Minn. Deficit Shrinks; Dayton Drops Income Surtax

ST. PAUL, Minn. (AP) — Minnesota’s projected budget deficit shrank by a fifth to $5 billion on Monday, prompting Gov. Mark Dayton to withdraw his proposal for a 3 percent temporary surtax on top incomes and reduce proposed cuts to nursing homes and other health and welfare programs.

The forecast from Minnesota Management and Budget officials showed the shortfall for the coming two-year budget was down from an earlier projection of $6.2 billion. State economist Tom Stinson attributed the improvement to federal action that helped the economy, including a payroll tax cut and delay in a capital gains tax hike.

Dayton immediately dropped his call for a 3-year surtax on incomes starting at $500,000, which would have raised $918 million in the upcoming budget period. The Democratic governor said he was fulfilling a promise to avoid imposing the nation’s highest tax rate. Still in play, though, is his call for a new permanent top income tax bracket of 10.95 percent, just a hair under Hawaii’s top-in-the-nation rate of 11 percent.

The governor was due to hold a news conference later Monday.

“I characterize this as a modest and certainly helpful improvement in our revenue outlook. There are still quite a few budget challenges ahead,” Management and Budget Commissioner Jim Schowalter said at a news conference.

Dayton and lawmakers still face a mammoth budget problem. By the latest numbers, the deficit is nearly 13 percent of the state’s general fund. The governor and the GOP-controlled Legislature are split on how to handle the shortfall, with Dayton pushing for new high-end income and property taxes and Republican leaders vowing to erase the deficit through spending cuts.

Republicans are expected to outline their budget plan by the end of March. They adamantly oppose Dayton’s push to raise taxes.

The two sides even disagree on the accuracy of the deficit number itself, with Republicans saying it’s overstated because it includes automatic increases in programs such as public health care, which the Legislature could tinker with. Democrats say the gap is bigger than it appears because about $1 billion in inflation isn’t counted in the official number.

With federal stimulus dollars drying up, Minnesota government has already tapped its savings, delayed almost $2 billion worth of payments to schools and made other accounting shifts to stay ahead of the financial hole. Policymakers have few moves left, other than raising taxes or cutting spending.

Twice-yearly forecasts are used to set the budget, giving the most accurate projection of tax collections and spending patterns.

Dayton also asked Republican legislative leaders to quickly reverse a 2010 law delaying business tax refunds, saying the state no longer needs the move to stay solvent. Schowalter said Minnesota is no longer in danger of running out of cash before the current fiscal year ends in June.

(© Copyright 2011 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

  • helper

    Well what do you know… Leave it to Dayton’s watch to actually shrink the budget!
    And its only been a few months…

    • NEEDs Help with brain activity

      WOW! Helper..are you THAT dense? He didn’t shrink it at ALL!!!! It was recalculated!
      See…that’s why we need Repub’s in office…you Lefties have NO CLUE on how to use rational thinking to figure anything out….

      • Iconoclast

        Just looking at a graphic that ranks states by highest average IQ score. 7 out of the top ten went Democratic in the 2004 election (Including Minnesota). Sorry to correct your wishful thinking with facts dude.

  • Mark Schuster

    Did you even read the article as to why the lower deficit is forecast….short term due to extending the tax cuts. Why are you crediting Dayton for this? I’m not being facetious either…just trying to understand your comment.

    • Another Bob

      I don’t see,”short term due to extending the tax cuts”, anywhere in the article.

      • Mark

        It was in an earlier edition of the article.

    • albert

      Dear Mark Schuster,

      Whomever is in charge gets the credit and/or the blame. It’s all luck and timing.

      Score one for Dayton.

  • LARS gopher

    At Least he is informing the public sector…quite unlike T-PAW wqhen he was in.Mr. Quiet unless it was bad news

  • Joel M

    I sure as heck didn’t vote for Dayton but I give him some credit for transparency and what I think is honesty. Imagine that word – honesty! I never thought I would attach that to a politician again but he seems willing to do so even tho some will kick his teeth out for doing do.
    If it due to a shift then that is what it is due to. Many would take the credit as being something THEY did.
    We been hearing that for years and the ship was taking on water the whole time. T-Paw was pretty slick at the talk but not the walk. lol

  • tiredandretired

    Dayton for President in 2016!

