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The three DFL candidates for governor appeared in the first TV debate of the year last night and engaged in a few sharp exchanges over the state's budget crisis. 

Minnesota House Speaker Margaret Anderson Kelliher, former House minority leader Matt Entenza and former U.S. Senator Mark Dayton all said they will raise income taxes for top earners, but Dayton's plan received the most scrutiny from his rivals.

Dayton has called for income tax hikes for people earning more than $130,000 a year, and joint tax filers making more than $150,000 a year. 

Kelliher attacked Dayton's plan, saying it would hurt a segment of the middle class along with the wealthiest Minnesotans. 

"A teacher and a police officer working together as parents, earning over $130,000 a year would be in reach in your category," Kelliher said. "That's not rich to me. That's middle class."

Dayton defended his tax plan and turned the discussion to spending cuts. 

"Speaker Kelliher talks about my raising too much revenue from the rich. The alternative is then to cut," Dayton said.  "Margaret, if you're only going to raise $1 billion in revenues, then where are you going to cut the $5 billion that makes up that deficit?"

Kelliher said she would cut roughly $1 billion in state spending. She called for the creation of an inspector general to pinpoint fraud in the Department of Human Services, which runs low-income assistance programs, and also wants to close what she characterized as foreign tax loopholes. 

Entenza steered clear of many of the heated exchanges. He said he would roll back the 1998 income tax cuts on Minnesota's top earners, cut $2 billion in state spending and would continue to delay payments to schools. 

He also criticized Kelliher and Dayton for promising to enact a single payer, government-run health care program and for wanting to pump more money into K12 schools. 

"With a $6 billion deficit. I'm being very careful to not promise lots of new funding because I don't think we can promise that until we get the economy going," Entenza said.  "That's why I have a clear proposal that we'll get the economy going and we can push that money back into the education system."

Kelliher said she's committed to convincing the Legislature to commit more money to early childhood education and K12 schools. If that doesn't work, she says she'll push a constitutional amendment to boost funding for early childhood education.

"I don't think we can propose an education plan, and this is where I disagree, with no new money in it," Kelliher said. 

The exchange over education prompted Mark Dayton to challenge Kelliher's commitment to school funding during her time as House Speaker.

 "In the 2009 session, you proposed a lower level of funding for K12 education in the biennium than Govenor Pawlenty," Dayton said.

"That is just not true," Kelliher responded. 

But Kelliher later acknowledged Dayton's claim was true. She said she was trying to soften the blow that Pawlenty would have inflicted on other state programs in his 2009 budget.

The Democrats weren't the only candidates to debate the budget specifics. The debate included a separate forum for two of the Independence Party candidates.

Rob Hahn and Tom Horner disagreed over Hahn's plan to raise revenues from new Riverboat casinos. Hahn said it was a popular idea.

"$400 to $600 million would be a gimmick, and it creates jobs, and we've seen it work in Iowa, Indiana and Illinois," Hahn said. "Why wouldn't want to create a destination, and let the state benefit a little more?"

Horner disagreed with the idea, saying building casinos in rural Minnesota would destroy the local hospitality industry. 

Horner has called for solving budget problems by cutting corporate taxes and the capital gains tax while increasing the tobacco tax and expanding the sales tax to other services.

"We also need tax reform, not just tax cuts or tax increases," Horner said. "We need to reduce the taxes on job creation while we look at additional sources of revenue."

Horner also agreed spending needed to be cut. 

Republican Tom Emmer was invited to appear on the show but declined. He's on a statewide bus tour with the other Republican candidates for statewide office.

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Tom Scheck

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The three rivals engaged in a few sharp exchanges over financial issues at the first TV debate of the year last night.

DFL candidates for governor spar over deficit crisis in TV debate

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