Panel with ex-Fridley Exec Has Plan to End Shutdown

issued a state budget plan Thursday  as an alternative in the DFL-GOP impasse that has shut down state government.

The bipartisan panel's proposal includes $2.2 billion in permanent cuts, $1.4 billion in accounting shifts and $1.4 billion in new revenue. That last feature is a temporary, across-the-board, 4 percent tax increase on personal incomes.

The committee formed this week under the direction of former U.S. Vice President Walter Mondale, a Democrat, and former Republican Minnesota Gov. Arne Carlson, as well as former U.S. Sen. David Durenberger. It includes Kris Johnson, a former vice president at Medtronic.
 
In a two-page document, the committee outlined a framework for closing the $5 billion deficit by balancing 70 percent of it through spending cuts and the remaining 30 percent by increasing revenue.
 
The committee based its recommendations on three strategies:

• Cut state spending $3.6 billion from projections, which results in a biennial budget increase of 3 percent (or 1.5 percent increase per year).
• Raise income taxes 4 percent for everyone during the two years of this budget (an expected $700 million).
• Increase state revenues from a Human Services surcharge ($250 million), a tobacco tax increase of $1.29 per pack (an expected $330 million) and an alcohol tax inflation increase ($140 million).

Over the long term, the committee recommended, sales taxes should become broader and lower.
 
“I note that most of the committee’s recommendations parallel my own proposals,” Dayton wrote in a statement.
 
Dayton stated that the $2.2 billion in recommended permanent spending cuts is close to the nearly $2.1 billion he has proposed. The recommend $700 million from raised alcohol and tobacco taxes, along with a human-services surcharge, also seemed drawn to the letter of Dayton’s latest proposals.
 
Still, Dayton wasn’t ready to endorse the recommendations. He said he would “respectfully differ” with the recommended 4 percent, temporary income-tax hike for all Minnesota taxpayers.
 
“My goal has consistently been to protect most Minnesotans from either an income tax increase or a property tax increase, by raising state income taxes on only the wealthiest 2 percent of Minnesotans,” he wrote.
 
Minnetonka City Manager John Gunyou, a member of the committee, told Patch “there was a surprising commonality of thinking in the room” during the process of devising this budget resolution.
 
“We were all pretty pragmatic. We didn’t look at it from a real political standpoint,” said Gunyou, who joined former state House Speaker Margaret Anderson Kelliher's DFL-endorsed gubernatorial ticket that lost to Dayton in the primary election last year.

“But we’re also realists, so we talked through a lot of the options," Gunyou said. "The framework just made sense.”
 
Committee members knew there would be little happiness over the proposal to raise taxes on Minnesotans, Gunyou said.
 
“We had a nice, long talk about that,” he said with a laugh.  “Interestingly, everyone was pretty much in agreement. The feeling was that this (budget pain) needs to be shared by everyone. We’re hoping that might be a way to address this disagreement about who is paying what share, or a fair share.”
 
Along with Gunyou and Johnson, committe members include former Republican senator Steve Dille, former DFL legislator Wayne Simoneau, former state finance commissioner Jay Kiedrowski, former Wells Fargo CEO Jim Campbell, and current Minnesota Management and Budget commissioner Jim Schowalter, who acted as administrator for the group.