(00:00:01) Good afternoon live from the state capitol. And st. Paul Minnesota Public Radio presents Governor alkies budget message to the legislature. This is Bob Potter speaking in just a few moments. The governor will be addressing a joint session of the House and Senate gathered in joint convention here in the house Chambers members of the Senate arrived about 10 minutes ago and very shortly. We expect the sergeant-at-arms to announce the arrival of Governor Qui who will be escorted by a committee of House and Senate members immediately following the governor's address. John murli will be on the floor to seek reaction to the speech from leaders of the House and Senate also in the house Chambers this noon our members of the House and Senate staffs and other guests that are some guests in the gallery. There are a few seats available for the public people were queued up outside the house Chambers as of about 10-15 minutes ago waiting for the few public seats that are available. The National Guard is here security. People are busy around the capital. Although we must say that the pageantry surrounding this event is a little less than than it was for the State of the State message about three weeks ago. The sergeant-at-arms now announcing the arrival of governor cui and it was partying the chamber. This joint convention is being chaired by the Speaker of the House Rod Cyril. It is a traditional as a matter of fact, it is part of state law that the Speaker of the House chair joint conventions during the budget mess are rather during the State of the State message. The secretary of state was in the chair because the house had not elected a speaker at that time. The governor has now entered the chamber shaking hands with some of the members of the Senate down at the front. It's been asked ordered by a committee of House and Senate members as well as members of the National Guard. Also on the dice with house Speaker Rod Cyril is the president of the Senate at Garrity of Minneapolis Governor Quinn shaking hands with both men (00:01:55) now. Members of the convention is my distinct pleasure to introduce to you the governor the state of Minnesota Albert H Qui. All of the House and Senate members and guests on the floor are standing (00:02:15) collagen is a Governor's presence here and he'll begin his address in just a moment according to an advanced text of the speech was delivered to lose reporters yesterday. The governor will keep his campaign promise to cut taxes. You will propose about 575 million dollars in tax relief all together and now we get the details from Governor Qui. (00:02:40) Mr. Speaker Mr. President members of the 71st session of the Minnesota Legislature friends lieutenant governor Weinberg and I spent many hours conducting extensive reviews of every state agency budget request. We made hundreds of budget decisions somewhere easy, but most of them were difficult. And making those decisions. I want to thank and acknowledge many people who had important input into the shape of this budget message you the members and the leaders of the legislature who have shared your concerns and advice and counsel the hard-working state employees who with their expertise team with my staff to draft specific proposals and to the people of Minnesota who have mandated changes that will be responsive to their needs. My thanks to all of you. And the past 10 weeks have provided us with a crash course and state finance and budget priorities the former Administration invested hundreds of hours over months before we had a chance to review the budget. Significant changes and additions have been made and the Qui Weinberg administration's perspective and planning will be felt even more in the next budget two years from now. You no doubt will be investing many more hours and pouring over the specifics of this budget. I hardly welcome your positive ideas and constructive criticisms only as we work together. Can we effectively respond to the citizens demand for fiscal responsibility needed programs and necessary Services fiscal responsibility includes not only careful use of taxpayers dollars, but also wise and compassionate funding of necessary programs and Services. I present this budget message today with a strong confidence that it will serve. Well the people of Minnesota during the next two years together. We must live up to the high expectations voters have of their elected officials. We must never forget that we have been elected by the people to unselfishly serve their needs not to personally Advance our own Ambitions. I believe the budget message expresses the will of the People by dramatizing fiscal responsibility and human concern. Let us buy our support of this budget indicate to the people of Minnesota that state government is listening to them. Let us by our actions show that we are ready to respond to their expectations. I believe that one way we can indicate that the state government is listening to the people is to improve the Public's understanding of the Minnesota budget. So I had developed a new document called a budget and brief a report to the people. This document should help the people all across the state understand how their tax dollars are spent each of you and the legislature has been given a copy of the budget and brief. The purpose of the budget in brief is to condense and to summarize the five thick volumes of detail budget reports and recommendations into a concise and easily understood booklet. My budget message today has four parts first a discussion of the financial outlook for Minnesota state government and second an explanation of my proposal for tax relief 3rd and outline of educational priorities and forth my support for a wide variety of needed programs and services. Let me first discuss the financial outlook for Minnesota state government because of our healthy economy state revenue is during the 1979-80 one biennium are expected to increase by 22 percent under existing tax policies. I also considered the long-term effects of my proposals and developing my short-term spending plan for the biennium after all it would make little sense to propose a tax cut in one biennium only to increase taxes in the next I can tell you that the next two years will be lean ones in terms of Revenue growth with my tax cut proposal the long-term Revenue Outlook is very favorable. I strongly believe that because of expected Revenue growth. It is possible to reduce taxes and still provide necessary Services. I am recommending changes