Last week, NTU sent a letter to the Minnesota Legislature urging them to reject tax hikes as a way to close a $3 billion budget deficit. The shortfall emerged due to a controversial ruling by the Minnesota Supreme Court, which said the Governor exceeded his unallotment authority in rescinding some spending. Many in the State Legislature interpreted the Court's ruling as an excuse to raise taxes on hard-working Minnesota families and small businesses. However, NTU called on the Legislature to reject tax hikes and focus instead on reducing spending along the lines of what Governor Pawlenty recommended. The Legislature tried to raise the state's income tax, but Governor Pawlenty wisely vetoed these tax hikes and called on the Legislature to enact spending reductions.
Late Monday, the Governor and Legislature approved a deal to balance the budget. As one would expect in a deal negotiated at the very last minute, the deal to eliminate the state's $3 billion deficit is far from perfect. The good news is that the deal does not include tax hikes and enacts the spending reductions the governor proposed in his budget. However, the deal also relies on a significant amount of cost-shifting and borrowing to achieve a balance. Many cuts are temporary and will reemerge in the next budget. Additionally, the deal includes a provision that would allow Gov. Pawlenty or his successor to expand future Medicaid enrollment as permitted under the federal health care overhaul. We at NTU are concerned about the borrowing and cost-shifting because they will increase the pressure on raising revenue in the future.
There is no question that Minnesota's taxpayers won a huge victory in avoiding a tax increase. NTU applauds Governor Pawlenty and those in the legislature who stood fast against tax hikes. However, Minnesotans' fight to keep what they earn is far from over, as the provisions in this late-night, last-minute deal make clear. NTU will keep its eye on this deal to protect taxpayers from tax hikes and fight for reduced spending in Minnesota.