5.4. SR 04-14-2003 - Laserfiche WebLink

Home Browse Search

P) ll ' Number 14 Aped 9, 20O3 House Republicans and Senate Democrats' release budget plans Gary Carlson Nearly six weeks after the governor unveiled his budget recommendations to the Legislature and the public, the House and Senate released outlines of the separate directions they would like to steer the state budget. On Monday, the Senate Democrats added their proposal to balance the state budget to the mix at the Capitol. Late last week, the House Republicans released their committee targets. Both bodies now appear ready to begin the final process of crafting a biennial budget for the state. Both the Senate and the House appear intent on moderating the $435 million in state aid cuts included in the governor's original biennial budget proposal. House budget plan The House plan includes an estimated $91 million in additional resources for city and county aid programs. The proposal does not currently specify how the additional resources will be allocated. The House proposal also includes $50 million for higher educa- tion programs, and $70 million for nursing homes and other programs for the elderly. The final decision on the structure of the restoration of the aid cuts will be made by the House Tax Committee. Consistent with the governor, the House plan does not involve any new taxes. Instead, it relies on revenue from a proposed casino at the Canterbury Downs racetrack in Shakopee to cushion the budget cuts. The plan also addresses the state deficit by proposing a two-year freeze in spending for state employee wages and health insurance, a reduction in the state vehicle fleet, and reductions in "low-priority" programs such as the income tax political check-off. The plan would also establish an "Internet auction" procedure where vendors would compete and bid online to provide goods and services to the state. Although the proposal only applies this bidding procedure to the state, many of our city officials suggested a similar process for city purchases. Senate budget plan The Senate plan includes a combina- tion of tax increases, spending cuts, and payment shifts to balance the state's two-year projected $4.2 billion shortfall. For the biennium, state revenues would be increased by approximately $1.3 billion, spending would be cut by $1.2 billion, and expenditure timing shifts would provide an additional $160 million in one-time cost savings. For cities, the Senate plan includes a restoration of a portion of the market value homestead credit and local government aid (LGA) cuts proposed by the governor. The plan does not provide many specifics, but the total targeted relief for cities and counties is currently pegged at $200 million. The tax increases in the Senate plan include a new top income tax bracket of 9.4 percent, which would be applied to couples filing joint returns with incomes over $250,000 and to individual filers with incomes over $135,000. This ne~v income tax bracket would generate an additional $421 million for the biennium. The Senate plan would also raise the cigarette tax from the current $0.48 per pack by $1 per pack, which would generate an estimated $571 million for the biennium. The Senate would also close several current corporate tax deductions to raise an estimated $160 million in additional state revenues. According to Sen. Rest (DFL-New Hope), the Senate Tax Committee would be charged with reviewing corporate tax deductions. Although Rest identified two possible tax code changes, she indicated the committee would study the tax code and make recommenda- tions to the full Senate. Agreement by May 197 Work on the state budget will begin in earnest within the next few weeks. The major question remaining is whether the House, Senate, and the governor will be able to reach any agreement on a state budget before the scheduled end of the legislative session on May 19. ~-