Federal money will mean budget do over

Posted at 5:11 PM on February 18, 2009 by Tim Pugmire (3 Comments)

State lawmakers say the federal economic stimulus bill will require Gov. Tim Pawlenty to rework his budget proposal.

The issue came up today during a meeting of the Legislative Commission on Planning and Fiscal Policy. Management and Budget Commissioner Tom Hanson explained that strings attached to the federal money will likely prevent the governor's proposed spending reductions for health and human services programs. The governor's use of an accounting shift for K-12 education funding also appears to put federal money in jeopardy.

"Basically, we're really talking about a do-over budget for the governor at this point," said House Speaker Margaret Anderson Kelliher, DFL-Minneapolis.

Hanson largely agreed with Kelliher analysis.

"I don't know if the whole budget is a do over." Hanson said. Human services most likely will be."

But when Kelliher reminded the commissioner that human services represent a third of state spending, and education is an even bigger piece, Hanson revised his do-over calculation.

"Well, probably 85 percent of it," Hanson said.

After the meeting, the House Republican minority leader issued a news release to criticize Kelliher and her comments.

"Speaker Kelliher's caucus has offered very little in terms of its own ideas for balancing the budget and growing jobs," said Rep. Marty Seifert, R-Marshall. "While Republicans have put forth numerous ideas and Gov. Pawlenty made his proposal, Democrats continue to recline in the easy chair and not offer any solutions."

Comments (3)

We have a solution:

Share the Pain!

Tax the richest 10% at the same overall Minnesota tax rate at the SAME rate as the poorest 10%.

Instant FAIR solution.

Posted by Grace Kelly | February 18, 2009 7:08 PM

Grace, the first law of holes: quit digging when you find yourself in one. Your "solution" would actually decrease revenue. Quite simply, every existing tax either taxes everyone equally, or gets heavier based on income. Making them apply equally to everyone would result in a reduction in taxes on the rich or massive increases for the poor.
The exception: the portion of payroll "tax" which is used to fund social security insurance. The premium is only imposed on the first $106,800 (2009), but benefits are similarly capped (fair enough). Many point to "regressive" taxes like sales tax or cigarettes, but the taxes are evenly applied, you just don't like that the rich spend a smaller percentage of their income on taxable goods. So your real budget solution is to get the rich to drink, smoke, and buy more TVs.
What it comes down to is: the rich are rich for a reason because they spend, or don't spend, intelligently. And so long as legislators use taxes to attempt to modify behavior, the rich will pay a smaller portion of their income in taxes.

Posted by Duncan | February 18, 2009 9:16 PM

Actually, in OVERALL Minnesota taxes on each dollar earned the richest pay less than the poorest. This is from study from our Minnesota government. Check out the story

http://www.mnblue.com/node/1749

Posted by Grace Kelly | February 19, 2009 12:17 PM

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