Dayton’s budget addresses a projected $6.2 billion shortfall by raising taxes on the richest 5 percent of Minnesotans, closing tax loopholes and cutting spending in many areas. It requires a 6 percent reduction in the workforce of state agencies, a cut of about 800 positions.

At the same time, Dayton increases funding for early childhood and K-12 education and maintains support for health and human service programs that serve the elderly and disabled. His budget also covers debt payments on a proposed $1 billion bonding plan to rebuild Minnesota’s infrastructure and create 28,000 jobs.

“This is a very tough budget for very hard economic times,” Dayton told reporters at a budget presentation that lasted more than 90 minutes.

‘Welcome relief’
Minnesota AFL-CIO President Shar Knutson called the Dayton budget “welcome relief to middle class Minnesotans who have sacrificed too much over the last decade.”

“His budget makes long-overdue investments in students and communities while asking those who have been the most fortunate to do their part in building a better future,” she said. “We urge lawmakers who disagree with this balanced approach to submit their own plan instead of simply saying ‘no.’”

Education Minnesota President Tom Dooher, whose organization represents 70,000 teachers and other educators, lauded Dayton’s focus on education.

“Gov. Dayton understands that investing in the education of our children is critical to Minnesota’s future success. He’s keeping his campaign promise to increase funding for K-12 education, and his targeted investment in all-day kindergarten is one strong step toward closing the achievement gap.

“His plan to invest in two new programs that reward excellence in our schools will tap in to the innovative spirit of the true experts in Minnesota education – the educators themselves. His leadership in making students and schools a top priority will ensure a strong and vibrant future for all Minnesotans.”

The Minnesota Nurses Association, representing 20,000 registered nurses, said the budget presents a fair approach to keeping up with skyrocketing health care costs. Although some will lose health care coverage, services for the state’s most vulnerable citizens will be maintained.

“The failed policies of the past eight years under former Gov. Tim Pawlenty have left us with a $6.2 billion deficit and it will take honest leadership to get us out of this mess,” said Linda Hamilton, president of the Minnesota Nurses Association. “I think Gov. Dayton’s budget proposal demonstrates the political courage and guidance that we need to move Minnesota forward.”

Public workers share in the pain
Though public employees may face some layoffs under the plan, unions representing state workers said they appreciated Dayton’s “fair and evenhanded approach.”

“The governor’s budget proposal gets us back on track to creating jobs and on the road to prosperity, while protecting children and the elderly,” said Jim Monroe, executive director of MAPE, the Minnesota Association of Professional Employees. “The governor’s budget proposal will not cost the vast majority of middle-class Minnesota taxpayers another dime in income or property taxes.

“In the same six weeks, the legislative majority’s work has included a resolution to cut only $900 million, including $400 million in property tax increases. Where is the legislative majority’s proposal to solve the state’s massive $6.2 billion budget deficit? Who will pay for their proposal?”

“How Minnesota responds to the recession will define who we are as a people,” said Eliot Seide, director of AFSCME Council 5. “Gov. Dayton knows we can fix the budget with fairness and compassion if the richest Minnesotans pay their fair share of taxes. The alternative is to cut jobs, hurt schools and raise property taxes on working families.”

Negative response from Republicans
Immediately, Republicans in the Legislature attacked Dayton’s budget for raising taxes. Anticipating such criticism, Dayton challenged them to submit a better plan.

“We’ve got one of the worst financial messes in the country,” Dayton said. “I invite those who are critical of this budget to present a better alternative.”

The budget preserves state aid to local cities and counties so they don’t have to raise property taxes, helping both individuals and businesses, he said.

A cornerstone is a new, progressive tax on the wealthiest Minnesotans. Currently, the richest 5 percent of state residents pay 9.7 percent of their income in state and local taxes, compared to 12.8 percent for residents earning $40,000 a year.

The new bracket would tax single filers with incomes over $130,000 at 10.95 percent and would be coupled with a two-year, temporary surtax of 3 percent for all filers over $500,000 and a state property tax on home values greater than $1 million.

Even with these increases, the state’s wealthy would still be paying taxes at a lower rate than they did under Republican Governor Arne Carlson in the 1990s, Dayton said. Ninety-five percent of the state’s residents would see no tax increase under the plan.

“This is about restoring tax fairness in Minnesota and about asking our most affluent Minnesotans to help us out during this time,” Dayton said.

For more information
View the budget plan on the Minnesota Management and Budget website.