Holberg: Legislative Session Wraps Up

Editor's note: The following is a newsletter from Lakeville's State House Representative Mary Liz Holberg, R-Lakeville.

Friend and Neighbors-

Legislative Session Wraps Up

The 2013 Legislative Session came to a close on May 20th and many Minnesota families and businesses will be impacted by the policies put in place. New taxes on income, businesses and tobacco will be used to grow the state's budget to historic levels, adding over one thousand new state employees and increasing bureaucratic overreach into many areas of everyday life. Our families could see negative consequences from the decision to allow a unionization of home childcare workers and our small businesses will undoubtedly see smaller returns when they file their taxes. Health insurance for all Minnesotans will change as a result of the new insurance exchange agency in St. Paul, raising premiums for many and forcing some employers to drop coverage.

Still, this year's session focused mostly on crafting the budget for the next two years. Planning for the state's budget starts several years out, and in January, 2011, the outlook for future budgets looked grim. With a $5 billion hole to fill, Republicans took control of the legislature in 2011 facing tough decisions about how to get balance state spending and encourage healthy job growth to climb out of the recession.

We now know that the fiscal policies we put in place in 2011 to put the brakes on government spending increases have worked. We allowed Minnesota's economy to grow and create jobs.

That $5 billion budget deficit took a dramatic turnaround and grew into a more than $3 billion budget surplus. What was once a 7.5 percent unemployment rate is now 5.3 percent. Just last year, 55,000 new jobs were created and 60,000 Minnesotans took a risk and worked hard to start their own business. And the best news is, Minnesota's economy continues to improve and revenues continue to come in higher than projected. But, Democrats were elected to control the legislature this year, and new budget philosophy is upon us.

The next budget beginning July 1 will be much different. The state will spend nearly $40 billion, several billion more than we currently take in. The new spending will be supported by higher taxes and fees that could have unintended consequences, such as tobacco product smuggling from our cheaper neighboring states or a "flight" of capital in order to avoid income and business taxes. Supporters claim the higher spending and higher taxes will help avoid shortfalls in the future, but we know this theory doesn't always hold up, especially if our economy slows down again. Minnesotans deserve a sound budget that prioritizes spending.

Here is some more information on major legislation considered this session:

Everyone Pays More

The 2013 Tax Bill raises $2.1 billion in new taxes starting this summer.

• Mom & Pop Shop Tax, New 4th tier tax: $1.12 billion by increasing income tax on top bracket by 25 percent,including small businesses. This makes Minnesota's income tax rate the 2nd-highest in the nation for comparative income.

• Large Employer Tax: $424 million from a tax increase on large employers resulting in less take-home pay for hardworking employees.

• Cigarette Tax: $408 million from increase of $1.60/pack (from $1.23 to $2.83).

• Sales and Gift Tax: $137 million by expanding sales tax to services like warehousing and storage, IT services and telecommunications and gift tax.

•Everyone pays more for necessities:

* Groceries like bread and milk due to warehousing tax

* Medical products due to warehousing tax

* Gas due to warehousing tax

* Electric bills due to additional mandates on utility companies

* Health Insurance due to Democrats' Insurance Exchange

* Drivers' licenses, vehicle registration and vehicle title fees

* Internet purchases due to sales tax

*Farm equipment repairs due to electronic and commercial repair services sales tax

• Wasteful Spending

Rather than creating a more effective government by forcing it to live within its means, legislative Democrats focused on wasteful spending this session. By permanently increasing spending over the next two years by $3 billion, hardworking taxpayers will now lose more of their paychecks in order to fund more inefficient government programs. 

• Democrats' Insurance Exchange (HIX): This legislation means higher costs, fewer choices and less privacyfor Minnesotans. It does nothing to guarantee better health care, lower insurance premiums, increase coverage or create savings in the health care system.

• Funding state agencies above requested amounts: In some cases, House and Senate Democrats compromised upward and spent more money on state government programs than either body had originally approved.

• Minneapolis, St. Paul bailouts: Hardworking taxpayers contributed tens of millions toward eliminating debt on facilities in Minneapolis and St. Paul.

• Bonding bill: House Republicans defeated Democrats’ original $800 million bonding bill bloated with wasteful spending items. Republicans helped pass a $176 million bill that focused on flood mitigation, veterans and repairs for the Capitol.

Please contact me with any questions or concerns you may have. Thank you for the opportunity to serve you in St. Paul.

Sincerely, 

Mary Liz Holberg