Baird Helgeson and Rachel E. Stassen-Berger
Minnesota's rebounding economy has brought the state a $1.08 billion surplus for the remainder of the two year budget cycle, according to a new state economic forecast.
That's good news for state leaders, who had pinned their hopes on the state steadily pulling itself out of the worst financial downturn since the Great Depression.
Gov. Mark Dayton said that he will not make any final decisions until he sees an updated forecast next year but if the state has extra money, he wants to cut new business to business taxes and give the middle class a tax break.
Some of the money is already out the door. The first $246 million must be used to complete repayment of the K-12 school property tax recognition shift. Additionally, $15 million will be transferred to the state airports fund, restoring money originally borrowed in 2008. This forecast completes repayment of all accounting shifts from prior budget solutions. That leaves a bottom line surplus of $825 million, budget officials said.
House Speaker Paul Thissen, asked about Dayton's idea of tax cuts if the surplus holds, says "we have to look at the whole totality" of the choices in front of them.Thissen, DFL-Minneapolis, said the DFL controlled House will consider the tax cut proposals but did not immediately embrace the idea.
"What's going to be better for growing Minnesota's middle class," Thissen said.
Senate Deputy Majority Leader Katie Sieben, DFL-Newport, said "it's too early to say" whether the DFL Senate would support ending the business-to-business taxes as Dayton proposed.
Senate Minority Leader David Hann, R-Eden Prairie, said that if Dayton follows through on the idea of tax cuts he would find a willing partner in the Senate Republicans.
Minnesota Management and Budget Commissioner Jim Schowalter said the forecast highlights the state’s recovery compared to the rest of the nation. On the national level, economists are seeing slower growth than expected and more uncertainty caused by continued political budget and spending showdowns.
Minnesota is “one of the leading states in the country in terms of economic performance,” Schowalter said.
Dayton says he would only follow through with his tax cut proposal if the state has a surplus in the forecast that will come out in February. Budget forecasts tend to shift significantly between those two economic predictions. (See history of those shifts here.)
Minnesota, a state known for clean politics, ranks among the worst for financial disclosure from the judiciary, according to the Center for Public Integrity.
"Minnesota is at the back of the pack for financial disclosure requirements, ranking 45th in the country along with Iowa," the Center found in a nationwide study of disclosure required of supreme court justices. "It has a self-policing system for enforcing the disclosure rules, in which Supreme Court justices would be asked to rule on a complaint about themselves. And the state currently does not require judges to report gifts, investments such as stocks or any financial debts on the one-page form."
The Center gave Minnesota an "F," for its judicial disclosure requirements. Minnesota's low ranking on this score is not unusual -- the state often gets below average grades from good government groups that measure transparency and disclosure required of public officials.
Earlier this year the state's campaign finance agency and some lawmakers pushed for more financial disclosure from lawmakers and other public officials. While that proposal largely fell by the wayside, Minnesota did increase the disclosure required of the judiciary.
From the Center: "Minnesota is toughening its requirements starting next year, meaning its lousy grade will undoubtedly improve. Legislation passed this year will require judges to file an additional form that other state officials already file. The form will ask judges to report investments, locally owned real estate and even involvement in horse racing starting in January 2014."
Republican candidate for governor Scott Honour earned $1.7 million last year and paid about $636,000 in state and federal taxes, according to the federal tax form summary he voluntarily disclosed.
He earned far more than any other gubernatorial candidate and paid far more in taxes. Honour paid more in taxes than any of the other candidates earned, according to tax information others have released.
Honour, an investment banker, also gave far more to charity than any of his rivals. According to the federal documents, he contributed $78,876 to charity.
Honour joins DFL Gov. Mark Dayton as well as Republicans Jeff Johnson and Dave Thompson in voluntarily disclosing his earning, tax payments and charitable deductions. Republican candidate Kurt Zellers released some tax information but not what he gave to charity. Republican Marty Seifert refused to release his tax information.
In addition to his income tax payments, Honour also paid $147,083 in property taxes last year.
Honour has not said how much of his own money he will put into his campaign or if he will personally contribute.
Dayton, an heir to the Dayton's department store fortune, put more than $3 million into his 2010 campaign for governor in 2010 but has said he will not self finance next year's re-election bid.
Image: Scott Honour
Dead men tell no tales. They also collect no pay.
That's a problem for the Minnesota House DFL Caucus' federal campaign arm. Since at least 2003, the federal group has carried $56,025.62 in debt to the Benjamin Group of Madison, Wisconsin, according to Federal Election Commission records.
Rep. Steve Simon, the treasurer of the federal campaign finance group and a DFL House member from Hopkins, says the caucus would be happy to pay it off.
"The company is no more. The owner is no more," Simon said. "Yet the FEC won’t let us take it off the books."
The Benjamin Group is long out of business, Simon says, and, "Mr. Benjamin died." There is no successor group to which the DFL can pay the $56,000, he said.
The solution, derived from legal advice and the FEC? The DFL just has to report the debt cycle after cycle forever and ever.
Republican House Leader Kurt Daudt believes a state presentation on Minnesota's economy prepared for a legislative hearing strayed from factual to political.
"The presentation was designed to look like a re-election campaign advertisement for you," Daudt, R-Crown, said in a letter to DFL Gov. Mark Dayton Monday regarding the state Department of Employment and Economic Development's prepared testimony for a hearing last week.
Asked for a response, Dayton deputy chief of staff Bob Hume completely dismissed the accusation, calling it "ridiculous."
"The Governor would be happy to sit with Representative Daudt, or the entire GOP caucus, and enumerate the games and gimmicks that have been in past budgets," Hume said in a statement. "The bottom line is that Rep. Daudt doesn’t like the fact that the economy is improving because it doesn’t suit his political needs. We have good news to tell, and that’s what we’ve been doing."
The presentation, according to the House Republicans, included slides with titles like "games and gimmicks caused a budget roller coaster," "leveling the playing field for the middle class" and "reforming government through smart investments."
Shortly after the presentation began last week, Republicans objected to its tone.
"I'm not sure it was games and gimmicks," Sen. Dave Senjem, R-Rochester, said during the hearing. "I will tell you there were people on each side of the aisle doing the best job they could to try to make the system work in good faith."
Senate Minority Leader David Hann, R-Eden Prairie, said part of the presentation was "out of line."
House Speaker Paul Thissen, DFL-Minneapolis, said at the time that the committee should set aside the idea of taking credit or not for the state of the economy. To a request that the committee skip the presentation until it was stripped of partisanship, Thissen proposed they move forward with the facts.
Much of the slideshow ended up being set aside during the hearing but it still raised ire.
"The nature of the presentation makes the preparation and use of it an inappropriate use of state resources for campaign purposes," Daudt said in his letter on Monday. He said if the Dayton administration uses the presentation, House Republicans will take "any action necessary" to stop it.
In reaction to Daudt's letter, Thissen spokesman Michael Howard said the original presentation was off focus.
"The request to DEED was to deliver a presentation focused on the strengths and challenges facing Minnesota's economy in the future and their PowerPoint presentation didn't necessarily reflect that focus," Howard said in a statement. "That is why the CF moved away from the PowerPoint presentation and focused more on productive testimony."
See the presentation's slide show, as captured by the House Republicans, below and view the video of the hearing here. The DEED portion of the meeting starts about 1 hour and 12 minutes in.
This post was updated with reaction from Michael Howard, Thissen's spokesman, and Bob Hume, Dayton deputy chief of staff.