Gov. Tim Pawlenty proposed to cut the state sales tax by 1/8th of a percent. This would deepen Minnesota's anticipated deficit of $935 million. But the GOP governor said the state treasury's $77 million loss would be consumers' gain and an answer to pending sales tax hikes approved by the Democratic-controlled Legislature.
Consumers would save 2 cents on a $20 purchase.
"It will soften or mitigate the effects of the DFL's tax increases," he said at a Capitol news conference. "Number two, it will provide a modest stimulus for the economy."
Minnesota's 6.5 percent sales tax would go down to 6.375 on July 1 under the proposal, not counting local sales taxes that vary from community to community. Finance Commissioner Tom Hanson couldn't say exactly how much such a cut would help the state's economy.
"Every little bit helps," he said.
To fill in the budget gap, Pawlenty looked to a combination of cuts, savings and dedicated accounts. Cuts added up to more than $340 million -- including $187 million for health and welfare programs and $54 million for public colleges. Pawlenty said many of the cuts were reductions in planned increases in state aid.
"Nobody will be removed" from government health programs, he said. But a planned expansion of coverage would be canceled, affecting almost 1,000 adults expected to become eligible for the programs and reducing coverage for an average of 20,000 children transitioning between programs each month by mid-2010.
He's also seeking 4 percent reductions to most state agency budgets. He said the departments of Veterans Affairs, Military Affairs, Transportation, Public Safety and Corrections are either exempt from cuts or would see minimal reductions. Most cuts could be done without layoffs, he added.
Pawlenty looks to cut costs in places large and small.
He would eliminate a state security coordinator for the Republican National Convention, saving the state $28,000. He also would trim $653,000 from crime victim service grants. The city of Minneapolis would lose $750,000 in annual payments it uses to cover bills for the Target Center arena.
The Metropolitan Council, which runs Twin Cities buses and light rail, would lose $30 million in the upcoming fiscal year -- wiping out a budget fix it stood to get from the metro area transit tax.
Pawlenty's plan would use $250 million from the state budget reserve and shift another $250 million from a health care fund to cover subsidized care for disadvantaged Minnesotans.
Two big pots of money were declared off-limits as state leaders seek to erase the deficit by the middle of next year: allowances to schools and local governments.
There are a few fee increases attached to the plan. Fish hatcheries would pay more to cover the costs of state inspections. And industrial users of water would be assessed for the environmental review process before they get permits. People who have had their license revoked for controlled substance violations would pay an extra $30 to get it back.
Tax collectors would pull in $102 million more by doing away with an exemption some corporations used to shield income from overseas operations.
But Pawlenty also adds to the budget.
A smattering of veterans assistance programs get a boost. The state's 150th anniversary committee, now strapped for cash, would receive more money so it can stay afloat. Research on a rare form of lung cancer among Iron Range miners would get state dollars.
The budget plan also provides up to $40 million for a special compensation fund for victims of the Interstate 35W bridge collapse, although the governor said the final package could be smaller.
The governor also included a $14 million guarantee for local organizers raising cash for the Republican National Convention in September. It would back them up if they fall short of their fundraising goals.
Pick a part of budget cuts or expenses, react to it. What do you think?
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24 comments:
Lower sales tax is nice, but I'm not sure I agree with most of this... It's good they won't touch the money for education and local governments.. but couldn't they use more of that money for education than on other things?? I'd rather see them cut the money from welfare than health care.. It's hard for some people to get health care, especially young adults right out of high school.
I agree with Gennifer. I think that they should cut more money from welfare because it is harder for younger people to get health care.
I think that the sales tax decrease is nice but I think that we are putting too much money in to the welfare system. Health care and education are more important
I concur with these other fine young students finding good Health care is almost impossible it seems like. I dont want to sound like a jerk i know that many people need well fare but i know a few people who have been under the system for 20 years plus and i really dont think they need to be, i feel that Americans need to step up and not be hypochondriacs, we all have a responsibillity to take what we need and leave what we dont.
-jameson.... is not gay
I for the most part agree with genni, for example i think it should be easier for young people to get health care but at the same time, i think alot of people need the welfare programs we have.
I think we are putting too much money into the welfare system. Education and local government are very important and give people more opportunities than the welfare program does.
I agree with Gennifer. I think they should lower sales tax. More money should be used on education. I also agree with Brandi they should make it easier for younger adults to get heath insurance and heath care.
