Dayton, GOP on collision course for budget balancing

Over the past five months, Governor Dayton and Republican legislative leaders have been pledging to work together on the state's projected $6.2 billion budget deficit.

But the two sides have a fundamental difference: Dayton wants to raise income taxes on the state's top earners and the Republicans don't.

In his State of the State speech, Dayton said the state needs more jobs, but he said Minnesota can't solve its budget problems without more revenue.

"Some will criticize me for proposing next week to ask those successful businessman and woman and other wealthy Minnesotans to pay higher taxes," Dayton said in the address. "I ask them for their forbearance during this fiscal crisis, which I did not create, but inherited and now, with you in the Legislature, must solve."

Dayton also asked lawmakers to join him in a pledge not to shut down the government. He used the example of politicians coming together to ensure the federal government kept operating after the 9-11 attacks. He suggested state leaders should follow that example in light of the economic crisis.

"Whether we unite or whether we divide is hanging in the balance," he said. "The challenges we face threaten to divide us, rather than bring us together. Partisan posturing and narrow agendas threaten to overwhelm bi-partisan cooperation and compromise."

REPUBLICANS REJECT DAYTON'S APPROACH

But even as Dayton called for bipartisanship, Republican leaders were rejecting his budget approach. Republican Senate Majority Leader Amy Koch said even other Democratic governors are cutting spending, not raising taxes, to balance state budgets around the country.

"I appreciate the governor's comments on investing and we all share some goals in doing good things for the state," she said, "but I would submit that he's making promises that he does not have the dollars to support."

And despite Dayton's objections, Republicans in the House and Senate are moving forward with a budget balancing bill that erases $900 million in state spending. The Senate is expected to vote Thursday on the package of cuts.

The House passed the bill 68-61 just hours after Dayton's speech.

The measure cuts funding for higher education, health and human services programs, and aid to cities and counties over the next two years.

It also instructs state finance officials to cut $100 million in unspecified spending during the current fiscal year. Rep. Rod Hamilton, R-Mountain Lake, said the bill takes one-time cuts from last year and makes them permanent.

"What we're trying to do is address the $6 billion deficit. We're trying to get ahead of the game," he said. "And we're taking a run at this by adopting most of what we adopted last year."

DEMOCRATS SAY MEASURES WOULD INCREASE PROPERTY TAXES

But Democrats said the cuts would result in higher tuition and property taxes, and would reduce funding for child protection. Rep. Paul Marquart, DFL-Glyndon, argued property tax increases would be more painful than Dayton's proposed income tax increases.

"Today, you're going to push a green button that's going to increase taxes on the most vulnerable in this state by 2 to 3 percent of their income," Marquart said. "I want you to remember this day and the button that you push when there are other proposals to raise taxes on the wealthier."

Dayton hasn't said whether he'll veto the bill but has raised objections to tackling the budget problem in a piecemeal approach.

The governor is scheduled to release the details of his plan on Tuesday. The true test of bipartisanship will come after that, as he and the Legislature try to end the legislative session with a budget agreement.

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