Student Opportunity Gaps

Governor Releases Budget

By January 22, 2013 No Comments

Governor Dayton released  Tuesday his budget plan and as expected he’s proposing a significant expansion of the sales tax and an upper income tax increase in order to generate revenue to balance the budget, invest in education and give homeowners a property tax rebate.

In an attempt to make it cost neutral to the average consumer, he’s proposing to lower the rate to 5.5 percent, down from the current 6.875 percent. Progressivity in the tax system is a major goal of the Governor’s and Revenue Commissioner Myron Frans told an audience that the net effect of the tax plan as measured by the suits index is progressive.
The Governor’s plan would raise the following amounts of revenue:

  • $1.129 billion from 2% increase on the top 2% of earners
  • $2.083 billion from sales tax expansion
  • $370 million from cigarette and tobacco tax increase

The Governor’s plan spends $1.4 billion to give a $500 property tax rebate to each homeowner. That leaves about $2.1 billion. That would be enough to close the $1.1 billion projected deficit for the next biennium and leave $1 billion to pay for investments in a number of state budget areas, including about $640 million in early childhood, K-12 and higher education. You can view the Governor’s proposed change items for K-12 education on pages 9-15. Download the Governor’s district by district recommendations.