Dayton's budget a gamble on his political future

Mark Dayton
In this May 4, 2012 photo, Minnesota Gov. Mark Dayton takes questions during a news conference on taxes in St. Paul, Minn. Dayton will unveil his two-year budget proposal Tuesday, Jan. 22, 2013 and make his pitch for a top-to-bottom overhaul of Minnesota's tax code. If the past is any guide, Dayton will find a political minefield awaits.
Jim Mone/AP

Gov. Mark Dayton is scheduled to release his budget proposal on Tuesday, and his key advisers are suggesting that the plan will mark a cultural change in Minnesota government.

But Dayton, who has not been shy about calling for higher taxes, will be laying out an agenda that could put him in a politically dicey position.

Throughout 2012, Dayton asked voters to give him a DFL Legislature. On Election Night, the voters did so, and now he will have to deliver results.

His budget plan and the public's reaction to it could be a major factor in whether voters decide to re-elect him in 2014.

Dayton has been out of public view for the past three weeks as he recovers from back surgery, which means that information about his budget plan has come from his top advisers. And they have not been hesitatant about defining the stakes.

"We really see this as 'Minnesota's moment,'" said Bob Hume, Dayton's deputy chief of staff. "Minnesota's fiscal house has been torn down to its foundation."

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Hume recently told a group of nonprofit professionals that there will be spending increases in some areas of the budget.

"As we go into this budget on [Jan.] 22nd, when the governor launches his budget," Hume said, "it's going to be a real and new and significant step to building that back."

Hume and others were not saying how much Dayton wants to spend. Minnesota faces a $1.1 billion projected budget deficit. Dayton has also committed to paying back a school funding delay, and he wants to lower property taxes and spend more money on schools.

His staff did not indicate how he intends to pay for those priorities except to say that an income tax increase on top earners will be part of the plan.

Chief of Staff Tina Smith said the governor will explain why he thinks the tax hikes are needed.

"We're really focused on how much it costs to buy what we think Minnesotans expect and deserve from their state government," she said.

For Dayton the political gamble is huge. His commitment to raising income taxes is already known, but his plan is also likely to change the tax code in way that could hit a broader swath of Minnesotans. Cigarette taxes, sales taxes on clothing and services, and cuts to the corporate income tax are all possibilities.

Smith and others say Dayton intends to show what new spending could deliver, like early childhood education, for example.

"The whole thing has to hang together as a package," Smith said. "You can pick something apart until there's nothing left and that won't work. It all has to hang together. You have to have the spending you need to have in order to move the state forward and then pay for it."

Dayton and other DFL legislative leaders say their budget will not rely on gimmicks used in the past, like one-time money and accounting tricks. Dayton and the Legislature relied on tools like that to end a government shutdown two years ago. Then, the governor had to fight with majority Republicans to get part of his agenda enacted.

Now that his fellow Democrats are in control, he has to worry that his entire plan might become law -- and the public dislikes it.

Republicans in the Legislature, like Sen. Julianne Ortman of Chanhassen, were already painting Dayton and DFL leaders as tax-and-spenders.

State Sen. Julianne Ortman
"We should be a lot more conservative and a lot more fiscally disciplined," said Sen. Julianne Ortman, R-Chanhassen.
MN Senate

"We should be a lot more conservative and a lot more fiscally disciplined," Ortman said. "It has paid off so far, so I'm not sure why we need to take this great big veer off the course of fiscal discipline into indiscriminate spending."

DFL legislative leaders were already lining up behind Dayton's push for more revenue. They hope the public's thirst for a cooperative tone at the state Capitol will outweigh concerns over taxes and spending.

But even some Democrats were worried.

"I do feel pressure," said DFL Rep. Ann Lenczewski of Bloomington, chairwoman of the House Taxes Committee. "And I caution folks on the overreach because we all think we know what the election is about, every single legislator. What I heard is there were very few people who said, 'Elect me and I will cut everything' and there were very few people who said, 'Elect me and I will simply raise taxes and I will not cut a dime.'"

Dayton and his staff say there will be spending cuts in the budget but add that the state has already experieced lots of cuts over the last decade. They are gambling that voters are ready to move in a new direction, and they will find out if their bet pays off in November 2014.

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