Some in GOP open to new revenue as part of budget fix

When Gov. Mark Dayton unveiled his $37 billion state budget proposal last week, he said he was unwilling to make barbaric cuts to essential services.

Dayton argues that new revenue is needed to erase a projected $6.2 billion state budget deficit.

Republican leaders quickly dismissed Dayton's plan to raise $4.1 billion in new revenue, including an income tax increase on upper earners. They contend that the state simply must live within its existing revenue of about $32 billion.

But Dayton is receiving some indirect and surprising support from freshmen Republicans in the House and Senate. Those newly-elected legislators still oppose the Democratic governor's overall budget proposal, including an income tax increase. But some are suggesting that some other form of revenue will be needed.

State Sen. Jeremy Miller, R-Winona, said he was disappointed with Dayton's proposal, but he's open to reforming the current tax structure as a way to increase revenue.

"I will be the first one to tell you I'm committed to balancing this budget by reducing state spending," Miller said. "But at the same time, I think all options have to be on the table, and I'm willing to look at all options. I'm willing to look at compromises. We need to do what's best for the state of Minnesota."

There are 20 new Republicans in the Senate. State Sen. John Howe, Red Wing, said he doesn't want to see any tax increases either, because he fears it would make the state less competitive. But Howe said there is a place for what he calls "revenue enhancements."

"There are places in our tax code that we can capture revenue that's not being paid. Where we have loopholes in our system, we can address that," Howe said. "I'm a believer that we should go to more of a consumer-based tax, and less of an income tax, property tax structure. I think what we need is true reform."

Similar opinions are coming from the Minnesota House, where the Republican majority has 33 new members. State Rep. Rich Murray, R-Albert Lea, said he doesn't like the governor's budget proposal because it doesn't do enough to make government more efficient. However, Murray said everything needs to be on the table during the budget debate, including the possible repeal of some tax exemptions.

"Are there more of those out there than we really should be having?" Murray asked. "Are there too many special deals for different groups out there? I think we need to look at all that and just make sure. Because if somebody is getting a special deal, that means I'm paying more or the next guy is paying more. So let's make it fair."

Not all freshmen Republicans agree more revenue is needed. State Sen. Paul Gazelka, R-Brainerd, agrees with GOP leaders that state government has enough money.

"I do not see a revenue increase in the final solution," Gazelka said. "I really believe it's the will of the people to live within our means."

But some other Republicans share the governor's concern about the impact of spending cuts. State Rep. John Kriesel, R-Cottage Grove, said he opposes an income tax increase, and he wants to get state spending under control. But Kriesel is not ruling out new revenue as part of the budget solution.

"It's obviously going to be extremely difficult erasing $6.2 billion without any increased revenue, which is why I would entertain looking at gambling and other types of revenues that aren't tax dollars, in order to increase revenue so we're not cutting only,' Kriesel said. "Because that's going to be difficult. That's going to be painful."

An expansion of gambling will likely face stiff opposition, but Kriesel said he thinks it could be the key to an end-of session budget agreement. Despite the divide over revenue, most freshmen say they're optimistic the Legislature and governor can reach a balanced budget deal by the scheduled May 23 adjournment.