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Long under wraps, DFL nearly $1 billion tax plan passes

ST. PAUL - Minnesota Democratic senators knew in February they would suggest raising taxes to fund their top priorities, but first talked about it publicly last week and on Saturday passed a nearly $1 billion income tax increase.

The tax increase was kept under wraps to direct attention toward education needs, the Senate's education finance chairman said.

"There is a hesitancy on keeping the center of focus on taxes rather than investment," Sen. LeRoy Stumpf, DFL-Plummer, said Saturday after senators approved his bill adding $444 million to education funding while raising income taxes on the richest Minnesotans.

Senators approved the bill 35-29, with seven Democrats - mostly from Twin Cities suburbs - joining Republicans in opposing it. Gov. Tim Pawlenty says he will veto any tax increase.

The House appears likely to approve a smaller income tax increase, with proceeds being used to reduce property taxes.

Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, admitted the income tax increase won't survive in its current form once negotiations begin with the House and Pawlenty.

However, the leader said, the "Senate is committed to not going home without fixing property tax and investing in education." That means more taxes are needed, he added.

Republicans said the added money is not needed and they complained that the tax measure was written behind closed doors with no public input. The plan was first heard by a committee about 24 hours before the full Senate debated it.

For weeks, Senate leaders have refused to talk about a tax increase, even though Stumpf now says they knew one would be coming. Stumpf said avoiding talking about taxes was intentional.

"It's a way for us to direct the message," he said.

However, there was plenty of tax talk Saturday, mostly from Republicans.

"This is the mother of all pigs," Sen. Ray Vandeveer, R-Forest Lake, said.

Most of the new taxes would be split between education spending and lowering homeowner property taxes.

"We can't just come out and say we want something for nothing," Sen. Sandy Pappas, DFL-St. Paul, said. "We need to pay for it."

The bill would increase public college and university spending $93 million in the next two years. That is enough to keep Minnesota State Colleges and Universities tuition increases at 3 percent the next two years. University of Minnesota tuition increases would be limited to 5 percent a year.

Public school K-12 education would get a $298 million boost for the biennium, an average increase of $100 per student a year, above a $498 million increase senators already approved.

Another $54 million would be spent on providing funds for parents to place children in pre-kindergarten programs.

Senate Tax Chairman Tom Bakk, DFL-Cook, echoed other Democrats' comments about the need to raise taxes: "We simply have to invest in our young people because that is what will make our nation prosper in the future."

Warning "tomorrow is too late," Sen. Steve Murphy, DFL-Red Wing, said education needs money now.

When he campaigned last year, Murphy said, voters told him they would be willing to raise taxes to help fund education improvements.

"Quit trying to protect the upper-crusters," he told Republicans.

Voters did not send senators to St. Paul to raise taxes, Sen. Bill Ingebrigtsen, R-Alexandria, countered.

"I'm going to tell them exactly who raised their taxes to be No. 1 in the United States," he added, talking about Democrats.

The wealthy who would be most affected by the tax increase created many of Minnesota's jobs, Ingebrigtsen said.

Democratic researchers estimate that about 93,000 taxpayers would pay the higher taxes.

The new tax would be placed on couples earning more than $250,000 a year and single filers with incomes of at least $141,250. Taxpayers who fit into the new category would pay 9.7 percent of their income to Minnesota, up from today's top rate of 7.85 percent.

Also Saturday, senators unanimously voted to name a portion of Minnesota 210 between Staples of Motley the late Sen. Dallas Sams. The 16-year veteran DFL senator died of cancer March 5.


Tax increases in Stumpf's bill were too much for Sen. Dan Skogen, DFL-Hewitt.

"The burden on our taxpayers is just too heavy in this bill," the freshman senator said.

"I strongly support our schools, but it does our schools no good if the governor disagrees with our plan," Skogen added. "We need to craft a bill he can sign that will benefit our schools and safeguard our taxpayers."

One of the seven Democrats to oppose the bill was Sen. Kathy Saltzman, DFL-Woodbury.

"This particular bill just went a little too far," she said, but would not say what kind of a tax increase she could accept.

Saltzman and others who voted "no" live in generally well-to-do areas where many voters would be affected by the higher tax bracket.

"I am very uncomfortable "giving Minnesota the highest tax rate, she added.

Pogemiller said he understood Saltzman's vote: "She represents a different district than the rest of us."

Many Democrats represent Minneapolis and St. Paul's lower-income neighborhoods, where few would feel the tax hike impact.

Sen. Gary Kubly, DFL-Granite Falls, said he likes the education part of Saturday's bill.

"Going door-to-door last fall, senators and candidates heard from the people of Minnesota that they were worried about the quality of our schools, that our roads and bridges are crumbling and that their property taxes were out of control," Kubly said. "That frustration resonated in the halls of the Capitol and we responded."

Early-childhood education is particularly important, he added. "Studies show that quality early education leads to education success later. Restoring early childhood family education to 2003 levels and providing over $50 million for pre-K education allowances will help parents across the state pay for early education programs."

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.