Democratic gubernatorial nominee Mark Dayton's campaign will release a revised budget plan today to show how he would erase Minnesota's projected $5.8 billion budget deficit. Dayton's original plan came up short on the amount of money he thought it would raise.
All three major party candidates have been talking a lot about their plans to fix the shortfall, a major issue so far in the campaign.
The stakes in the upcoming election are huge. The next governor will make spending decisions on critical issues affecting the future of schools, health care and local governments across the state. Dayton, Republican nominee Tom Emmer, and Independence Party candidate Tom Horner each say their plan is the best.
But for all they've proposed, each candidate's plan lacks some specific details about how they would solve the state's budget problems.
TOM EMMER'S PLAN
Emmer has released broad targets for where he would cut spending in order to balance the budget without raising taxes. He's promising business tax cuts and wants state spending on K-12 schools to stay at current rates.
But Emmer wants to make real cuts to higher education, aid to cities, and state government departments. He also wants to dramatically reduce the rate of spending growth in health and human services programs.
Emmer doesn't spell out exactly where those cuts will occur in each category. When asked for specifics during his budget announcement last week, he said "this will be something that we work out details with the two legislative bodies."
Hospital officials are worried about those details. Earlier this year, Gov. Tim Pawlenty and the DFL-controlled Legislature cut funding by 75 percent for the General Assistance Medical Care program, which pays for health care for some of the state's poorest residents. Hospital officials worry a big cutback in the growth of health and human services spending will come at their expense.
Mary Krinkie, vice president of the Minnesota Hospital Association, said Emmer's budget plan would seriously affect how hospitals treat patients.
"Most of that money is in the Medicaid program which means it has a dollar for dollar federal match," she said. "So for every dollar the state cuts in the Medicaid program, it has a matching dollar from the federal government."
In other words, if the state cuts Medicaid funding, it would mean hospitals, long-term care facilities and clinics could see a double whammy -- cuts from state and federal government.
Hospitals aren't the only ones who are worried. City officials say Emmer's proposed cuts to local governments will result in higher property taxes. Colleges and universities argue that cuts in higher education will result in increased tuition.
MARK DAYTON'S PLAN
Dayton's budget plan has a different problem.
Throughout the campaign, Dayton has suggested an income tax hike on Minnesota's top earners as the centerpiece of a $4 billion revenue package.
"Taxes, I believe, are the lubricant for the machinery of our democracy," he said during a speech at the University of Minnesota's Humphrey Institute. "Without sufficient revenues, the wheels stop turning and the machinery breaks down."
But Dayton's income tax plan is coming up short. An analysis by the Minnesota Department of Revenue said Dayton's plan would raise $1.8 billion over two years -- less than half of what he said he would need in new revenue. At a recent debate, Dayton said he would continue to look for additional revenue and spending cuts to fill the gap.
"If I become governor I'll work with the Revenue Department and other areas to find areas where we can continue to make revenues come in that are on a more progressive basis," Dayton said.
Those potential tax hikes worry some small business owners. Mike Hickey, state director of the National Federation of Independent Business in Minnesota, said many business owners are already concerned about President Obama's plan to let tax cuts for top earners expire.
Hickey, whose organization represents 13,000 business owners in the state, also said Dayton's tax plans add uncertainty, and could make businesses more reluctant to hire more workers.
"There's anxiety about how badly people will be penalized under the Obama health care plan and there's anxiety here in Minnesota if Mark Dayton wins and people think we're heading for one of the highest income tax rates in the nation," Hickey said.
Dayton has pledged his income tax hike on Minnesota's top earners would not leave the state with the highest tax rate in the country. Hawaii's 11 percent is currently the top rate.
Dayton's plans to cut spending may also not add up. He's counting on more than $500 million in savings from renegotiating leases for state offices and storage and a plan to reduce private contracting in the state.
TOM HORNER'S PLAN
Horner is also banking some spending cuts that aren't fully explained. He wants to create teams to help find savings in each budget area, and said his top goal would be to improve how state government delivers health care and social services programs.
"Things like doing a better job of how we purchase health care, looking at how we deliver human services through the counties, there are those kinds of areas where I have been specific that do add up to immediate savings," Horner said.
But Horner is a bit vague on some of his budget savings, and he acknowledges that his budget plan has a $1 billion gap.
"A lot of it is what we do collectively -- a governor, a Legislature and the others who come to the table," he said.
Several groups who may be at that table are advocates for the poor. The centerpiece of Horner's budget plan is expanding the sales tax to clothing and some unspecified personal services and lowering the tax rate. He also wants to raise taxes on tobacco and alcohol.
Those tend to be regressive taxes, said Brian Rusche, executive director of the Joint Religious Legislative Coalition.
"The burden of his solution would fall more greatly on low income people," he said. "So it's asking those who have the least to shoulder the burdens more than others."
Still, Rusche said he's pleased that Horner has outlined some ways to offset the impact on the poor, such as a sales tax holiday or a refundable tax credit. But Rusche said he'll wait to see more specifics on the plan.
Like many other Minnesotans, he may walk into the voting booth not knowing exactly how the candidates will fix what's projected to be the largest budget deficit in the state's history.
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