With three weeks left until the end of the legislative session, the House has passed all of the finance bills we believe should be the foundation of state's budget for the next two years. Those bills are now in conference committees with the Senate to reconcile some differences before sending them to the governor to approve or veto.
Minnesota's massive budget shortfall makes our choices about balancing the budget -- especially for the long term -- extremely difficult. The state's current fiscal crisis didn't just happen; it goes back more than a decade, beginning with tax cuts for higher-income earners made in the late 1990s. Those cuts left $2 billion less per year coming into state coffers.
More recently, a national recession and state unemployment levels at 25-year highs slowed state revenues even further. The abrupt economic decline, coupled with a dwindling revenue stream, has left Minnesota lurching from deficit to surplus and back again, culminating with this year's $6.4 billion budget deficit.
Some have told us to just cut spending to bring the budget into balance. But a cuts-only approach, even with federal stimulus money to cushion the blow, would mean slashing state spending by $4.6 billion this biennium and even more after that.
Cuts that large would close nursing homes and hospitals, all of our state parks, and one, or maybe two state prisons. It would cut a wide swath through our public schools, put tuition out of reach for many, cause 10,000 teachers to lose their jobs and decimate our court system, meaning months-long delays to adopt a child, have a civil court case heard, obtain a divorce or settle an estate.
Instead, the House took a more strategic approach to balance the budget. Our goal was to protect jobs while maintaining a reasonable level of funding for our schools, health-care system and public safety needs, among others. Our budget bills include significant reform, targeted budget cuts, and some new revenue by way of modest tax increases. The resulting budget is balanced not just for the next two years, but for the next four years.
Business as usual was simply not enough this year. After cutting spending significantly -- $100 million more than the governor -- we asked state agencies to streamline existing practices to be more efficient and save money. Programs that were no longer effective were eliminated or scaled back. Mandates that burden-ed counties and school districts were lifted.
Finally, we took a serious look at the state's tax system. The middle class in Minnesota has been stretched to the breaking point as property taxes have gone through the roof and families see more of their paychecks eaten up by those unfair taxes. Under Gov. Pawlenty, the wealthiest Minnesotans are paying a smaller percentage of their income than lower and middle class wage earners.
To restore fairness and balance to the system, the House tax bill eliminates dozens of outdated and ineffective business subsidies, and simplifies the tax system to make it easier to understand and navigate.
It also creates a fourth tier income tax bracket for families making more than $300,000 a year. Since very few families in Beltrami, Clearwater, Hubbard, Polk and Pennington counties earn that kind of income, it would affect very few. It's hard to argue against the fairness in the bill. We're not asking high-in-come earners to pay more than everyone else; just a closer percentage to what lower and middle-income earners are paying to make sure Minnesota weathers this budget storm.
In addition to shrinking government, increasing transparency and restoring fairness to our tax code, the House plan rejects the governor's proposal to borrow more than a billion dollars at an additional cost of $600 million in interest to the state -- something never attempted in the history of the state -- and which has been likened to paying for the state's budget shortfall with a credit card. In fact, by an over-whelming bipartisan majority, the House voted against this proposal, by a vote of 130-2.
Minnesota can weather this economic storm, but only if we keep looking forward with an eye toward the future and long-term stability. To be sure, voting for budget cuts and tax increases is not very popular.
But the alternative -- closing hospitals and long-term care facilities, laying off thousands of health care and nursing home workers, kicking the elderly and disabled off of health care, and eroding the quality of our schools -- is simply unacceptable.
Voting for the House budget plan, including the tax bill, was the right thing to do. I know wasn't sent here to take the easy way today, only to make the problem worse in future years. Voters sent me here to make hard, but necessary choices that will lead to expanded prosperity and security for every Minnesotan.
Brita Sailer, DFL-Park Rapids, is a member of the Minnesota House.