It was refreshing to see Gov. Dayton defend Minnesota’s business climate, our progressive values, and our loyal, diligent public workers in his State of the State address. For the past decade, conservative leaders worked to undermine these assets to justify their “no-new-taxes” policy.
Over the last decade, conservatives complained about public workers as they slashed revenue sharing with local governments. According to state revenue data, since 2002 state aid has dropped in Bemidji by 24 percent, not including the erosion in purchasing power due to inflation. In many northwestern communities, this led to cuts in public services and property tax increases. Under Dayton’s budget plan, Beltrami County homeowners will see their property taxes reduced.
Conservatives bashed teachers while cutting Bemidji School’s per-pupil state aid an inflation-adjusted 14 percent since 2003. Dayton’s plan increases per-pupil funding for schools statewide, and by about $400 per pupil in Bemidji.
Minnesota survived through that failed conservative fiscal experiment because of previous generations’ progressive investments in an educated private and public workforce, local communities, and health and human services. Minnesota can only coast on past commitments for so long. Soon these amazing human and infrastructural resources will break down without recapitalization.
However, in the short term, they continue paying dividends, which Gov. Dayton was quick to point out.
“Minnesota’s job growth in 2012 was the 12th-best among all 50 states; and we outperformed three of our four neighbors. Iowa ranked 30th; South Dakota was 44th,” according to the governor.
“Wisconsin, which by the way is open for business, helped bring up the rear at 42nd,” he went on to joke. “Their unemployment rate last month was 20 percent higher than ours, while our per capita income was 12 percent higher than theirs.”
The governor also highlighted the return on investment for businesses that invest in Minnesota.
“The facts show that states offering businesses and their top executives the lowest taxes usually offer the rest of their citizens the lowest incomes, the fewest public services, and the highest crime rates,” Dayton said. “Furthermore, their job growth typically lags ‘high value and high performance’ states like Minnesota.”
When it comes to attracting businesses to Minnesota, the governor’s ideas for tax fairness aren’t exclusive to middle- and working-class folks. His plan levels the playing field for businesses committed to Minnesota. It lowers the corporate tax rate while cutting loopholes for companies that send jobs and investments overseas. It also provides a 2 percent reduction in business property taxes for Beltrami County businesses. The sales tax expansion in the plan will be balanced with lower sales tax rates and progressive revenue from Minnesota’s wealthiest.
The plan asks those who can afford it to contribute a more proportionate share of their income to invest in these assets that will keep Minnesota a strong state. In Beltrami County, Dayton’s income tax increase will hit only 128 of the county’s richest. This will help bring fairness to a system where “state and local taxes per dollar of income are 26 percent higher for middle-income taxpayers than for the top one percent,” according to Minnesota 2020’s analysis of the Institute on Taxation and Economic Policy report Who Pays? and the 2011 Minnesota Tax Incidence Study.
Not everyone likes Dayton’s budget path. There are certain parts of it that Minnesota 2020 believes need improving. But taken as a whole, it starts the conversation that will put Minnesota back on a path to shared prosperity, re-investing in our schools and communities.
JOHN VAN HECKE is the executive director of Minnesota 2020.