    • SVENgopher

      a possibility !!!!!!!!!!!!!!!!!!!!!!!!!!

    • Too funny!

      SURE! That will ENSURE we have a repub as prez!

  • Clint Make My Day

    I dunno tired. lol
    Then again – if it was a choice between T-Paw or Bachmann and Dayton — he’d get my vote.

  • JB

    Wow, I love all the credit Dayton is getting here. The man was not in the senate last year, so he was not responsible for one bill passed that affects our current budget. He has not passed one bill nor been thruogh one budget cycle, heck he has only been in office for 2 months, yet he appears to be the savior for many. Obviously many of the folks that post here have very low standards.

    • Tom L

      but if t-pee were still in office, kudos goes to him though, right?

      like the earlier post said, its all about luck and timing in politics. t-pee had 8 yrs to do something relevent. Dayton needed a few months.

      Point goes to Dayton and the Democratic party.

      • albert

        And Obama “owns” the huge increase in the deficit due to Bush’s tax cut, Bush’s recession, Bush’s lack of oversight of the banks, Bush’s record high unemployment – just because his tukus is in the Oval Office at the moment.

        Timing, timing, timing.

      • Heidi

        Thats right!! It is all about luck and timing?? Seriously give me a break. The credit should most certainly go to whomever started it. So If you come up with a great plan in your job and for some reason get moved to another position and someone else comes in right after and essentially just isd there to receive the final product and THEY get all the credit for it…Oh know that is okay!! Its never okay to take away credit from someone. You could say Gov Pawlenty started and got things going during his time in office and Gov Dayton followed through with the finish. Sheesh you people are so one-sided and hyprocritical. Give people their due no matter what it is.

      • JB

        Tom, The deficit credit obviously does go to the Democrats as they over rode a “T-Pee” veto and created this mess, you are absolutely right. I am no fan of former Governor Pawlenty, but he did at leat try not to spend more than we had coming in. Since you want to give points, then I count this as minus one for the democrats as they created this mess with their veto over-ride.

  • Remeber

    Good news for everyone for sure. This was announced/projected back in October of 2010. How could Dayton have anything to do with it? If Pawlenty would not have cut things with line item veto, the previous Demo legislature would have left us a much bigger hole. Again, this is from revenue increases, not spending decreases. The remaining 5B should be cut from spending.

    • Mark calls you out

      Hmmmm. Other than in jest I don’t see much stated calling Dayton a God. I do see comments that like the transparency. Giving him all this credit??? Show me.
      That stated – how come you dudes hate any DFL er so much. I’m independent. If credit is owed – I give. If not – none granted. If a lashing is due – it comes.
      So many of you just have to bitch about something and frankly could not see anything but what you have as pre-concieved opinion. Both party aisle guilty. No reason to question dysfunction in government when it is so rampant in the public.
      You never yet have a viable solution byt loaded with whiney complaints. Pull up your pants and grow up

      • Ignorance must be bliss

        HERE HERE MARK!!!
        Well said. The only thing I would add is that you cannot be an independent as all the posts on WCCO claim that there are only republicans and liberals. Those are the only 2 options that all these people seem to give. Maybe they are just not smart enough to realize that there are more than 2 parties because they are too busy complaining to open their eyes like you state.

  • Said it for 71 years

    and never forget everything the Sain Ronald Regan did followed that chap named James Carter. So Jimmy gets all the Regan kuddos I guess ;-)

  • Andy

    Dayton is clearly a financial genius. His experience as the grandson of a department store empire, coupled with his time as a civil rights activist, hockey player and failed senator makes him this state’s first choice to balance the budget, create jobs, and push Minnesota to Number 1.

    • why you should pay no heed

      To funny Andy, to funny.
      Maybe some of your insanity may hold some good. If he has any means to surround himself with anyone who created the Dayton/Target monster maybe he can do something going forward.
      Anything is better than pizzing and moaning and doing nothing other than play the blame game. Which is about all I see coming forth from the GOP, depsite holding the control. They can’t even avoid hating one another . lol

      • Not in a Dayton's

        You are clueless……Dayton is just a trust fund baby……if anyting….he LOST the “Dayton” empire! When was the LAST TIME YOU were at a “Dayton’s” (Not a Target!) OH! That’s right…they sold to Macy’s! Why? I’m sure you KNOW why!

