DFL gubernatorial hopefuls call for tax hikes to fund education: Dayton says wealthy should pay more

Oct. 2--Several Democratic candidates for Minnesota governor on Thursday openly advocated tax increases as a way to restore education funding and fix other essential services that were slashed in the state's recession-hammered budget.

During a state AFL-CIO forum in Bloomington attended by 11 announced or potential 2010 Democratic-Farmer-Labor gubernatorial candidates, former U.S. Sen. Mark Dayton called for increasing income taxes on the wealthiest 10 percent of Minnesotans to pay for more state aid to schools.

"Read my lips: Tax the rich; they can afford it. I know that," said Dayton, the wealthy heir to a department store fortune.

State Rep. Tom Rukavina, of Virginia, said anyone who says Minnesota doesn't need to increase taxes "has their head in the clouds -- or somewhere -- because we need to raise revenue." He called for a temporary 5 percent to 10 percent income tax surcharge.

Calling for tax increases is a politically risky stand to take in a campaign. It's particularly unpopular when a recession pinches taxpayers' pocketbooks.

But the economic crisis also has slashed state revenue collections, and the DFL candidates argued that more money is needed for the state's K-12 and higher education systems, access to health care and investments in roads and other infrastructure.

Dayton said he wouldn't increase everybody's taxes.

"I think most people are hard-pressed in this economy, with either no jobs or uncertain jobs or declining real

wages," he said.

But citing a Revenue Department study that showed wealthy Minnesotans paid a smaller percentage of their incomes on state and local taxes than the middle class, he said the rich "aren't paying their fair share."

Other DFL candidates weren't as specific about which taxes they'd raise.

"We have a structural budget deficit, and we need to raise additional revenue," said former state Sen. Steve Kelley, of St. Louis Park. "We have to do it in a fair and transparent way. We can't call it fees. We can't shift the cost to local units of government."

Kelley said the state needs to balance its progressive tax system, which relies heavily on income taxes, with more stable revenue sources. That usually means sales taxes, although Kelley didn't say so.

Like Dayton, Minneapolis Mayor R.T. Rybak, an undeclared gubernatorial candidate who is seeking re-election this fall, said wealthy Minnesotans who have prospered in recent years "have to pay a larger share of the burden. There's no question about it."

After the forum, Ramsey County Attorney Susan Gaertner said the state would "need to raise more revenue," as well as cut spending and redesign state and local government services to balance the state budget.

The other candidates didn't mention tax increases, but none of them rejected them, either. Some had previously called for higher taxes.

Although House Speaker Margaret Anderson Kelliher, of Minneapolis, didn't discuss taxes at the forum, she said when she announced her candidacy last month that she would both increase taxes and cut spending to erase a projected deficit of up to $7 billion in the state's next two-year budget.

Senate Tax Committee Chairman Tom Bakk, of Cook, also didn't mention taxes, but he carried a $2 billion income-tax-increase bill to balance the budget during the last legislative session.

Sen. John Marty, of Roseville, boasted that he was the only DFL senator who voted against a 1999 tax cut for the rich.

St. Paul Mayor Chris Coleman, former state Rep. Matt Entenza and state Rep. Paul Thissen also participated in the forum.

The 300,000-member state AFL-CIO traditionally plays a significant role in picking DFL candidates for governor. The labor organization has not yet set a date for endorsing a gubernatorial contender.

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