Wednesday, February 16, 2011

Here Comes the Budge(t). Apologies to African-American burlesque comic of days gone by "Pigmeat" Markham and his 1968 novelty hit "Here Comes the Judge," but here comes Governor Mark Dayton's initial budget. Not a ton of surprises here, as the basic thrust of the budget is consistent with his campaign platform and early statements as Governor. Some of the details differ slightly from what I expected, but the tone and direction is clearly in line with what has been heard in the past.

The obvious bone of contention is going to be the income tax increase Governor Dayton has proposed to both pay for new programs, preserve local government aid at its current levels, and prevent budget cuts. Governor Dayton's proposed income tax increase would raise the marginal tax rate to 10.95 percent for single filers with incomes in excess of $85,000 and couples with incomes of approximately $150,000. The Dayton proposal also calls for a 3 percentage point--for a marginal rate of 13.95 percent--temporary income tax surcharge for filers with incomes in excess of $500,000. The initiative has been labelled the "5% solution," as approximately five percent of Minnesota income taxpayers are affected by the proposed increase.

To say this has ignited a firestorm of criticism goes without saying. The "tax increase versus cuts" debate will now officially ensue along with the "benefit principle versus progressive taxation" debate. Be prepared for a long stare-down and we'll see who, if anyone flinches. There will be wiggle room on a lot of what is discussed this year, but the state resource question may well be intractable, at least at this juncture.

I'm sure we are going to see several "super rallies" on the Capitol grounds as the session continues with all viewpoints from anti-tax to preserve or increase spending will be represented. In another note, it appears small plane piloting and air traffic controlling are going to be growth industries for the next few months, as both the Governor and legislative leadership are scheduling fly-arounds to promote their viewpoints in the budget debate.

Quoting Bette Davis from "All About Eve," "Buckle your seat belts. It's going to be a bumpy night."


Dayton Budget Proposal: (Go to FY 2012-2013 Operating Budget Links).

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