Bakk joins race for governor
Published 10:44 am Thursday, June 25, 2009
State Sen. Tom Bakk said Gov. Tim Pawlenty’s proposed budget unallotments could leave the state with a $6 billion budget deficit in the next biennium.
Bakk, DFL-Cook, is one of the few outstate candidates for Minnesota governor on the Democratic side of the aisle.
Bakk chairs the Senate Taxes Committee, and he played a key role in the Senate budget plan that the Legislature and Gov. Tim Pawlenty couldn’t agree on. Bakk discussed Pawlenty’s unallotments and his candidacy for governor during stops in Austin and Albert Lea Wednesday.
Email newsletter signup
The Senate’s budget proposal would have been balanced in each of the next two biennium’s, Bakk said, and he said that was the fiscally responsible thing to do.
According to Bakk, preliminary statistics show Pawlenty’s budget could lead to a $6 billion budget deficit by the time the next governor takes over in the 2012-2013 biennium.
“I don’t think that the next governor, whoever that is, should have to wake up that Wednesday morning after the election and immediately have to start putting a budget together based on a $6 billion hole,” Bakk said.
The preliminary deficit after the proposed unallotments for the 2010-2011 biennium will be about $2.7 million, Bakk said. The projected deficit for the 2012-2013 budget was $3.1 billion.
That amount doesn’t include the deferred school payments, $1.8 billion, or the money Pawlenty unalloted for General Assistance Medical Care, a health care program for those he described as “the poorest of the poor.”
Bakk said he hopes to see the GAMC money reinstated. That would add about $900 million, which would bring the budget deficit to around $4 billion.
“We’re going to start with a $4 billion dollar problem — in the hole. Where are we going to find $1.8 to pay the schools back,” Bakk said.
It’s not guaranteed the deferred $1.8 billion will be paid to the schools, because Bakk said the Legislature will need to approve the payments.
The deficit will be the first challenge the next governor will face when elected, Bakk said.
The school money was deferred into the next biennium, so Bakk said that would bring the deficit to about $6 billion for the next biennium.
Local government aid
Pawlenty called the mayors of Albert Lea, St. Paul and Wadena “complainers” in a May 22 WCCO radio broadcast. The mayors and other leaders had called for Pawlenty to reduce the cuts to local government aid.
Bakk called Pawlenty’s remarks a “cheap shot,” because Pawlenty is from Eagan, a town that doesn’t get or need LGA.
“The LGA is intended to be a tax-base equalizer. The cop car, the fire truck — they cost the same in Eagan as they do in Albert Lea,” Bakk said.
“Who do you suppose has more tax capacity to pay for that kind of stuff?” Bakk added.
Bakk described LGA as a revenue-sharing proposal to give towns the size of Albert Lea the ability to compete with towns the size of Eagan, which have much large tax revenue.
The tax rate on a building is lower in city with a lot of tax capacity, so the taxes will be lower since the tax burden is spread around more.
“A $100,000 building in Albert Lea should have about the same tax rate as a $100,000 building in Eagan. A $100,000 building is a $100,000 building,” Bakk said
Bakk talked about a similar problem in school funding.
“Schools are part of the identity of a community,” Bakk said.
But school funding is not equal across the state, and Bakk said part of the problem is the reliance on funding from voter approved property tax levees, Bakk said these levies are often harder to pass in small towns where the property taxes come largely from homes and can be easier to pass in larger cities where there’s more commercial property absorbing the property taxes, Bakk said.
Bakk said one key for an outstate governor candidate will be earning the DFL endorsement.
“My main theme is going to be jobs. I’m going to talk about economic development. That’s the only way we can get out of this recession is by getting people back to work,” Bakk said.
Taxes have been a priority under Pawlenty, and Bakk said that system won’t turn the economy around.
“You can’t solve this problem by just taxing the rich; it’s too big,” Bakk said.
“What really needs to happen is we need to figure out how to get people back to work,” Bakk said.
Putting people back to work is Bakk’s plan. He said state bonding and public works projects could be a way to do that, but he said he’d also like to see the banks lending again.
If elected governor, Bakk said he could propose a budget similar to the one the senate proposed.
Bakk said one possibility would be undoing permanent income-tax cuts made in 1999 and 2000 when the economy was strong, and returning to 1998 rates.
To ease the effect on middle income households, Bakk said a fourth tier would apply to those making more than $250,000 a year.
Another possibility is a income tax surcharge, which was a tool used during the 1981-82 recession.
In 1982, that surcharge was 10 percent, meaning someone who paid $3,000 in state income taxes paid an extra $300.
Bakk is on a media tour that will span newspapers and media outlets in towns like Austin, Mankato, Owatonna, Faribault, Winona, Red Wing, Rochester, Fergus Falls, Wadena, Brainerd and Grand Forks.