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Former senator says budget deal only shifts funding into the future
JULY 18, 2011

By Kristen Miller
News Editor

With Thursday’s announcement of a deal that would end the longest state shutdown, former Senator Steve Dille says the deal is only “kicking the can down the road.”

On the 14th day of the shutdown, Democratic Governor Mark Dayton and Republican legislative leaders came to a deal that will raise revenue by $1.4 billion without raising taxes.

The plan: shifting $700 million in K-12 school funding and roughly $700 million in tobacco revenue bonds.

“Schools have already been shorted during the last biennium,” Dille said, who spent much of the shutdown working on a plan that he said would resolve the budget impasse by increasing revenue both in the short term and in the long term. With this shift, the state would then owe the schools $2.1 billion.

Just days after the shutdown, the Dassel Republican was asked to co-chair a bipartisan six-member committee made up of retired state officials and business people that has become known as the Mondale-Carlson Task Force.

In the first week of the shutdown, the task force, organized by former GOP Gov. Arne Carlson and former Democratic Vice President Walter Mondale, issued recommendations on how to solve the state budget’s impasse.

They chose Dille to be involved, he says, because of his reputation of working on a bipartisan level with fellow legislators in the past.

One of the main principles that helped shape the recommendations included that the budget should only spend an amount equal to ongoing revenues, though, by not using shifts in order to do so.

During their talks, committee member and former professor at the University of Minnesota’s Humphrey Institute of Public Affairs Dr. Jay Kiedrowski, suggested this type of shift would not be the best way to balance a budget, according to Dille.

“The idea of borrowing money against the tobacco settlement (of the 1990s) is only a temporary fix,” Dille said last Friday.

Instead, the wise decision, Dille said, would have been taking the committee’s recommendations of increasing revenue, both permanently and temporarily.

Committee recommendations

Though the committee has no special power, it began gaining visibility last week, Dille said, noting a letter to the editor that was published in the July 12 issue of the Star Tribune.

The letter was written by fellow committee members James Campbell, a former CEO of Wells Fargo; and Kristine Johnson, president of Affinity Capital Management, an investment firm. The letter listed the suggestions offered.

The first of the recommendations was rejected by both sides, and included a $3.6 billion cut in state spending that would result in a 3 percent budget increase over two years.

“Republicans won’t accept anything with a tax increase, and the governor . . . wants to tax the rich,” Dille said, a day prior to the announcement that a deal had been made between the Democratic governor and the GOP leaders.

“I think we all need to learn to compromise in life . . and get our state back in business,” he added.

With a $5 billion budget shortfall, the committee suggested 70 percent be resolved with budget cuts and the rest with a 30 percent increase in revenue, Dille explained.

Revenue increases suggested included:

• Increasing taxes on tobacco by $1.29, making Minnesota equal to Wisconsin, for a total of $330 million in revenue.

• An inflationary increase on the alcohol tax, the first time since 1987, for at total of $140 million in revenue.

These increases, alone, would have closed the remaining gap of $1.4 billion.

“To try and solve this problem in the long-term, we are suggesting the sales tax be lowered – probably to 4.8 percent, but include other things like clothing and services,” Dille said.

He said the reason is “[The state] depends too much on income tax for our revenue.”

If the state depends less on income tax and more on sales tax, “it will be a more stable source of revenue,” he added.

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