Legislative Watch: Spin and Facts

The frenetic pacing of the GOP budget resolutions the last two weeks has made it hard to keep up with what is going on in St. Paul.  The reality of the disastrous budget plans supported by Senator Julianne Ortman, Representative Joe Hoppe and Representative Ernie Leidiger hasn’t been fully explained.  Let’s summarize the GOP spin versus what is really happening here: 

SPIN:  GOP budget bills result in “no new taxes”. 

FACTS:  While state taxes don’t increase, severe funding cuts to local government aid will cause statewide increases in property taxes, and the bottom 40% of income earners will see their tax burdens increase.

Analysis by the State Department of Revenue projects that local government aid reductions will cause $859 million in property tax increases over the next three years.  That represents a 4.3% increase statewide.  All types of property will see their property taxes go up — even with the GOP’s proposed cut to the tax rate for business property, increases at the city and county level will still result in Minnesota businesses paying $63 million per year more in property taxes. 

SPIN:  GOP income tax cuts to the lower and middle brackets are progressive and will provide substantial help to those taxpayers. 

FACTS:  The Department of Revenue analysis concludes that 47% of the tax relief in the GOP budget goes to the top 20% of income earners, who will get an average benefit of $391.  The bottom 10% of earners will get an average benefit of 87 cents from the GOP budget bill.  

The GOP budget proposals also slash the renters’ property tax credit to 12%.  This provision will result in 38,000 renters losing their credit altogether and the remaining renters will see their benefit slashed by an average of $300. This is a clearly regressive tax change that will hit lower- and middle-class taxpayers the hardest. 

SPIN:  Severe cuts to higher education funding won’t impact students because of tuition hike limits.

FACTS:  The budget bills passed by the Legislature cut funding for the University of Minnesota and Minnesota State colleges and Universities (MnSCU) by 13-19%, reducing funding to the same levels as in the late 1990s. 

The problem, of course, is that our public colleges and universities serve 52,000 more students today than they did a decade ago, and the cost of goods and services have been inflated over that time.  The result of these cuts is going to be lost jobs and lost futures.  

For many of Minnesota’s community colleges, personnel costs represent over half of the budget, so any cuts result in professors and support staff out of work.  Class sizes will increase, and availability of libraries and laboratories will be reduced

MnSCU has already indicated that if these cuts are signed into law that they will have to look into closing campuses to save money.  That will be a real hit to rural areas of the state, as closures will make it difficult for students to commute to and from school.

SPIN:  Everyone is sacrificing as part of the GOP budget plan. 

FACTS:  The latest Tax Incidence Study released by the Department of Revenue shows that the wealthiest taxpayers in the state – the top 10% — pay an average of 10.3% of their income in state and local taxes.  That’s 1.2% lower than the statewide average of 11.5%.  The top 1% of earners pay only 9.7% of their income in state and local taxes, nearly two full percentage points below the state average.  This has been a consistent trend since the tax cuts that were passed during the Ventura administration. 

The DoR analysis of the GOP budget plan shows that these trends would continue to get worse if it becomes law.  The total tax burden of the lowest 40% of income earners would increase under the plan, while the upper 50% would see their tax burden decline. 

The GOP claims that reducing the tax burden on the wealthiest and business is necessary to create jobs.  Well, we’ve been following those policies for the last decade, and what has it gotten us?  State tax rates have remained constant since the cuts in the Ventura administration and the federal government has passed five rounds of tax cuts since 2000. 

Yet, Minnesota ranks 39th in job creation and has posted below national average performance in wage and wealth growth since 2002.  It’s clear the GOP approach doesn’t work. 

Minnesota deserves a balanced approach to our budget problems, one that shares the sacrifice equally and doesn’t destroy the foundation for our future growth.  Let’s demand that our elected representatives support a budget that enables us all to thrive, not just a select few.

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  1. Nohealthcareville and other “highlights” of the 2011 legislative session | Brick City Blog - May 26, 2011

    […] The higher education bill slashes funding for the University of Minnesota and Minnesota State Colleges and Universities (MnSCU) systems — double-digit percentage cuts for both institutions while capping tuition increases at 5% of less.  The impact on students will be clear:  fewer class offerings, fewer support resources, and fewer professors, staff, and administration.  These cuts take higher education funding back to late 1990s levels. […]

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