to existing tax law that will provide 575 million dollars in tax relief during the next two years. More than was expected. Even after adjusting for reduce taxes, I'm able to propose a budget appropriation of seven point four billion dollars for the biennium. This represents an increase of nine hundred and seventy nine point six million dollars or a 15.2 percent increase over the expenditures of the current biennium. This is the lowest percentage increase in the state's budget since 1963 the first year for which the Department of Finance has records what is important is not so much the amount of the increase, but rather what this budget means to the people the state of Minnesota, it means tax relief for every taxpayer and for every business in the state, It means an enhanced quality of Education. It means an improved job climate that means the preservation of a quality environment for present and future Generations. It means better opportunities for the economically disadvantaged minorities the elderly and the handicapped it means additional recognition of the Arts and related cultural activities. However, before I discuss my budget in detail, I want to share with you four conclusions made regarding state government. These principles have guided me and making many difficult budgetary decisions first. The state has adequate resources Financial Resources. Yes, but also human resources in the form of talented and motivated employees. These resources can meet the needs and expectations of the people of Minnesota in the foreseeable future second. We should closely examine existing programs to make sure that they serve a genuine need that dollars are spent as intended. This means refining our budgeting to provide for decision-making with strong evaluation strategies. Third. We must continually evaluate the responsiveness of our programs to the changing requirements of the public for program is not meeting its objectives. We should know it that is not working and promptly initiate corrective action. One fourth. We must strive to better coordinate the activities of All State agencies to prevent the waste that results from duplicate or overlapping programs. I believe that you will find these principles to be sound as we work together on this budget. We will be achieving measured progress towards a just and self-governing Society. I ought to I want to emphasize again. I believe the state government should exist to serve the people. They should provide essential Services where necessary whenever possible. They should act as a catalyst to help local citizens address local needs with locally acceptable Solutions. This is my view that text taxpayers want state government to make existing programs work before initiating new programs. I agree. My proposed budget reflects this philosophy. One of the major components of my fiscal plan for the 1979-80 one biennium is a comprehensive program of tax relief people want a greater Independence a greater voice and making their own economic decisions. Minnesotans are restrict are restricted in their economic choices because they pay one of the highest state income taxes in the nation nearly twice as much as the average American taxpayer $4,000 of personal income during the past year. I repeatedly advocated giving Minnesota taxpayers a 10% tax cut my budget fulfills his promise income tax collections for 1979 will be reduced by 10% over the amount collected in 1978. When a person's income increases he or she expects to pay more taxes. This is how our tax system operates. Unfortunately. Our tax system does not differentiate between incomes which increased due to a cost-of-living raise caused by inflation and increases was actually raised a person's purchasing power presently state revenue grows at the expense of taxpayers who have no increase in purchasing power me repeat that presently state revenue grows at the expense of taxpayers who have no increase in purchasing power. This gives the state and inflation bonus. I firmly believe that this inflation bonus was not in the intended tax policy of our predecessors. In order to eliminate the state's and plays inflation bonus. We must reduce the escalating impact that inflation has on our tax structure the technical term for this process is called indexing we need to index our tax system so that as incomes increase because of inflation people will not be taxed at a higher rate. As you know incomes are grouped in brackets for tax purposes in comes with in the same bracket are taxed at the same rate. For example, the first five hundred dollars of taxable income is taxed at one point six percent the second five hundred dollars of income is taxed at 2.2 percent. Then the brackets become larger and the tax rates rise all the way to 17% in the top bracket. I am recommending a plan to spread each tax bracket so that when incomes go up because of inflation tax payers will not be taxed at a higher rate. Simply put people do not expect and should not expect to pay taxes caused by inflation. Inflation has had a devastating effect on all income levels, but the effect has not been uniformly felt my income tax proposal will cut each individual's taxes by the amount. They were increased over the last three years because of inflation and this is the key to my tax cut proposal. So I'll repeat it my income tax proposal will cut each individual's taxes by the amount. They were increased over the last three years because of inflation. My proposal will also automatically index individual income tax in the future in order to be fair to those at the lowest income levels. I am proposing that the low income credit be indexed as well. The net effect of these proposals will mean that many low-income taxpayers will have their income tax eliminated other taxpayers whose incomes range as high as 33 thousand dollars will receive at least a 10% reduction the tax cut for the median income family of four who make $16,000 will amount to a 16.3 percent tax cut is my view that this tax cut is long past due consequently. I'm recommending that the legislature make this cut effective January 1 1979 The result is 416 million dollars in personal income tax relief for every Minnesota taxpayer during the next two years. This tax relief program will provide a 10% or greater tax cut to over 90 percent of Minnesota's tax payers. I spent a considerable amount of time and explaining the individual income tax relief, although this amounts to a major portion of my total tax relief package other features