Another deficit at the Capitol

Tax increases and scrapping tax cuts are viable options, accounting gimmicks are not.

Once again, Minnesota is facing a budget shortfall. Gone are the days of a $6 billion surplus – legislators this session are trying to compensate for a $700 million deficit, which could be as high as $1.4 billion if inflation is factored in. And from the looks of it, most of the quick fixes favored by tax-wary lawmakers have been used up.

It is time for Minnesota to start seriously considering its options – including the possibility of tax increases. A few potential “increases” would not really be tax hikes at all – just not decreasing sales taxes on products currently taxed at more than 6.5 percent. Hikes could impact smokers or large corporations.

Increased taxes on rental cars and alcohol scheduled to be reduced could simply remain as they are, and few would notice a difference – keeping those taxes at current levels could mean almost $100 million per year for the state. A $1-per-pack cigarette tax increase could bring in as much as $250 million per year. Rolling back a tax cut for high-income Minnesotans by a few tenths of a percent and closing corporate tax loopholes are other viable options.

What the Legislature should not do is resort to the only quick fixes left: accounting gimmicks designed to “save money” – only on paper. The gimmicks put off the accounting of state expenses, allowing the Legislature and public to delude themselves into thinking they’ve solved a problem. One such tactic involves buying back a $118 million accounting shift from last year’s K-12 education budget woes.

These tactics only prolong the budget problem and saddle a future Legislature with the consequences – this Legislature needs to buck up and solve the problem in a sensible way.

Gov. Tim Pawlenty blames a large part of the deficit on Minnesota’s ever-increasing health-care spending. The state must avoid health-care cuts; being one of the healthiest states in the country is no excuse to provide less-than-stellar health care.

While Pawlenty and the Legislature should explore options to decrease the cost of health care at its fundamental level, any cuts that affect the quality of health care Minnesotans receive should not be used as a means to balance the budget.

All Minnesotans feel the effects of a budget deficit, especially University students. We feel the shortfalls every time our tuition rises. Minnesotans need a balanced budget, and to do that, they might need to grin and bear a few more taxes.