Capitol Watch: House Democrats playing coy on tax increases

There is one week left in the regular legislative session and to no one’s surprise, the parties are stuck on the big stuff. Everyone is waiting for a breakthrough on how to fund K-12 schools and health and human services, the two largest areas of the state budget. Among the many disagreements, three big ones stand out:

Unemployment for seasonal school workers

In K-12 education, can we afford to continue paying for seasonal school district employees like bus drivers and cooks to receive unemployment over the summer? This is one of the new unfunded mandates passed onto local school districts in 2023 that is busting the bank at the state and local level. House Democrats initially agreed to phase it out, but the ultra-liberal wing of their caucus (pushed by public employee unions) objected. The House education bill was supposed to be on the floor last week but is stuck in negotiations.

Free heath care for illegal immigrants

In human services, House Republicans are being asked to vote for another new initiative from the 2023 session: free health care for illegal immigrants. This originally passed with zero Republican support in the House or Senate, but now is part of the base budget. It’s an extraordinary benefit for illegal immigrants — free health care from the MinnesotaCare system, while Minnesota residents are asked to pay premiums and co-pays. And the cost of the program is already way over budget, which is exactly what happened in other states as enrollment surged way beyond projections. If they stand together and focus like a laser, Republicans could threaten to shut down state government over this issue and win the messaging war. It’s really hard to defend raising new taxes to pay for free health care for illegal immigrants, especially when they are committing high-profile crimes in Hennepin County. German Adriano Llangari Inga could be the poster boy for this campaign.

More taxes?

Yes, Democrats at the Capitol are actually pushing to increase taxes again. Gov. Tim Walz has a proposal to broaden the sales tax and lower the rate. The Senate Democrat tax bill raises taxes $365 million, mostly in the form of a new tax on social media companies. House Democrats are playing it coy so far on taxes. As John Phelan writes here, the House tax bill deserves a cautious welcome and shows how divided government is paying off this session. But we noticed an interesting phenomenon among the responses to our email campaign from House DFlers. Here are three sample responses (emphasis added):

Thank you for reaching out. I am not aware of any tax increase proposal with bipartisan support that would pass this year. Can you share with me what proposal you are referring to? As always, I appreciate hearing from you.

Thank you for reaching out. I appreciate hearing from you. With a 67-67 tie in the Minnesota House, Democrats and Republicans are working together to craft the state’s next 2-year budget. Currently, there are no proposals to raise taxes that have bipartisan support. We’re looking forward to continuing our negotiations with Governor Walz and the Senate on a final budget agreement.

Thank you for reaching out. I appreciate hearing from you. With a 67-67 tie in the Minnesota House, Democrats and Republicans are working together to craft the state’s next 2-year budget. Currently, there are no proposals to raise taxes that have bipartisan support. We’re looking forward to continuing our negotiations with Governor Walz and the Senate on a final budget agreement.

On the one hand, this is really good news. House Democrats are going on the record with their constituents against tax increases. On the other hand, the language they use is concerning. Read another way, the message could be, “At this point, Republicans are against raising taxes, but as soon as one of them comes our way, we will support a bipartisan tax increase.” As long as all Republicans (Senate and House) keep their distance from any tax increase, House Democrats will be compelled by these constituent responses to eschew any new tax increase.

To be clear, the email responses above were from suburban DFL House members (Rehm, Bierman and Klevorn). Their colleagues in Minneapolis and St. Paul have publicly stated their desire to raise taxes this year. Rep. Mohamud Noor of Minneapolis admitted on the House floor that if Democrats were in charge, they would just raise taxes to pay for more spending. Rep. Samantha Sencer-Mura of St. Paul complained at a press conference that Republicans have taken tax increases off the table.

Suburban Democrats are hedging their bets about possible tax increases, assuming they get at least one Republican to go along. But if urban Democrats had their way, tax increases would be a sure thing. It’s going to be a pressure-filled week.