Gov. Mark Dayton released his budget Tuesday, calling for a cut to higher education funding and a raise in MinnesotaâÄôs income tax rate for the wealthy to make it the highest in the nation.
The budget would cut the stateâÄôs $6.2 billion deficit in half, in part by raising the income tax on the wealthiest 5 percent of Minnesotans.
Republicans said DaytonâÄôs approach was fundamentally off-base with the needs of the state and tax increases are out of the question.
DaytonâÄôs proposal comes days after he vetoed the RepublicansâÄô first aim at tackling the budget. The governor called the plan that included $200 million in higher education spending cuts âÄúpiecemeal.âÄù
Under the governorâÄôs proposal, the University of Minnesota and Minnesota State Colleges and Universities would face $171 million in cuts to their 2012-13 budget âÄìâÄì a 6 percent decrease in expected allotments.
University Chief Financial Officer Richard Pfutzenreuter described DaytonâÄôs budget as âÄúwelcome news.âÄù
âÄúHis funding levels are good for the University,âÄù Pfutzenreuter said.
University President Bob Bruininks echoed that message in a press release.
âÄúThe GovernorâÄôs proposed funding level for the University means we will be able to hold any tuition increase for Minnesota students for the upcoming academic year at a very modest amount necessary to cover inflation,âÄù he said.
Pfutzenreuter said the University will still have to find ways to decrease spending with measures like salary freezes.
Pfutzenreuter and Bruininks said deeper cuts from the Legislature that go beyond the governorâÄôs proposal could mean lost jobs, higher tuition increases and a drop in services at the University.
The State Grant Program, which provides scholarships and grants to 80,000 low- and middle-income citizens annually, will be immune from cuts, Minnesota Higher Education Commissioner Sheila Wright said.
DaytonâÄôs budget also includes cuts to social welfare and health programs. His budget makes it tougher to qualify for state-issued health care benefits.
Dayton said he is delivering on his campaign promise with a budget provision to increase funding for K-12 education.
Dayton emphasized that 95 percent of Minnesotans would not experience a tax increase. His budget also includes a provision that would add a new income tax tier of 10.95 percent for joint filers who earn more than $150,000 and heads of households earning more than $130,000.
Dayton also proposed a temporary surtax on those filing more than $500,000 and a property tax on homes valued at more than $1 million.
Echoing his State of the State speech last week, Dayton personally pleaded to the stateâÄôs richest citizens. He said he wasnâÄôt worried about wealthy business owners relocating.
âÄúI think the wealthiest people in the state are better than that,âÄù Dayton said.
Dayton said his budget sends a message to the rest of the country that tax hikes for the wealthy are necessary to remedy financial crisis.
If other states arenâÄôt willing to raise taxes on the wealthy, âÄúI truly fear for the future of this country,âÄù he said.
But majority leader Sen. Amy Koch, R-Buffalo, said most governors are cutting taxes, not raising them.
âÄúThis is a feeble and pathetic attempt at going back in time to raise taxes and increase spending in order to âĦ balance a budget,âÄù Speaker of the House Kurt Zellers, R-Maple Grove, said. âÄúWe are not going to let Mark Dayton tax your job out of state.âÄù
However, Republicans and Dayton agree Minnesota needs a budget compromise before May 23 to avoid a government shutdown.