Monday, July 08, 2013

How do you like your crow cooked?

With the Democrats having complete control of Minnesota state government this past legislative session, they pretty much implemented whatever policies they felt they could get away with. The most galling aspect of this past budget cycle was eliminating a $600 million budget deficit by increasing taxes more than $2 billion. One of the more egregious tax increases was the "warehouse tax."

In response to that potential fiscal calamity, House minority leader Kurt Daudt and Senate minority leader David Hann addressed the issue in a letter to Governor Mark Dayton earlier today.

Since Dayton is so hypersensitive to criticism (he relented on a proposed business-to-business tax earlier this year after enormous public outcry), there was the hope he would seriously consider calling a special session (he's the only one with the purview to do so) to address the matter. But in his normal acerbic manner, Dayton dismissed the idea.

“It’s a grandstanding stunt on their part,” Dayton said. “They don’t have any solution. …If they were to make a specific proposal of what the costs would be and how they would pay for that, then we would have something for the legislative leaders and myself to look at. This is just a publicity play.”

If you recall the budget fight in 2011, the Republican majority in the House were seated at their desks in the House chamber the night of June 30. Since there was still significant disagreement between the governor and GOP legislators, government would shut down at 12:01 a.m. on July 1 if they did not overcome their impasse. With that in mind, the Republicans at least wanted to pass a "lights-on" bill to fund government for another 10 days or so and then continue negotiations. Dayton used similar rhetoric back then, calling the Republicans' plea a "publicity stunt." Alas, no agreement was reached and government was shut down. But after two weeks of said shutdown without the public outrage hoped for predicted by the DFL, Dayton ended up having to eat crow by calling a special session. The session was used to put together the framework of a budget that was essentially the same proposal put forth by the GOP initially.

Unfortunately, the only way Dayton realizes the error of his ways this time is if Minnesota businesses take their warehousing needs elsewhere. Of course it will be too little too late by that point.

Does Gov. Dayton honestly believe that the majority of these businesses will even be utilizing warehousing services in this state when the legislature reconvenes in February? Best case scenario is that they will merely decide not to expand. That doesn't make for a rosy outlook, neither from a revenue collection perspective nor in terms of job growth.

I'm quite certain the GOP leaders will take no joy in being correct on this one.


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