Matt Entenza, Minnesota 2020 board member, said that adjusted state spending is actually 18 percent lower than it was a decade ago. (By Glen Stubbe, Star Tribune Staff Photographer)

A St. Paul public policy group is taking on claims by business groups that Minnesota's government spending and proposed tax hikes are excessive.

Minnesota 2020 issued a report Monday saying that adjusted state government spending is down more than 18 percent from a decade ago. The groups is arguing that Gov. Mark Dayton's proposed tax hikes still keep state spending below historical spending levels.

"Despite the fact that conservative pundits say that spending is out of control, what they ignore are the facts," said Matt Entenza, a founder and board member of Minnesota 2020.

The Minnesota 2020 report, called Crumbling Fiscal Foundation, says that adjusted state spending is actually down $5.2 billion.

The group says per-capita state government spending is now at historic lows, at less than $3,100 per person.

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Lower state government spending has resulted in higher class sizes, inadequate transit and ultimately stagnant wages for all Minnesotans, Entenza said.

He pressed legislators to approve a crucial component of Dayton's budget plan, an income tax hike on high earners.

"The reality is that those who are fortunate enough to be extremely high income at a state level are paying historically low taxes," Entenza said. "Minnesotans deserve a better deal and the state deserves a better deal."

Minnesota 2020s report says that Minnesota's economy is strongest when the state makes targeted investment in education and roads and bridges.

"Over the last 10 years, that contract was broken," said Entenza, noting previous GOP leadership in the governor's office and in the Legislature. "Instead, using gimmicks and cuts, Minnesota lost its economic competitiveness."

A week ago, a new Republican business group unveiled a $600,000 advertising campaign against the governor's budget, saying Dayton's proposal will increase spending at a faster rate than the economy is growing.

"Increasing state spending by over $2 billion dollars when our economy is struggling to improve isn't fair to hardworking Minnesota taxpayers who will have to foot the bill," said Charlie Weaver, executive director of the Minnesota Business Partnership.

Jeff Van Wychen, Minnesota 2020's director of state tax policy, said the business groups' numbers are "factually incorrect."

Minnesota 2020 leaders plan to present the report at cities around the state as legislators debate the budget in the next few weeks.