Friday, December 7, 2007

What to expect from 2008 Minnesota Legislative Session? Haggling and Posturing

What should we be expecting from the 2008 Minnesota legislative session? A lot of haggling and posturing and not a lot of substance. Why? Because there isn't much money to go around. The state is projecting a $373 million budget deficit by the summer of 2009. That's about 1% of the state's general fund budget. It shouldn't be too hard to scale back a bit especially for a 1% reduction over a year and a half time period. Especially in light of the $1.95 billion deficit the state faced in November of 2001. Even with that huge deficit there were no tax increases.

DFLers in the legislature will demand tax increases to cover not only the deficit but provide for other spending projects. Ultimately, Governor Pawlenty holds all the cards, along with the Republican minority in the state House who will be needed to uphold any vetoes of tax increases. If they hold firm there will be no tax increases and therefore no big health care and education initiatives.

The lack of money will act as a bottleneck on all the health care, education and other social spending programs proposed for individual legislators. If there's no money then they won't have a lot to do.

DFL'ers want to close a "corporate tax loophole" for foreign corporations which would bring in about $244 million. Pawlenty said he's supports doing that if the new revenues are used for tax cuts which means there is no net increase in state taxes.

As a result, the 2008 legislative session will see a lot of haggling and posturing but not a lot else. That's not a bad thing if your chief concern is the possibility of state shrinking the family budget by raising taxes.

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