(UPDATED) Rep. Carlson, Sen. Latz Respond to Commission's Solution

Rep. Lyndon Carlson (DFL-District 45B) says he could work with budget suggestions made by a bipartisan commission. But he would "want to modify it to build in more tax fairness."

Carlson made his comments Friday afternoon, a day after the commission members issued their proposals to Gov. Mark Dayton and Republican lawmakers.

The commission's so-called third alternative included more than $2 billion in permanent cuts, $1.4 billion in accounting shifts and $1.4 billion in new revenue—including a temporary, across-the-board 4 percent tax increase on personal incomes.

In a two-page document, the commission 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 commission 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 be broadened and lowered.

“I note that most of the committee’s recommendations parallel my own proposals,” Dayton wrote in a statement to the media.

Dayton cited 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 service surcharge, also seems drawn to the letter of Dayton’s latest proposals.

Sen. Ron Latz (DFL-District 44) said he is generally supportive of the proposal made by the bipartisan budget committee Thursday.

“I think overall it’s a pretty well-balanced proposal,” he said, adding that the split between 70 percent spending cuts and 30 percent tax increases seems fair.

Carlson said the commission's suggestions addressed one of things that have troubled him—the years 2014-15. "For some time I've been concerned about the out biennium, the third and fourth years."

Carlson said he wanted the Legislature to "avoid a one-time solution that kicks the can down the street, so to speak." Pawlenty, he said, "continued to choose a one-time solution."

That kind of budgeting, Carlson said, caused Minnesota tolose its AAA bond rating

"The commission made it very clear that those kinds of solutions just simply should not be used," Carlson said.

On Thursday, Dayton wasn’t ready to wholeheartedly endorse the commission's recommendations. Specifically, he said, the governor does “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.

"Four percent does bring in needed revenue," Carlson said, "but doesn't address the tax fairness issue." He said residents who make more than $1 million would pay a higher rate under Dayton's most recent plan, "which would be closer to what middle class taxpayers pay."

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.

The commission was created by former Minnesota politicians Vice President Walter Mondale, Gov. Arne Carlson and U.S. Sen. Dave Durenberger. Along with Gunyou, members included former Republican Sen. Steve Dille, former DFL legislator Wayne Simoneau, former state Finance Commissioner Jay Kiedrowski, former Wells Fargo CEO Jim Campbell, former Medtronic Vice President Kris Johnson and current Minnesota Management and Budget Commissioner Jim Schowalter.

“We were all pretty pragmatic. We didn’t look at it from a real political standpoint,” Gunyou said. “But we’re also realists, so we talked through a lot of the options. The framework just made sense.”

Latz said he also has some concerns with the plan, particularly uniformly raising income taxes on all Minnesotans.

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 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.”

Dayton turned the pressure on Republicans in the Legislature on Thursday, calling this framework the third “compromise proposal (the Republicans) have received in the past 24 hours.”

Carlson said he would like to have some input on the commission's suggestions before voting.

Despite his concerns, Latz said he would vote for the committee’s proposal if it made its way to the floor. He said he “honestly doesn’t know” if Republicans would support the proposal, but maintained his position that the majority party needs to be willing to compromise.

“If everyone sticks their feet in cement, you can’t govern,” Latz said. “That’s not democracy.”

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