Senate budget focuses on property tax relief

by T.W. Budig
ECM Capitol reporter

A key theme of the Senate Democratic budget is property tax relief, with another where to find about $2 billion in additional revenue.

Senate Democrats released their $38.2 billion budget targets on Wednesday (March 20), with Senate Majority Leader Tom Bakk, DFL-Cook, describing the fiscal vision as a small step towards recreating the so-called Minnesota Miracle of the 1970s that brought sweeping changes to school funding.

Senate Majority Leader Tom Bakk, DFL-Cook, listens to Assistant Senate Majority Leader Katie Sieben, DFL-Newport, at a recent press conference.
Senate Majority Leader Tom Bakk, DFL-Cook, listens to Assistant Senate Majority Leader Katie Sieben, DFL-Newport, at a recent press conference.

Senate Democrats propose about $400 million in property tax relief. About $150 million would be slated toward buying down voter-approved school district levies.

“In most school districts property taxes will either go down or stay the same,” Bakk said, speaking outside of the Senate chamber to a knot of reporters.

Like Democratic Gov. Mark Dayton, and unlike the Democratic House, Senate Democrats do not look to immediately buy down the school funding shift.

Bakk said buying down the shift is desirable, but said they couldn’t figure out how to do that and also provide the property tax relief they wanted.

While the House Democrats proposed the creation of a temporary fifth-tier income tax bracket to pay down the remaining $854 million school shift, Bakk cautiously threw out several tax increase ideas but embraced none.

Indeed, Bakk said  over reliance on the income tax invited budget instability, because income tax revenues are volatile.

Still, he did not rule out an income tax increase on wealthier Minnesotans.

Senate Democrats are currently running revenue estimates and crunching numbers, he indicated, to determine whether Dayton’s two percent, tax-the-rich proposal makes the most sense.

Perhaps an income tax increase on the upper five percent of wage earners made more sense, Bakk suggested.

“We’ll take a look at it,” he said of the House Democratic surcharge proposal.

Although Dayton took a political beating on his sales tax expansion proposal and has withdrawn it, Senate Democrats are exploring possible expansion to select items.

The goal, Bakk explained, wouldn’t be raise additional sales tax to spend but rather reduce the sales tax rate.

Asked about a possible sales tax expansion to clothing — a cherished aim of some lawmakers — Bakk indicated the proposal wasn’t off the table.

But the governor’s retreat from the sales tax “made it a lot heavier lifting,” he said.

In general, the Senate, House and governor, are “very closely aligned” on spending targets, Bakk said.

Between the Senate and House, the House slates about $65 million more towards E-12 education than the Senate — the Senate about $110 million more toward higher education than the House.

In its largest single “investment” of $486 million toward education, the Senate, like the House, funds all-day kindergarten for all children statewide.

The proposal has its critics.

Senate Minority Leader David Hann, R-Eden Prairie, characterized the Senate Democratic plan as wrongheaded, saying proof that the Republican approach of lower taxes and limited spending works can be seen in the turnaround in the state budget.

Tim Budig can be reached at [email protected]