Report from the Capital from Rep. Ron Shimanski

Dear Neighbors,

The Legislature has begun working to create jobs and balance the budget. Governor Tim Pawlenty provided something of a starting point in both areas.

The Governor dedicated a significant portion of last week’s State of the State address discussing employment-related issues. I applauded his statement that it is our citizens and job creators not government who have the answers to lead us back to prosperity.

He revealed a six-point jobs plan which includes:

• 20-percent reduction in the corporate tax rate
• 20-percent exclusion from taxation for small businesses
• Angel Investment Tax Credit to provide incentives for investment in early-stage companies
• Supercharged Research and Development Tax Credit
• Capital gains exemption for qualifying investments
• Incentives for companies to invest in Minnesota small businesses

Coincidentally, we attempted to bring a related bill to the floor the first day of the 2010 session, but the majority denied our effort. The bill phases out the corporate tax rate – currently at 9.8 percent – by 1 percent annually and the Alternative Minimum Tax at the same rate. This plan would provide much-needed relief to area businesses hit hard by the economic downturn and we will continue working to get it through the Legislature

The Governor followed by issuing his budget recommendations to erase our short-term $1.2 billion budget shortfall and cut by more than half the $5.4-billion plus deficit for the 2012-13 biennium. His proposal includes no tax increases, no shifts, and holds K-12 education, public safety and our veterans safe from cuts.

He achieves a balanced budget with cuts to health and welfare ($347 million), Local Government Aid ($250 million), state agencies ($181 million) and higher education ($47 million). There also is a $387 million saving through an extension of federal Medicaid funds.

Pawlenty also proposes eliminating unnecessary agencies like the film board and the humanities commission. Now it is up to the Legislature to come up with a response and it will be interesting to see what the majority party has in mind. Will K-12 education, veterans and public safety be protected as the governor recommends? Will the majority party propose tax increases during the worst economic dilemma since the Great Depression? Some of us would argue that we should balance our budget before we take on more debt to be paid back next two decades.

Some misplaced priorities already have come into play as the House majority party started the session by passing a $1.2 billion borrowing bill on the House floor. Proponents are touting it as a jobs bill, but taxpayers should be aware each job the bill creates lasts only a few months and costs us about $100,000 each. The borrowing bill now heads to a House and Senate conference committee to work out the differences and returned to both chambers for final passage before it reaches the Governor's office.

Sincerely,
Ron
State Rep. Ron Shimanski
District 18A
227 State Office Building
St. Paul, MN 55155
651-296-1534
800-920-5882