  • Tom

    We went from 6.2 billion down too 5 billion. It’s nothing too get excited over but it is good news none the less. But at least he has made some adjustments too the budget after this new budget report came out. And yes the only news that Pawlenty ever reported was the bad news as that was done too sell his agenda. It will be interesting too see what adjustments that Republicans will offer? I would venture too guess none which wouldn’t be a big surprise. The Republincans want the pat on the back after this is all done and you don’t get that if you have too make tough decisions that aren’t popular.

  • BS

    sounds like a bunch of brown noses and butt kisses.

  • Tea get's it RIGHT!

    OK…answer me this…..Wasn’t this budget figured out when T-PAW was in office? What happened was it was REVIEWED and once the numbers were calculated it was found out that the initial budget numbers were OFF! SO….Dayton has NOTHING to do with 1.5 B being cut…..the ONLY thing we SHOULD be giving him credit for is BACKING down on INCREASING taxes on just TWO sectors! OK….I agree….THANKS MARK…though a SMALL token….it is showing us he is at least willing to back down where he can! I’ll give you that!
    BUT, to give Dayton credit for the “1.5 B” is VERY WRONG!!!!!
    You lefty’s crack me up…….Here are some straws….keep grasping @ them!

    • Michele


      You are absolutely right, Dayton didn’t anything, it was re-calculated, It’s no shock to me anymore to see the lame comments here from both sides. When will people get it through their heads that this budget mess was created by all and we all have to take part to fix it.


      • Tom


        From what I am hearing Dayton is not taking credit for anything. And was this budget mess created by everybody yes and should we all sacrafice too fix the problem yes. But that is not what the Republicans are doing they are trying too balance the budget on backs of the middle class so that they can protect the rich because they believe that some day the rich will bring the jobs back.

    • albert

      And if Pawper were new to the office, you would be the first to credit it to him.

      • PHAT Albert?

        Sorry Albert….I will be the 1st one to say he (T-Paw) left Dayton some issued to deal with….(considering who was in office while T-Paw was Gov…..it’s tough to fault JUST T-Paw) So I guess you’re wrong…..And I am the 1st one who will shake Dayton’s hand, as I stated he at least acknowledged the new numbers and backed down on the tax issues…but you can NOT CREDIT Dayton for this 1.5B DECREASE! That’s ALL I am saying!

    • people have short memories

      Hey Tea bagger, notice how your boy supposedly balanced his budget?? Not paying the local schools and cities over 2billion owed them since last year. Read the article. Ya, its easy to balance a budget when you don’t pay your bills. Now Dayton has to try to figure out this mess. I don’t care who our gov. is, we (Minnesotans) are stuck with a monster amount of debt that we need to climb out of. I will take 1 billion any way I can get it.

  • Tea and peas

    I bow to thee ….. GOPeeeeeee ……
    ya’ll get it right every time.

  • LLP

    We still have the best politicians that MONEY CAN BUY. If you think any of them care about YOU you’re insane they only care about BIG BUSINESS and the BANKS which cares nothing about the little people.

  • Kyle's not believing this :-)

    Holy Crappola – I have to be reading the wrong stuff. Where is it stated that Dayton is taking credit for the $1.2B drop?
    Huh – where?
    Either hate-love-care not about the man. I read ZERO that states he is taking credit for this.
    SHOW ME THE WORDS folks, show me the words.

    • Tea is Making a point...

      Hey Kyle….it’s not Dayton…..it’s people like “helper” (see the 1st spot) thinking he is the one to praise for this “mistake”. As stated….I am giving Daton props for at least agreeing to not persue the tax HIKE on two areas….

  • Tea

    You know what they say…..Politics is just SHOW business for UGLY people!

  • Jon

    You righties blame everything that goes wrong on the dems. When something positive happens you want to take the credit. I suppose you’ll blame Dayton for the 5 billion dollar deficit, just like Obama gets blamed for Bushes 1.3 trillion deficit.Conservitives spend out of their rear-end,then get kicked out and then blame dems.Bushes tax cuts and two wars were never paid for!

    • Tea has a Homework assignment for you!

