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Senate DFL proposes cuts, $2 billion tax hike

ST. PAUL - Minnesota Senate Democrats want to chop state budgets 7 percent across the board and raise taxes $2 billion, mostly on the state's richest residents.

Senate leaders announced their budget-balancing plans this afternoon, cutting every segment for a total of $2.4 billion. They include a $1 billion education cut, compared to Republican Gov. Tim Pawlenty's proposal to spare public school education from budget cuts needed to fill a deficit.

While the Democratic leaders say they would take roughly equal amounts of new taxes and program cuts to balance the budget, they have yet to figure out where to put about $2 billion in federal economic stimulus money. Given that, Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, said education cuts may end up being moderated once details of how the state can spend the federal money are unraveled.

The state's $33 billion two-year budget would be $6.4 billion short without cuts, new taxes and federal money. Pawlenty figures the federal money into his budget and calls the deficit $4.6 billion.

After weeks of speculation in the Capitol, Senate leaders revealed their target for tax increases will be top-income Minnesotans.

Senate Tax Chairman Tom Bakk, DFL-Cook, said that is where he plans to start as he crafts a tax bill. He said whatever comes from new taxes, "a lion's share" will be assessed to the rich.

Bakk said he would like to freeze the amount of money the state gives local governments at a time when most policymakers are calling for a cut in local government aid.

Republican senators said they were not consulted about the proposal. They called tax increases job killers.

Senate committees are to begin taking up the budget plan in the coming days, putting details on the outline released today.

Don Davis
Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.