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THE LEGISLATURE

Bakk: Repairing state budget is top priority

Tom Klein
Posted 11/16/12

REGIONAL – Newly-elected Senate Majority Leader Tom Bakk spent the past week fielding a flood of phone calls.

“I turned off my cell phone at a meeting,” he said, “and when I switched it …

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THE LEGISLATURE

Bakk: Repairing state budget is top priority

Posted

REGIONAL – Newly-elected Senate Majority Leader Tom Bakk spent the past week fielding a flood of phone calls.

“I turned off my cell phone at a meeting,” he said, “and when I switched it back on I had 23 voice mails.”

Many of the calls are to lobby the Cook DFLer for programs whose funding was diminished as the state grappled with a series of budget deficits. Although Bakk is sympathetic to their needs, he said the first priority has to be getting the state’s budget back in order.

Fiscal crisis

In eight of the last 11 years, the state has faced a budget deficit, Bakk said, and the state is anticipating another shortfall this year. Adjusted for inflation, Bakk said the hole could be as large as $2.1 billion.

“One of the biggest challenges we’ll face will be managing expectations,” said Bakk. “If you’re always managing a crisis, you can never make long-term planning decisions. We can’t get too far ahead. There are a lot of good ideas being proposed, but until we have the funds to support them they will have to wait.”

That includes repayment of the $2.4 billion that the Legislature held back from schools to balance its budget. Bakk said it’s unlikely the state will be able to make up that gap in the next biennium, but he said the DFL-controlled Legislature would work on a plan to eventually restore those funds.

“In the short term, things are not going to get better for K-12 schools,” Bakk said. “The best schools can hope for is some kind of repayment plan.”

Bakk said the No. 1 focus would be on trying to put together a honest balanced budget that provides long-term financial stability and avoids accounting gimmicks.

The budget solution is likely to include a mix of spending cuts and new revenue. Gov. Mark Dayton and DFLers sought to increase incomes taxes on the wealthiest Minnesotans last session and Bakk says that he expects the governor to propose tax reform again.

But he cautioned that even with changes in the state’s tax system, there would be significant spending cuts.

“We just can’t raise enough to plug the budget hole,” he said. “Minnesotans will expect us to tighten our belts, be more efficient and deliver services at lower cost.”

Another avenue for raising revenue may be in changing the state sales tax. In the past, Bakk has advocated expanding the tax to clothing, saying it would generate $257 million in its first year.

The Senate Majority Leader hasn’t ruled that out but wants to hear from others first. He was scheduled to meet on Wednesday with state Revenue Commissioner Myron Frans, who has been criss-crossing the state to inform Minnesotans about the current tax structure and gather their ideas on how they would like to see it reformed.

According to Frans, the current state tax system places an unfair burden on the middle class and small businesses. “Over time, data shows that the state tax code has evolved to favor the state’s highest-income residents and some companies that benefit from complicated, selective tax breaks,” Frans stated in a press release. “As a result, Minnesota’s middle class and many of its small businesses contribute a larger share of their income to fund public programs.”

Bakk said it remains to be seen what the state Legislature’s appetite for tax reform is, but said lawmakers are unlikely to stray too far from the governor’s budget proposals. The governor is expected to draft his budget plan after the Dec. 5 state revenue forecast.

Another area that Bakk wants to emphasize this year is lowering property taxes. “Property taxes have increased from $4 billion in 2002 to $8.5 billion in 2012,” Bakk said. He blamed cuts to Local Government Aid to cities and counties, and the increase in excess operating levies to help fund schools.

“We squeezed schools, forcing them to turn to operating levies,” he said, noting that school levies now are raising $700 million a year and creating inequities in public education.

Bakk added there might be a limited bonding bill to deal with emergency needs, but he doesn’t expect a large bonding bill to be on the agenda this session.

Taking charge

The DFL sweep in both houses of the Legislature surprised Bakk, who expected DFLers to recapture the Senate but was unsure of the House. Even the magnitude of the victory in the Senate, where DFLers gained a 39-28 majority, exceeded Bakk’s expectations. In the House, DFLers hold 73 seats to Republicans’ 61.

“Statewide, we received 330,000 more votes than Republican candidates,” said Bakk. “In the Senate, Democrats got more votes than Barack Obama. There were about 100,000 people who voted for Mitt Romney but voted for a Democrat in the Senate.”

Bakk said the Republicans’ were undone by their voting record. “There was a basket of things they did that we were able to call them on,” said Bakk, ticking off the elimination of the homestead credit, historic borrowing from public schools and the cuts in funding to higher education.

Republicans misjudged the public by trying to turn the focus to social issues such as the marriage amendment. The amendment and that strategy failed, he said.

A number of freshmen Republicans who rode the Tea Party wave into office were ousted, but Bakk said the far right is still calling the shots in the Republican Party in Minnesota.

He pointed to Republicans’ decision to elect Sen. David Hann as Senate Minority Leader. While the House Republicans opted for a fresh face — Rep. Kurt Daudt — to lead them, the Senate stuck with Hann, one of the most conservative members of their caucus, Bakk noted.

“He ran their re-election campaign and I was surprised to see him named Senate Minority Leader,” said Bakk, who added several of the more moderate Senate Republicans shared his concerns.

“They’re not happy with the outcome,” he said. “I’ve already heard from one and I expect to hear from others, so we should be able to work with those members.”