      LOL Jon….you do NOT have a clue do you…..OK..here is a HOMEWORK assignment for you…
      #1- Look at what the national debt was when Bush took office for his 2nd term….
      #2- Look at what it was when Bush LEFT office
      #3- Look at it today!
      YOU TELL ME who is adding to the national debt!

      • Tom

        Tee has a homework assignment for you.

        Was there a budget surplus or budget deficit when Bush took office in 2000? He was given a budget surplus so who blew that budget surplus? It was the Republicans! And If I also remember right that budget deficit grew when the Republicans were in charge of the house, senate, and the white house. So maybe you should do your math before you speak!

    • Tom


      You are right!

  • Victim Du Jour

    For over 200 years the United States was not in debt.

  • Bill Bromeland

    Pop the champagne, we’re 5 billion in the hole! Funny that tax cuts helped the budget… “including a payroll tax cut and delay in a capital gains tax hike.”

  • Jon

    Hey tea, what did Bush start with in his first term?600 billion surplus! Anyone knows you have to spend money to get the bus repaired after going off a Cliff. The deficit will be lowered just like Clinton did!

    • Victim Du Jour

      So the World Trade Center Attacks, and Hurricane Katrina were Free?

      Reagan and Bush Sr reduced oil consumption, and created the largest oil reserve in human history.

      We were driving smaller cars up until Clinton flooded the streets with 300,000 more SUV’s a year (handing out clean air act waivers too)

      Oil was the reason we had a budget surplus in the 90’s.

  • Happy I am not but

    we got a bill way past due. we all benefited from all around us.
    tabs past due and we gotta pay. suck it up and be a man and quit skirting your obligation (and your parents and grandparents and great garndparents and ) since the older folks who bestowed their share forward also are gone now and we get to deal with the bills of theirs too.
    Hell – this is a great country. We think the taxes to high I guess we can sell and move. To where you ask? helluva good question. ;-)

  • Tea for a DEM?

    Jon and Tom….OH trust me….I will NOT stand behing Bush as a “non-spending repub” but my point is the RATE at which Obam is placing us in the hole…..It’s like saying….”Oh come on…you were shot in the leg with a 22, but I was shot in the head with a 40 cal”…..they are BOTH gun shots….but it’s the rate of BLEEDING that will KILL YOU. I will back you guys 100%..I would take Clinton ANY DAY over Obam!!!!! (I MAY even admit in taking Clinton OVER BUSH!!!…..just saying….Reagan was the BEST!!!)

    • Tom

      Tea for a Dem?

      Reagan was the best? I really doubt it! Did he cut taxes yes he did he also raised taxes about 10 times not because he wanted to but because he knew he had to. That is something that the Republicans of today will never do. And it was also Reagan who claimed that budget deficits don’t matter. And please don’t use the excuse that his deficits weren’t as big as they are today, a deficit is a deficit.

  • Victim Du Jour

    Clinton drained the fuel dumps.

  • Stick of the Blame Game

    So far there are only a couple of post that “get it!”

    Compromise and yes hurtfull taxes for all of us are coming Rich, Middle, Poor. It is not up to the Rich to create jobs, we need Mfg jobs back across the whole country instead of shipping them to Mexico and over sea’s. Why can’t clothing be made in the USA anymore, steel, planes, motors, computers, customer service these are things that our country needs to do here, unless we get the Mfg jobs back this nightmare of budget crisis for all of the United States is not going to go away.

    • Have you been watching the news?

      Sick…..UNIONS!!!! We can make ALL of that stuff here….but the cost of building/making it is WAY too high! You want a $200 shirt? As MOST manufacturing jobs are UNION based! I agree…unions WERE a VERY important part of our history when they made people work 20 hours a day…..in the dark…..but things have changed today……

      • Why Not

        Not all Unions are to blame, some are needed others not so much anymore.

        But who will be the watch dogs to regulate industries, to make sure we are not creating “sweat shops” here? Maybe the Federal Government needs to spend the money and open the Steel Mills, Taconite Mines, Garment shops, then they can have the tax benefits for creating the jobs. There are enough vacant homes to tear down and recycle the material, so Construction and More Recycling are created there, Rivers, Parks & Lakes all need to be cleaned up; People want to be paid to do this so let the Federal Government create a jobs program to do this and they will pay workers. I’m sure there are enough Managers, Engineers, and others in the Government to become bosses of these industries.

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