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Dayton's new Minnesota budget plan banks on casino money

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ST. PAUL - Mark Dayton revised his state budget proposal today, saying he would raise taxes and other revenues $3.6 billion and cut spending $1.2 billion.

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The Democratic Minnesota governor candidate's new plan still would leave a $1 billion hole in Minnesota's budget.

Dayton released a new budget plan after his initial one, based on raising income taxes on the richest Minnesotans, was shown to not raise enough money.

"I am the only candidate who will not raise taxes on the middle class," Dayton said in a prepared statement. "We cannot ask them to pay more."

The proposal was released via e-mail late this morning. In the past, Dayton has released important campaign details in front of reporters, who could ask questions. He was due at a St. Cloud debate over the noon hour.

Key parts of the Dayton plan for the next two-year budget include:

- Adding a fourth tier to the income tax, charging 10.95 percent on individuals earning at least $130,000 annually and couples earning $150,000. That would raise nearly $1.9 billion, according to a state Revenue Department estimate.

-Adding a third property tax bracket to homes valued at more than $1 million, to raise $95.4 million.

- Eliminate a "snowbird tax loophole" of $500 million that now allows people who live away from Minnesota more than six months to escape Minnesota income tax.

- Increase tax law enforcement, for $340 million.

- "Possible addition" of a state-owned casino near the Mall of America or Minneapolis-St. Paul International Airport to bring in $300 million.

- Reduce private contracting by state agencies to save $425 million.

- Eliminate Job Opportunity Building Zones tax credits, designed to help rural Minnesota, for a $69 million savings.

- Charge credit card companies with interest rates higher than 15 percent, raising $212.7 million.

Dayton's new plan includes a variety of other cuts and new revenues, ranging from a few million dollars to more than a hundred million dollars.

The former U.S. senator was forced to go back to the budget drawing board when the Revenue Department said his original plan to raise taxes on the rich would bring in just $1.9 billion, far short of the $4 billion he needed in new taxes to make his original budget work.

Dayton says that without action, the state budget deficit would be nearly $5.8 billion in the two years beginning next July 1.

Don Davis reports for Forum Communications Co.

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