by State Representative Cindy Pugh
Last week, Governor Dayton proposed his budget for the 2014-2015 fiscal year. I’m deeply concerned that this budget will only grow the size of government at the expense of hard-working taxpayers, hurt middle class families and render Minnesota’s business climate less competitive.
The budget the governor put forward calls for a $37.9 billion in state spending!
This is a 7.6 percent increase in spending and an 11.9 percent increase in taxes, which amounts to $3.7 billion in tax increases with only $225 million in cuts.
That is one dollar in cuts for every sixteen dollars of tax increases!
This is hardly a balanced approach. When Minnesota families are tightening their own budgets, I strongly believe government should be doing the same and should not be asking for more from taxpayers. The growth of state government has simply become unsustainable. I’m also disappointed Governor Dayton’s budget plan did not mention anything about comprehensive public pension reform especially given the recent report revealing over $16 billion in unfunded liabilities.
I will be following the work of the Legislative Commission on Pensions and Retirement and plan to work with colleagues on both sides of the aisle to identify solutions to this multi-billion dollar problem. I’m also troubled by the $2.1 billion of new sales tax proposed on goods and consumer services. The Governor proposes taxing clothing over $100, gym club memberships, over-the-counter drugs, swimming lessons, haircuts, legal services, accounting services, travel services and auto repairs—just to mention a few.
As a former general manager of the Dayton’s store in St. Paul, I understand the impact of sales tax on clothing on retailers’ bottom lines. Such a tax would lead to retailers having to lay off employees or worse yet—to close their store. I do not want the pending closing of the downtown St. Paul Macy’s to be the canary in the coal mine to a business climate in Minnesota under this budget.
Governor Dayton’s proposal to raise income taxes by two percent on the top-two percent of earners is also misguided and the wrong direction for Minnesota. This income tax hike will hurt small businesses registered as S-Corps or LLCs which file taxes through their individual tax returns. In Minnesota, 92 percent of businesses file through their individual returns. I was alarmed to learn that this tax will also disproportionally affect constituents in our district.
Carver and Hennepin counties are ranked as the top two counties in the state hardest hit by this tax!
Many constituents have contacted me to share their concerns about Governor Dayton’s budget proposal. Some have said that they are giving serious consideration to making a move to another state or retiring all together to enjoy the fruits of their labor. This is not good news and will not put our state on a path to prosperity.
I take these concerns very seriously and plan to follow the budget proposal closely as it moves through the legislative process to learn how it will affect our state and our community.