A no new taxes pledge, but GOP still finds new revenue

For months, Republicans in the Minnesota House and Senate have said that they can balance the budget without any new revenue. They've all but taken tax increases off the table as they deal with the state's $5 billion budget deficit.

"We're going to build a budget based on what is in Minnesota's checking account," said state Sen. Geoff Michel, R-Edina. "Not what we wish was in the checking account, but what is in the checking account based on the most recent forecast."

But it appears that the definition of the state's checkbook is expanding. GOP lawmakers are using special revenue accounts and dedicated funds to help balance the state's budget.

For example, Michel is proposing to take $45 million from an Iron Range economic development fund. That money is paid by Iron Range mining companies in lieu of property taxes.

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State Rep. David Dill, DFL-Crane Lake, was one of several Iron Range lawmakers who said GOP legislative leaders are stealing their funding.

"And they campaigned on living within their means," Dill said. "I don't think that taking the property tax money of seven counties and putting it in for a fix for the state budget is living within your means."

Previous legislatures have often used one-time money and special accounts to balance budgets. The problem is that it never fixes what financial experts call the structural imbalance, which means that without permanent tax increases or spending cuts, the budget problem just crops up again in future years. By tapping these funds, Republicans are masking the level of spending cuts needed to erase the deficit.

Nearly every budget bill relies on some sort of dedicated funding source to help cushion the blow of budget cuts.

For example, the House Public Safety budget bill uses several pots of money currently dedicated to other ongoing expenses. The bill takes nearly $15 million from a police training fund, a fire training fund and a fund used to build a statewide public safety radio system. The funds are collected from 911 fees on telephone bills.

Jim Franklin, executive director of the Minnesota Sheriffs Association, said it's unprecedented that lawmakers are looking at those funds to balance the budget.

"This is a use that has never been permitted," Franklin said. "In the past all of the funds have been dedicated for the use of public safety 911 services. None of it has [ever] been used for the general fund."

State Rep. Tony Cornish, R-Good Thunder, defended his decision to use those funds to balance the budget. He said the severity of the state's budget deficit requires him to look everywhere.

"When you reach a budget crisis nothing is dedicated unless it's dedicated constitutionally," Cornish said. "We look at it as direction. If we have to change the rules in desperate situations we will. When we're cutting back on women's shelters and health care, we're certainly not going to leave a radio system untouched."

Democrats also say the environment budget bills are paying for general fund programs with sales tax money dedicated to the outdoors through a recent constitutional amendment.

But House Majority Leader Matt Dean defended efforts to tap dedicated funding and use it for the general fund. He insists that Republicans don't consider using new funding as "more money" for the state's budget. Instead, he said, it's a reallocation of available funding.

"It is revenue that is currently being produced in the state, and it's a question of priorities and fairness," said Dean, R-Dellwood. "Where are the dollars coming from, where are they being allocated and where are they being taken from? And whether it's schools, cities, counties, we're going to be having that debate in all of the committees this year."

Gov. Mark Dayton is skeptical of using special revenue accounts to balance the budget. He told reporters that he considers "shifts, gimmicks and raids" out of bounds.

Dayton has proposed an income tax increase on top earners to help balance the state's budget.