House budget plan increases taxes, cuts spending

Flanked by college students and pre-school toddlers, House Speaker Margaret Anderson Kelliher of Minneapolis unveiled a budget plan that she said maintains the state's commitment to every student.

Despite the $4.6 billion budget shortfall, the House DFL plan keeps funding at current levels for early childhood education, K-12 schools and higher education.

"What you will see here is the strongest commitment overall to education in the state," Kelliher said.

The DFL plan cuts spending by $843 million for the next two-year budget cycle. It shifts a $1.8 billion payment to school districts into the following biennium and raises unspecified taxes by $1.5 billion.

Kelliher wouldn't say which taxes might be on or off the table for consideration. She said the House tax committee will consider several revenue options that are fair and progressive.

"I think there are things that people find harder to stomach, and I think the clothing tax is one that is more difficult," Kelliher said. "But we will allow the tax chair and the tax committee to look at the interactions between different taxes and what makes sense at this time."

With Gov. Tim Pawlenty promising to fight any tax increases, Kelliher suggested the second-term Republican has crossed his self-imposed line on taxes before.

"The governor has not been honest with Minnesotans about taxes about the last six years, and his unending appetite for raising property taxes."

She said during the past six years, property taxes have gone up $2.7 billion, cigarette taxes increased $869 million and fees rose by $850 million under Pawlenty's watch.

"I reject his frame out of hand," Kelliher said. "The governor has not been honest with Minnesotans about taxes about the last six years, and his unending appetite for raising property taxes and putting tax off on other levels of government."

The House proposal differs from the approach taken by Senate Democrats, who last week proposed across-the-board spending cuts of 7 percent, including education. The Senate plan also calls for $2 billion in new revenue. Gov. Tim Pawlenty called the Senate plan troubling and unwise.

His spokesman, Brian McClung, said the House plan falls short too, but said they at least tried to set some budget priorities.

"What the governor has shown is that if you set priorities you are able to make strategic choices for a better future," McClung said. "That would include more money for education tied to performance increases. That would include trying to reduce business taxes, so we can try to grow jobs in Minnesota. What the House Democrats have done here doesn't look like a very complete or smart plan."

House Republicans quickly panned the DFL proposal. House Minority Leader Marty Seifert said tax increases aren't going anywhere this session, and he promised his caucus would sustain Gov. Pawlenty's inevitable veto.

On the same day Minnesota's jobless rate rose to 8.1 percent, Seifert said the Democrats' plan to tax the rich will make a bad situation even worse.

"What these proposals are doing is punishing job providers, people who are creating opportunity in the state of Minnesota," Seifert said. "And it's going to chase them out of this state."

Tax committees in the House and Senate will have to finalize their plans for raising new revenue next month. The Legislature has until May 18 to finish its budget-balancing work.

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