Democratic State Senator LeRoy Stumpf visited the Crookston Library on Saturday, Feb/ 9 to provide an overview of Gov. Mark Dayton’s proposed budget. During his 45 minute speech attended by several community members, he commented on hot topics, including: health insurance reform, property taxes, education and ways to decrease Minnesota’s budget deficit.
Stumpf has served in the Minnesota legislature since 1980 under governors Rudy Perpich, Al Quie, Arne Carlson, Jesse Ventura, Tim Pawlenty and currently under Mark Dayton. As he began to speak about Governor Dayton’s proposed budget and recent State of the State address, Stumpf said, “I don’t think that there have been any governors, except Perpich, that have the reception (in the legislature) that Governor Dayton does. I was sitting in the chamber when he came in (to give the State of the State Address) and it was amazing – the applause. It wasn’t just coming from the democratic side. I think this is a good indicator that maybe he’s on target as to what direction people want our state to go in. You can disagree with him on individual issues, but the sense that I got was people are pretty supportive of the direction he would like to see the state go.”
According to Stumpf, one of the most eminent struggles facing Minnesota is insurance reform. Affordable health care legislation, also known as Obama Care, has many aspects to it. In the forefront are insurance care for individuals with pre-existing conditions and insurance for children until the age of 26 under parental health plans. However, there are a number of provisions within this legislation. One of the items that most impressed Stumpf was for every dollar Minnesota invests into this system, the federal government will put in seven dollars.
The State of Minnesota currently funds many programs such as Medical Assistance, Medicaid and MinnesotaCare, covering hundreds of thousands of Minnesota residents. When these programs were put in place, it was the hope of government officials that all Minnesotans, regardless of economic status, would have access to insurance coverage. Unfortunately, these programs failed to completely cover all facets of the population.
The Affordable Care Act will allow many current Minnesota health insurance recipients to move to coverage under the act. This will take an approximately $1.8 million burden off of the state. Although the Affordable Care Act will not be fully functional until 2014, residents will be able to begin enrollment in October of this year. Many plan options will be available.
According to Stumpf, the state anticipates the Affordable Care Act will provide “clarity in healthcare. It will be possible to see what costs what and where your charges have incurred. Costs will actually go down. Hospitals will no longer get away with charging 16 dollars for an aspirin.”
Page 2 of 3 - Emotions run high around the Affordable Care Act. Some states are very opposed to it. Governor Dayton and Senator Stumpf believe it is a positive for the state. “Minnesota has always been a leader in terms of good ideas, said Stumpf. What comes out of Minnesota could be a model for other states.”
The Minnesota budget deficit
Nine out of the past 11 years, Minnesota has faced a budget deficit. This remains true for 2014-2015 budget at an estimated $1.1 billion shortfall. Cuts have to be made to reach the governor’s proposed need of $37.892 billion, which is 2.8 percent higher than the 2012-2013 budget. The proposed budget is higher because inflation has not been figured in as it was in previous years.
Governor Dayton anticipates cuts of $1.115 billion will take place internally within state departments. The governor also plans to raise $3.6 billion dollars in new revenue through a variety of avenues.
The state will raise $1.129 billion dollars via a fourth tier income tax on the top two percent of earners with a rate of 9.85 percent. If the governor’s proposed budget passes this will impact couples who file taxes as married-joint with a taxable income of $250,000 or more. Individuals who file as head of household will be subject to the tax increase if they earn $200,000 or more in taxable income. Single filers earning $150,000 or more of taxable income will be impacted. Finally, six percent of small business would also pay higher taxes under the 9.85 percent rate.
According to the 2011 Tax Incidence Study, the top two percent of earners pay up to two percent less of their income in state and local taxes than the remainder of Minnesotans. According to the handout of Governor Dayton’s proposed budget provided to attendees of Stumpf’s forum, the tax increase will “begin to restore fairness to the system.”
An additional $2.083 billion will potentially be raised by expanding sales tax to most services, clothing items over $100 and items purchased online. The upside to the tax expansion is a proposal to lower state sales tax from 6.87 percent to 5.5 percent, effective January 01, 2014. With 67 percent of consumer sales falling into a non-taxable category during 2010, the governor believes it is possible to earn additional revenue from taxes, even if the state sales tax rate decreases.
In Dayton’s proposed budget, corporate taxes would fall from 9.8 percent to 8.4 percent. However, four million dollars could be raised by eliminating corporate loopholes, even with a lower overall tax rate.
A potential $370 million could be raised by significantly raising the taxes on cigarettes and other tobacco products.
Small property tax relief proposed
Page 3 of 3 - Due to the steady increase of property taxes in the last several years, the governor is proposing a $500 per homeowner reduction in property taxes, across the board. “For us in rural areas, that translates into a different way to look at it than in the metro area because homes and land down there are so much more expensive than it is here.” Stumpf said. He continued, “I think the governor was kind of zeroing in on greater Minnesota when he mentioned it. It is an interesting idea. I don’t know if it will materialize or not. We’ll wait and see.”
Stumpf reported that, “In the K-12 system, the governor wants to implement all-day kindergarten statewide.” This financial increase goes along with additional monies for per student costs, special education, early learning and bullying prevention.
In higher education, there is a plan for a sizeable investment in financial aid “to help students that feel they can’t afford to go to school”, commented Stumpf. In addition, $160 million is set to be divided equally between the U of M campuses and the MNSCU system.
Governor Dayton’s proposed budget also allows for additional monies for job and economic growth, investment in health and human services and funds for public safety and court efficiency.
Following his presentation, Stumpf opened the floor for questions, commenting on topics ranging from gun control to buying tobacco products out of state and bringing them into Minnesota. Before heading to the University of Minnesota, Crookston to meet with Chancellor Fred Wood regarding a new gym and recreation complex, Stumpf took the time to individually thank attendees for attending and pose for photo opportunities. His 2012 running mate, Mark DeMers was also on hand to discuss concerns with community members.