State budget trouble surfaces as issue in Minn. legislative campaigns

Here's something property taxes, school funding and the state's budget have in common: Each is center stage in some of the most contested legislative races in the state, from the suburbs of the Twin Cities to the north woods.

These dense policy issues, which first surfaced during the last legislative session, have transformed into essential campaign talking points in this year's down-ballot elections. Take property taxes, which Democrats and liberal political groups are making the centerpiece of their effort to oust Republicans from the Legislature.

"If you think the fact that property taxes in Minnesota are at their highest levels in state history... is a bad thing, and if you're sick of paying more and more property taxes every year, then on Election Day we say time is up for the Republican legislators who voted to eliminate to Homestead Tax Credit," said House Minority Leader Paul Thissen during a recent press conference focused entirely on the topic.

Claims about property taxes are particularly resonant in rural Minnesota because property taxes have increased faster there than in the Twin Cities, said Carrie Lucking, who is executive director of the Alliance for a Better Minnesota.

"I do think that issue may be more at the forefront in greater Minnesota but I think everyone is concerned about it," Lucking said.

The Alliance for a Better Minnesota is a liberal group that has spent more than $700,000 on television ads and mailings meant to help Democrats win seats in the state Legislature. Linking the Republican-controlled Legislature to property tax increases is a big part of that campaign.

In particular, Democrats like to point out that Republicans supported the elimination of the Homestead Tax Credit in the budget deal that ended the government shutdown.

The credit kept property taxes low, and its elimination affected a lot of people. In some areas of the state, it's meant higher property taxes. But what Democrats don't always say is that the credit was replaced with an alternative plan that was meant to alleviate property taxes for the same people.

And while it's true that 69 percent of Minnesota homeowners are paying more in property taxes right now, it's not just because of the latest homestead tax change, according to the Department of Revenue. Tax increases have been affected by fluctuating property prices and changes to local property taxes - dynamics the Legislature doesn't control.

Meanwhile, barbs over school funding are playing out in miniature in St. Cloud, where the race between Republican Rep. King Banaian and his DFL opponent Zach Dorholt is getting attention from both the DFL and the Republican Party of Minnesota.

There, Democrats are hoping to snag Banaian's House seat, which he narrowly won in 2010.

"King Banaian has the wrong priorities," says one of at least six fliers the DFL has sent to voters in St. Cloud. He "voted to take $2.2 billion from schools."

It's true that Banaian supported the budget deal to end the 2011 government shutdown, which borrowed more than $2 billion from schools to close the budget gap.

On the flip side of that claim, many Republicans, including Rep. Keith Downey of Edina, are touting their support of a bill that would have paid the schools back.

"The Legislature passed $400 million more to pay back the entire 2012-12 school shift and a portion of the 2010-11 school shift," says a flier Downey's campaign paid for.

He's running for state Senate in an open seat against DFLer Melisa Franzen in Edina, and the race is one of the most hotly contested in the state.

Dayton vetoed the legislation because he said it would have forced the state to borrow more money to pay other bills.

Central to the GOP's effort to maintain their majorities in the House and Senate is the budget. They're taking credit for creating a budget surplus after just one year in control of the Legislature.

Take fliers paid for by the Coalition of Minnesota Business, a group backed by business interests that supports pro-business candidates. The group has spent at least $30,000 on legislative races, though that figure is likely higher because some of the coalition's spending is shielded.

"Thank you Rep. Carolyn McElfatrick! You turned a $6 billion deficit into a surplus without raising taxes," reads one flier the group sent to voters near Grand Rapids.

Redistricting has pitted McElfatrick against DFL incumbent Rep. Tom Anzelc.

The line is also playing near Rochester, where Republican Sen. Carla Nelson is running for re-election.

Nelson "turned a $6 billion budget deficit into a $1 billion surplus, prioritizing job creation and economic growth for Minnesota."

It's true that the state had an extra $1.3 million at the start of 2012. But these mailers also leave out a lot of details.

Though the state had a surplus, that money was automatically used to pad the state's cash-flow and budget reserve accounts. And much of that extra cash was the result of things beyond the Legislature's control, including less than expected enrollment in the state's Medicaid program.

And there's still bad news for Minnesota in the latest budget forecast: the state is expected to have a $1.1 billion deficit in the coming fiscal year.

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This story was reported with the help of MPR's On Message feature. To learn more about how you can send us your campaign fliers, robocalls, and emails, click here.

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