Terri Bonoff

A Visit from Representative Paulsen

Members of the Minnesota Legislature who represent parts of the Third Congressional District were visited on Tuesday by newly-elected Representative Erik Paulsen. It was a great opportunity to discuss with Representative Paulsen the potential impact on our community of the recently-passed Economic Recovery package. It was nice to visit with a former colleague of the Minnesota Legislature and discuss his new role in the U.S. Congress.

Governor’s Commission Releases Suggestions for Tax Reform
The Governor’s 21st Century Tax Reform Commission has been meeting throughout the summer and fall to “examine how Minnesota can improve and modernize the state’s Tax Code for businesses to encourage economic growth in a fast-changing, highly-competitive and global economy.” The group of business and tax leaders was charged with developing a revenue-neutral proposal for effective tax reform and presenting it to the Governor and Legislature in 2009.

The commission’s report, released last week, focused mainly on reforming business taxes and paying for the change through an extension of state sales taxes. Specific suggestions include repeal the state corporate income tax (The Governor’s budget proposal recommends reducing the tax from 9.8% to 4.8% over six years), simplifying the state property tax system by reducing 55 classes to four classes, extending the sales tax base to a broader range of consumer products and consumer services and increasing the excise tax on cigarettes by as much as $1 additional per pack.

The commission did not recommend raising specific sales and use taxes, although members suggested items such as food and fuels should not be taxed, but clothing and most services should. The group also did not recommend a specific sales tax rate that should be applied.

Senate Takes Steps to Save Taxpayer Money and Address Budget Deficit
In an effort to make government more efficient and save taxpayer money, Senate Majority Leader Larry Pogemiller, DFL - Minneapolis, today announced several initiatives designed to cut the Senate budget.  Effective immediately, the Senate has frozen wages and promotions for employees, and allowed any member of the Senate to voluntarily cut their salary simply by submitting a written request.  In addition, the Senate is imposing a hiring freeze for the remainder of this year.  Some Senators had previously announced their support for a salary reduction across the board and Senator Pogemiller responded with this alternative. I prefer the wage freeze/hiring freeze alternative because several of my colleagues only means of support is their salary and benefits at the legislature. Our salary has not been raised since 1999 and is approximately $31,000. Last year our per diem was raised from $66.00 to $90.00 per day. I did not personally take the increased per diem but appreciated it for those of my colleagues on both sides of the aisle who sacrifice so much to be able to do this job.

These common-sense measures reflect our commitment to share in the budget balancing process. Other reductions the Senate has made include cutting $710,000 after the last legislative session and voluntarily agreeing to an additional cut through unallotment to the budget of $800,000 this December. The Senate also enacted an out-of-state travel ban, made a reduction in postage expenses and implemented a salary savings program by eliminating or holding open 24 positions, including not filling the position of Secretary of the Senate upon his retirement.

Student Achievement
The E-12 Education Budget Division heard from Dr. Angie Eilers, who presented the Growth and Justice Smart Investments proposal for Minnesota students.  The core of the Growth and Justice proposal is to increase student achievement, and increase the rate of students who finish post-secondary education by 50% by the year 2020.

To achieve this, there has to be strategic investments made across the “entire education continuum, addressing the whole child,” according to the Growth and Justice report.  The investments will follow the students: 40% for “Ready to Launch,” geared to children birth to age three, and other education-specific programs for children age four to Grade 3; 25% for “Ready for Higher Learning,” geared to students in grades four through eight and grades nine through 12; 35% for “Ready for Life” for children to transition to post-secondary education.

Please contact my office if you would like copies of the Growth and Justice proposal.

Federal Stimulus Update
The Business, Industry and Jobs Committee this week received an update from the state’s federal stimulus coordinator on how the American Recovery and Reinvestment Act would impact Minnesota. Commissioner Tom Hanson from Minnesota Management and Budget told committee members the state expects to get at least $4 billion from the bill, plus additional tax reductions for residents and additional funding to local governments and school districts.

Commissioner Hanson told lawmakers that of the estimated $4 billion coming to Minnesota in the plan, only between $2.6 billion to $2.8 billion would be available as General Fund spending. This money will come as one-time funding for specific needs; it cannot be used to resolve the state’s ongoing budget shortfall, which could grow to $7 billion by the time the state’s March forecast is released.  This funding is designed to stimulate the economy, and I feel the funding should be used to fulfill its intended purpose and not to balance the budget.

While the money will not help address the state’s current budget deficit, it will provide significant new funding for critical state needs.  The package includes $600 million in transportation infrastructure funding, with $502 million going to highways and bridges and $92 million going to transit. The package also includes $820 million for a State Fiscal Stabilization Fund for education. Some of this money will be allocated through the state, while some will be allocated directly to school districts. Moreover, there is additional money for law enforcement, weatherization projects, unemployment benefits, food stamps and community infrastructure needs.  In total, the package is expected to save or create 66,000 jobs in Minnesota and an estimated 3.5 million jobs nationwide.

Commissioner Hanson said that he expects the Governor will have to significantly modify his previous budget proposal to incorporate funding now available through the stimulus plan. A significant amount of the new federal funding requires the state to continue its existing financial commitments to certain programs, meaning several of the Governor’s proposed budget cuts and shifts will need to be eliminated from his plan. Hanson said that these changes should be reflected in the Governor’s updated budget proposal scheduled to be released in early March.

I hope you can attend the next Town Hall Meeting, which will be held at 7 p.m. on Thursday, February 26th, at the Plymouth City Council Chambers, 3400 Plymouth Blvd.

Have a great weekend!