three.
It doesn't take a political genius to know that the Senate bill will be the most difficult to sell. But I look at it this way. When you're facing a monumental challenge the best option is often the most difficult. I respect that, on first blush, the Senate seems to be attempting a long term fix to the state's budget woes. The House bill is better, but relies on sin taxes a bit more than I would like. Booze and cigarette taxes are generally popular because no one wants to be the one to say "But my Busch Light costs enough already!" (But it does, I switched to Milwaukee's Best Light a few months ago. I don't want to complain, but ...). Furthermore, such taxes are generally regressive, affecting lower income people more than higher income earners. This was the argument of several Iron Range lawmakers in yesterday's House debate and is properly summed up by this Mesabi Daily News editorial today. Sure, people shouldn't smoke or drink and those taxes could probably be raised a little, but we shouldn't base our budget solutions on people continuing to smoke and drink at high levels into a biennium. I expect higher sin taxes would drive down revenues.
Pawlenty will never, never sign the Senate bill. He'll probably not sign the House bill unless the tax cuts are made toothless somehow. An override would be a possibility under older political conditions, but I can't name any House Republicans that would want to go through what the "override six" went through last year in the passage of the transportation bill. Frankly, Pawlenty's adherence to an overly rigid and regressive approach to taxation and the role of government, coupled with his presidential aspirations, is in effect paralyzing good faith negotiations. (Remember, the lower and middle classes have lost ground under Pawlenty when all taxes are considered). Mr. 47 Percent won't compromise with the overwhelmingly Democratic legislature, elected by a vast majority of Minnesotans. Lacking a better idea, my advice to the DFLers in the House and Senate would be to do whatever would cause the most damage to a Pawlenty presidential run and hold out into the summer if necessary. This budget problem is historic and requires more than a stopgap measure.