For the first time in years, lawmakers this session made real investments in education. In addition, they restored much of the Local Government Aid slashed over the past decade and enacted other measures to provide property tax relief.
Even more importantly, legislators took steps to put the state’s fiscal house in order. Part of that was by necessity. The state had used up most of the pots of reserve money it could tap to prop up the budget. But it was also driven by the public’s frustration with gimmicks and accounting tricks that never resolved the state’s fiscal needs on an ongoing basis, forcing Minnesota to lurch from one budget crisis to the next.
That uncertainty helped Democrats win both the House and Senate in 2012 and, under the leadership of Democratic Gov. Mark Dayton, legislators were determined to deliver on the public’s expectations.
Providing more dollars for public education was a top priority, and schools will receive a significant boost in the basic aid per pupil over the next two years. Additonally, the state will now fund all-day kindergarten and is providing assistance for low-income families to enable them to enroll children in preschool programs.
Legislators also made critical investments in higher education, adding $250 million to provide $2.8 billion for higher ed over the next two years. They also imposed a two-year tuition freeze on the state’s public higher-education systems for two years, stopping it from spiraling ever higher and putting an advanced education out of reach of more Minnesotans.
Paying for those improvements will take additional funds, most of which will be provided through a new tax tier for the wealthiest Minnesotans. Under the plan, the top two percent of wage earners will pay 9.85 percent — a two-percentage jump from the current top rate. Legislators also approved a $1.60-a-pack increase in cigarette taxes and a broadening of business services covered by the sales tax, and eliminated some corporate subsidies.
Republicans argued that the tax increases will create a chilly business climate in Minnesota that will kill jobs and drive away entrepreneurs. But Senate Majority Leader Tom Bakk successfully argued that businesses are concerned about other matters — particularly a well-educated and trained work force. Minnesota had enjoyed economic success in the past because of those qualities that were being endangered by putting public education on a starvation diet.
In addition, the tax bill includes significant property tax reform for all Minnesotans. Some of that relief would come through an expansion of the current property tax refund program, but it also is generated by an increase in Local Government Aid. The tax bill increases LGA by $80 million, restoring about 60 percent of the aid cut over the last decade. Lawmakers also tweaked the formula for determining where LGA flows so it is spread more equitably across the state.
The additional aid will allow cities to hold the line on property taxes, reinvest in their infrastructure and, in some cases, restore programs or personnel that were cut when aid was reduced.
In addition, the tax bill exempts cities and counties from the state’s general sales tax for purchases ranging from computers to road salt. That measure alone could save cities $70 million annually, according to Gary Carlson of the Minnesota League of Cities.
There are numerous other actions taken by legislators that will benefit Minnesotans and improve the state’s quality of life. But it ultimately boils down to whether they were listening to Minnesotans’ concerns.
The evidence of this session indicates they were, and their actions set the state on the right path for the future.