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DFL plans millions in income tax hikes

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ST. PAUL - Income tax increases topping $500 million appear likely to pass the Minnesota Senate by week's end.

Democratic-Farmer-Laborite senators want to bump up education funding anywhere between $500 million and $1 billion, and income taxes look like their chosen way to fund the bigger budgets.

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Decisions could be made today about just how to raise taxes, with the Senate Taxes Committee chairman suggesting they restore personal income taxes to 2001 levels.

Sen. Tom Bakk, DFL-Cook, said he and others made a mistake cutting taxes in 2001. "We've got to be man enough to admit it."

Rescinding those tax cuts would bring in about $500 million, Bakk added.

However, Sen. LeRoy Stumpf, who heads the major Senate education finance committee, said education needs more money than that. If that is the case, Bakk recommends reversing the 2001 cuts and then increasing income taxes on Minnesota's richest residents.

The Senate Finance Committee should decide this morning how much more to spend on early-childhood, public school and higher education. Bakk's committee plans to vote on a tax plan Friday before the full Senate makes its decision Saturday.

This new tax increase plan comes after Senate leaders for weeks repeatedly refused to discuss one, even after their budget chairmen said they did not have enough to fund Minnesota's needs.

Bakk said Minnesotans will agree with DFL plans to raise taxes if college tuition is held down, public schools get adequate money and early-childhood programs see funding increases.

Stumpf said Wednesday night that he did not know just what programs would get funding in the new tax bill. For instance, he said, the Democratic-pushed all-day, every-day kindergarten proposal still may not receive enough money.

House Democrats earlier proposed adding a new tax rate for the state's richest 28,000 Minnesota filers. That would bring in $433 million for the next two-year budget, which House leaders would spend on reducing homeowner property taxes.

Republican Gov. Tim Pawlenty, backed by most legislative Republicans, oppose state tax increases. There are not enough Republicans to stop the House and Senate from voting higher taxes, but they might be able to prevent the Legislature from overriding a Pawlenty veto.

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Senators already have passed versions of most budget bills, including increasing education funding. At the time, they did not say another - more expensive - version would be on the way.

Republicans, however, predicted Democrats would try to raise taxes.

Republican Sen. Julianne Ortman of Chanhassen said on Wednesday that Democrats would produce a nearly $1 billion request. Stumpf said it would not be that big, but could come close.

Democrats planned to finish deciding how much more education money they want overnight, before what Stumpf expected to be a short Finance Committee meeting this morning.

After the new education funding amount is decided, Bakk plans to talk to fellow Democrats about just how to raise taxes. They expect to emerge from the closed-door meeting united enough to pass whatever tax increase they pick.

Bakk said Senate Democrats are about evenly split between raising taxes on the rich and rolling back 2001 tax cuts. Stumpf said fellow Democrats "are in all four directions."

Once Democrats make that decision privately, Bakk's full Taxes Committee will vote Friday afternoon, he said, then all senators will have a chance to vote on Saturday.

Senators plan to have all their tax and spending bills passed by Monday.

Stumpf, who said he will get all the money he can for education, said his new funding bill should be the last one senators consider.

"I'm sweeping up, getting all the crumbs I can," Stumpf said.

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Don Davis
Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.
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