Dayton, GOP blitz state on tax plans

Both sides began stumping with their vision for hauling Minnesota out of its deficit.

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Minnesota Gov. Mark Dayton discusses his budget during a stop in Duluth Wednesday.

Photo: Bob King), Duluth News-Tribune via AP

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In a daylong marathon of appearances across Minnesota Wednesday, Gov. Mark Dayton began the hard work of selling his tax-the-rich plan to a state starved for money and jobs.

At the same time, a planeload of GOP legislative leaders armed with charts and displays set off to counter him every step of the way.

The high-stakes drama unfolded from Moorhead to Mankato, foretelling the massive legislative struggle to come.

At numerous stops, Dayton preached what he takes as an article of faith: that wealthier Minnesotans must step up in Minnesota's time of need.

He also said he expects that stance to be unpopular in some quarters. "There is no way to be popular with a $6 billion deficit," he said while flying between stops.

In a Moorhead coffee shop, he was even more blunt. "If I stand alone, I stand alone."

On their tour, Republicans explained why they believe his plan would doom the state.

"This budget is detached from the reality every other state has recognized," House Speaker Kurt Zellers, R-Maple Grove, said from the tarmac at St. Paul's Holman Field, a gaggle of GOP leaders behind him.

Back at the Capitol, Dayton's challenge was on full display during a House committee hearing where members immediately began dissecting his budget outline.

Republican disapproval seeped into the discussion before committee members even finished reviewing the tax proposal.

"It seems like the governor is running the state more like an island," said Rep. Mark Buesgens, R-Jordan. Soon, he said, "it will be a deserted island."

But at a union rally of 300 workers in the Capitol Rotunda, Tina Smith, Dayton's Chief of staff, defended her boss' tax plans.

"All the governor is asking is that those folks who are doing the best, those folks who are making a lot of money right now -- and good for them, I mean, that's great -- all he's asking is that they pay the same share of their income as everybody else in Minnesota," she said. "We have a better Minnesota if we do this."

Hours of anguish

In an interview as he flew around the state, Dayton said he anguished over the budget details, spending hours poring over the numbers line by line.

The plan would slingshot Minnesota into the nation's top tax rate for the wealthy, something Dayton said he wanted to avoid.

But, he said, an "act of budget desperation" led him to propose a three-year, 3 percent income tax surcharge on people making more than $500,000 a year. "It was the last resort. It was not the first resort," Dayton said.

The seed of that idea, he said, may have sprouted after a December lunch with former Gov. Al Quie, who adopted a similar "blink-on" tax surcharge in the early 1980s. It firmed up one recent night, while Dayton was alone in the governor's residence, boxes still unpacked.

He was determined to keep his promise to increase education funding and still avoid cuts he found intolerable.

One idea floated earlier would have ended a small program that helps people with mental disabilities live in group homes, moving them into institutions.

"I just said: 'No. We are not going to go there,'" Dayton said, recalling his autistic nephew and the "miracle" that has to happen for disabled people to live independently.

Navigating the budgeting process will be Dayton's biggest test yet as a leader and legislative tactician.

He exerted his executive muscle earlier this month -- and chapped Republican leaders -- when he vetoed a GOP proposal to trim $900 million that he said would have triggered higher property taxes.

Engage with legislators

Dayton said he expects to engage fully with legislative leaders and says his commissioners will do the same. Flying on a tiny plane from Mankato to Rochester, he said he has already told his agency heads that if they are not working the Legislature throughout the session, they are "not in the right place."

He said he "had in my mind some things" that might effect an eventual budget compromise, but that the legislative process needed to play out first.

"I can't negotiate when I don't have a position to negotiate against," he said, noting the absence of a fully formed Republican budget proposal.

"That kind of compromise only occurs under time pressure," he said.

Dayton said he would not take odds on whether his stiff income-tax hike on high earners would eventually pass the Legislature. "I'm not going to predict the outcome," he said. "We'll see."

Both sides want a better state

Ultimately, he said, he is looking to restore an ethic of shared sacrifice and pass on a better state to the next generation. That, he said, is a fight worth having.

Republicans say they are just as committed to their vision of a better state -- one that does not include what they consider job-killing tax rates. They plan to release their budget proposal sometime after the Feb. 28 economic forecast.

In a tactical shift from previous years, they want to fast-track the process, balancing the books first and then dealing with policy issues -- all before the May 23 adjournment.

Not all was tense between the two sides.

The night before the fly-around, Dayton and Zellers were together at the Minnesota Outdoor Heritage Alliance banquet in St. Paul.

"I am a little under the weather," announced Dayton, who was fighting a slight case of the flu. "Speaker Zellers said he took one look at my budget and it made him sick, too."

The crowd -- including Zellers -- laughed loudly.

Star Tribune staff writers Mike Kaszuba, Bob Von Sternberg and McKenzie Martin, a University of Minnesota intern on assignment to the Star Tribune, contributed to this report. Rachel E. Stassen-Berger • 651-292-0164 Baird Helgeson • 651-222-1288

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