Student Opportunity Gaps

Paying for Budget Priorities

By April 21, 2013 No Comments

By Sam Walseth, MREA Chief Lobbyist

House Tax committee members last week unveiled their plan to pay for their spending priorities. The bill raises income taxes on families earning more than $400,000 and singles earning more than $220,000. The new fourth tier income tax rate would go from 7.85% to 8.49%.

Taxes on tobacco products would increase significantly including a new $1.60/pack of cigarettes. Alcohol taxes would increase as well including seven cents on each beer sold.

The revenue generated is used to close a projected $627 million deficit in the next biennium and pays for a $550 million E-12 spending target in the House. Without this new revenue, it would be next to impossible to see a “2&2” increase on the formula, all day kindergarten funding and an enhanced equity program for low levy districts.

Fewer Resources Expected from Senate

The Senate will unveil its tax plan on Tuesday. Rumors are they will be more aggressive in their fourth tier income tax increase. The Senate Tax Reform committee forwarded a proposal that would tax clothing and some services as a way to generate revenue to pay for their property tax relief agenda and a more modest increase in funding for schools.

The Senate focuses fewer resources on the classroom with “1&0” on the formula with an expansion of all day K in the second year. The Senate reduces school levies by $150 million and reinstates a general education levy that raises $20 million next year and grows to $30 million three years from now.