Dayton tax plan draws full house at hearing

Gov. Mark Dayton's sweeping proposal to overhaul Minnesota's taxes and raise about $2 billion in new revenue got its first public hearing last Wednesday night. The plan to raise income taxes on top earners and expand the sales tax while reducing property taxes drew passionate reactions.

Hundreds of people showed up for the House tax hearing and the overflow crowd filled several rooms. The turnout delighted DFL state Rep. Ann Lenczewski, chair of House Taxes Committee. After saying earlier that she had hoped to hear from a lot of "real Minnesotans," rather than people who are paid to be at the Capitol, she said it was "nice to see people that we don't know."

Throughout the hours of testimony, members of the public spoke to the committee about specific details in Dayton's plan that affected them, their families and their businesses. Those for and against the governor's package appeared equally represented.

Among those in favor of Dayton's measures, doctors said they support a proposed increase in cigarette taxes. A driver who transports the disabled hailed Dayton's suggested transit tax.

Mark Lakosky, of the Minneapolis firefighters union, said Dayton's proposed increases in local government aid were desperately needed. Lakosky said over the past few years cuts to local government aid have devastated fire departments. He said they're now working with skeleton crews and response times have suffered.

"I guess I would put it to you: If your child's choking on a marble for example, you want three people there or four people working on this. You want that person there in 3 minutes 39 seconds or in five minutes?"

Another supporter, Lutheran pastor Paul Erickson, said government is not the enemy, and taxes aren't evil if they pay for quality education.

"We cannot sit idly by and watch our children being deprived of the very things they need in order to achieve their fullest potential," he said. "We need to strengthen the tax base, making sure that all individuals and corporations pay their fair share and Gov. Dayton's proposals go a long way toward doing just that."

People who spoke against Dayton's plan said it put jobs at risk. Many business owners said the proposed 5.5 percent tax on business-to-business transactions would cripple local economies.

Molly Jungbauer owns a St. Paul technology consulting firm with her husband, which she said employs 200 people.

"Please think about it this way: Millions of dollars will be added to the current cost of providing services. Health insurance will go up. Education and tuition will increase. And the overall cost of local government will rise," she said.

Doug Spong, president of Minneapolis marketing firm Carmichael Lynch, said such a tax would crush the artist community.

"This tax as it's proposed today would be absolutely devastating to the state of Minnesota. There is no other state -- no other state in this country -- that taxes creative services firms. We do not want to be the only state doing that. It will cripple a thriving creative economy," he said.

Architect John Strachota said the professional services tax would be an undue burden on his industry, which is just emerging from the recession.

At least one business owner spoke in favor Dayton's proposed tax increases. Robert Scarlett identified himself as president of a business that helps exporting companies.

"I don't feel at all bashful for suggesting we need to invest more. And I believe that the tax proposals before us are very fair and balanced," he said.

The public hearing was just the first step in a long process. The next step happens today with the release of the state budget forecast, which will tell lawmakers just how big of a budget hole to fill.

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