I agree with all these peoples. Welfare is just a program that gets abused!!It is good for people that need it to get back on their feet but to stay on it for years and not have a job is a waste of our tax payers Mone$!!!!
I agree with Gennifer. More money should be used on eduacation. Its hard for younger people to get welfare.
Welfare Reform was signed into law in 1996 President CLINTON. The Republican controlled Congress drafted the reform and Clinton signed it against the wishes of his party.
The law puts a time limit on welfare- no person can collect welfare for more than 5 years-consecutive or nonconsecutive. The law also gave the welfare money to the states in the form of a block grant to be used and distributed as the state wants.
I like that cash intended for schooling and local governments is being protected. I think education is very important in contributing to society and ultimately the economy. I also like that victims of the bridge collapse are getting compensated for their losses. I think that tapping on some fees for random things like licensces and fish hatcheries is a good way to accumulate funds for the budget.
The light rail is an assent to the Metropolitan community. I've used the light rail numerous times, and i think it's a great way to get around the city and if this budget cut in that area affects the Metropolitan Council like it will. The budget cutting of that would seriously curb the benefits that the program has brought on so far. Bad decision. Cut more of the useless things like the State's 150th anniversary committee. Fundraise the money.
I am glad that Pawlenty is protecting the money for schools and local governments. I am also glad that welfare is being cut. The idea of welfare is a good thing but way to many people abuse it. I think that you need to have a really good reason to why you are taking free money from the government. If you don't have a good reason then get to work. I work hard for my money and seeing some faker getting my tax money free makes me upset.
I don't see a minimal sales tax decrease like this significantly helping business. I realize that overall the amount comes to millions of dollars, but I think that would be spent better off in the areas we are clearly needing: health care, transportation, and education. Plus it's a lot harder for me to calculate tax in my head at 6.375%.
I like how this proposal will give money to the victims of the bridge collapse. I think it is a good idea to charge an extra thirty bucks to the people who have had their license revoked due to substance violations and they are paying to get it back. It also provides a modest stimilus for the economy, which needs a boost to keep unemployment rates down. I agree with Megan when she says that she doesnt like the idea of fakers getting the money that she pays for taxes. I know some people need it, and for good reasons, but there is also too much fraud.
The light rail is important to the cities. There are a lot of people that use it throughout the day and it greatly reduces the congestion of vehicles. If the light rail has problems or breaks down and there isn't enough money to fix it what would the people who rely on it every day do? It doesn't seem like it is the best decision maybe they could cut other things instead of this.
this is a good idea but i dont like that they are going to charge the fish hacthers more money so that thay can spend it on a convention
i dont think he needs to cut sales tax. i think he can leave it right where it is. serioulsy how many people have just two cents laying on their car floor. whoopy two hole cents. who cares seriously if they ever want to get out of dedt they better figuer out something to do. i say tax booze and cigs more sorry arron your precious cigs will cost a lil more but seriously just leave sales tax alone i personlly dont think its a big deal.
I believe that funding toward the Veterans would be nice. they are the ones who have helped make America the way it is today and now they deserve to be helped. i believe that there is tooooo much money in welfare. People should learn to care for themselves. The money should be spent on education, then the money wouldnt be needed in welfare.
I htink they should use the money for other things such as education. the sales tax decrease is a good idea but putting it all into welfare is kinda dumb htey should put more into eduaction and health care
Raising taxes is not the thing to do when the economy is failing the stupid democrats aren't realizing they are very well screwing themselves over thats all i have to say
i also think that education is really important. Lower sales tax would be nice but i dont think i totally agree on this... I i think that it is great that they wont touch the education and local governments.. i also would like to see them cut money from welfare or only give it to people who are really need it i know a person who inipulates the system to get money and this person owns alot it is sad to see them use money like that.. This person should stop being lazy and get a job... It is sad to see people who do that and we are the ones who are suffering... they should keep the health care where it is at... It is really hard for young people to get health care out of hight school to get... hopefully they will make good decisions...
definately cut money for welfare. their are too many people on welfare that dont give a crap and don't work. these are the people that don't need help.
there needs to be more strict rules on welfare. im sick of the government givcing stupid families hat dont need it anymore money. its dumb. i wouldnt cut taxes at the monment saving 2 cents out of 20 dollars isnt atht big of a deal. we need the money for programs that need to be funded.
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