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Legislative News and Views - Rep. Steve Drazkowski (R)

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Monday, January 7, 2013

Even our most liberal Minnesotans will have a hard time disputing this statement: thanks to Republican-led leadership over the past two years, Minnesota’s future budget outlook has improved tremendously.

Let’s review the facts.

What was once a projected $6.2 billion budget deficit for Fiscal Years 2012-13 has been turned into a nearly $2.5 billion surplus.

What was once a nearly $1.9 billion budget deficit for Fiscal Years 2014-15 has been trimmed to $1.1 billion.

The state’s two budget reserve accounts, which were drained dry by the 2009-2010 legislature, now contain $1 billion.

The $2 billion amount borrowed from our schools by the Democrat-controlled legislature in 2010 has been nearly cut in half, to $1.1 billion.

And in Fiscal Years 2016-17, Minnesota is actually projected to have a budget surplus again if the next legislature doesn’t mess things up.

How could things get messed up you ask?  Tax increases.

Minnesota’s economy turned around after Republicans forced government to live within its means and began to hold the line on state spending.  Job providers - no longer fearful of seeing their taxes increase - did their part, as state unemployment dropped from 7.5 percent to 5.7 percent.

Now, as a Democrat Governor and a Democrat Legislature prepare to lead this state, income tax hikes will unquestionably be implemented in order to feed the hunger pains of state government programs that had been forced to diet over the past two years.

And that will likely lead to job losses.

For proof, look no further than the dire predictions for Minnesota job losses caused by the full tax increases that would have resulted had Congress not acted at all last week.  The state budget forecast found that job losses in Minnesota would have been as many as 45,000 by the end of 2013 and 70,000 by the end of 2014 thanks to the then-anticipated federal tax hike.

According to an MPR report that interviewed a state economist, “potential federal tax increases would have a more profound effect on Minnesota job losses.”

The recent federal tax increases are already beginning to stifle our positive economic recovery.  Now add to that the plethora of tax increases already being discussed by Democrats and their powerful special interest groups that funded their Election Day win and you can see where the problems compound.

On an individual state basis let’s look at Maryland, where its state government chose to implement a "millionaire's tax." Not long ago, CNBC reported on a study conducted from that state on the economic impacts of hitting only the “millionaires” with income tax hikes, along with 23 other new taxes or fees:

“The study, by the anti-tax group Change Maryland, says that a net 31,000 residents left the state between 2007 and 2010, the tenure of a "millionaire's tax" pushed through by Gov. Martin O'Malley. The tax, which expired in 2010, imposed a rate of 6.25 percent on incomes of more than $1 million a year.

“The Change Maryland study found that the tax cost Maryland $1.7 billion in lost tax revenues. A county-by-county analysis by Change Maryland also found that the state’s wealthiest counties also had some of the largest population outflows.”

Back here in Minnesota, Governor Dayton has spent the last three years championing tax hikes on the “top two percent” of wage earners in Minnesota - many of whom create jobs.  Let’s also not forget that Dayton’s own Department of Revenue found this idea would impact Minnesotans of ALL income levels.  That means the poor and the rich will both carry the burden of Dayton’s tax increase schemes.

If Minnesota wants to return to the days of fiscal irresponsibility and budget deficits, the Democrats will push forward with their tax everything and spend more than we collect agenda, the same way they did when they took over the legislature in 2007 – initiating the back to back biennial budget deficits that we are finally recovering from. 

But if they truly want to prioritize jobs and continue the positive state budget turn around implemented by Republicans over the past two years, they will leave tax rates alone and resist the temptation to increase state government spending.