deserve mentioned tax policy is as at the heart of job climate considerations the types and levels of taxes are a signal to the business community of our interest in economic expansion. I feel that our present corporate tax structure is unfair to some Minnesota companies particularly small businesses who Sails are entirely within the state my budget recommends a reduction in the corporate tax rate from 12 percent, which is the highest in the nation to six percent on the first twenty thousand dollars of income. This will create a climate that is conducive to the formation of small businesses. The through the initiative of small businesses that a large share of Independence and creativity is developed especially amongst our young people companies which conduct a relatively large share of their business in Minnesota will receive an additional tax reduction since I am proposing that no firm pay more than ten percent of his total net income and corporate income tax businesses whose primary income results from activities outside the state may continue to utilize the present three Factor weighted formula to a portion in come to Minnesota. These proposals will provide nearly 59 million dollars in tax relief to business over the next two years. Inflation has caused a hardship for nearly everyone but its effects are especially devastating to those who live on fixed incomes. For example in the Twin Cities metropolitan area twenty percent of the total population over 65 have incomes below the poverty level. my budget provides significant tax relief for senior citizens in addition to giving a 10 percent tax cut and indexing the low income credit. I am proposing that the legislature enacted a new senior citizen property tax freeze under this program. All homeowners after reaching the age 65 will have their property taxes Frozen an addition. No senior citizen will pay property tax at a rate higher than one-and-a-half percent of the limited market value of their primary residence. I'm also proposing that our pension tax law be revised to increase the present exclusion from 7200 to $10,000. In addition all present offsets, which reduce the exclusion should be eliminated. The combined tax relief to senior citizens will amount to over 22 million dollars per year. Farm machinery is used only a short time each year and yet a combine or corn planter is taxed at the full rate. I am proposing at the sales tax on farm machinery be reduced from his present four percent to 3 percent 1980 and further reduced to 2% in 1981. This will provide Farmers with almost eleven and a half million in tax relief Minnesota's inheritance tax exemptions allow most small Estates to escape heavy taxes. This is as it should be but family farms and other small family businesses are taxed quite heavily. Recent Court decisions have helped to change the situation in certain instances, but it is time to overhaul our system. Generally. Therefore I am proposing that our inheritance tax laws be changed so that the spouses are presumed to share ownership equally and that 50% of property received by a surviving spouse is exempt from taxation. This program will provide ten point six million dollars in tax relief during the biennium. Railroads have fallen into severe economic difficulty at the same time railroads offer a means of transportation relatively Frugal in energy consumption Congress has mandated that State's tax railroads and the same manner they tax other businesses. I'm proposing that the gross earnings tax now being imposed on railroads be replaced with an ad valorem tax, which will meet the test of fairness manded mandated by the US Congress. This will reduce the tax by 15 million dollars annually. My tax relief program also calls for the elimination of the sales tax on solar energy systems provides a 10% tax credit up to $1,000 to individuals who purchase solar energy equipment. These programs will provide an estimated 700,000 dollars in tax relief and finally, I feel that currently we do not treat all military reservists equally therefore, I propose extending the 140 dollar tax credit now available to the members of the National Guard to all members of the military Reserve. This will provide an additional two point eight million dollars in tax relief during the next two years. As I stated previously the total amount of tax relief I am proposing is 575 million dollars for the biennium. Now some of you may be concerned by the scope of this proposal. However, we have the resources and long-term projections for the bienniums Beyond 1981 show that there is available opportunity for either additional tax cuts or expansion of programs Revenue projections by the Department of Finance indicate that we can cut taxes and still improve the quality of our schools and local government as well as strengthen our Human Service programs in this biennium. Yes, it will take some Thrift on all our parts and some common sense. But I want you to know that the budget I proposed to you today has been forged with compassion. Let me tell you some of my concerns. We all share in our desire to provide tax relief to our constituency our constituents demanded. We also share a common interest in improving the quality of Education in our state education after all is a Stairway to economic independence and personal development. As you know, I spent 20 years in the Congress working on educational legislation and during that time I was impressed by the foresight of this legislative body and providing for education. Also want you to know I feel indebted to the teachers who helped me with my education during the years. I was in school. And lastly. I believe it is so important that parents are involved in the education of their children. Well, as you all know the enrollment in our elementary and secondary schools is presently declining we as representatives of the state should consider declining enrollments not as an obstacle, but as an opportunity to improve improve our educational system, all we must do is to appropriate the same amount and constant dollars for elementary and secondary education as we did in the previous biennium and this will mean that more dollars will be available per child. Where can this additional money be used? Most effectively? I believe it can best be used to reduce class size in the primary grades. This is the age when the child is most keenly interested in learning and when the parents are most concerned about the education of their child my budget therefore proposes 49 million dollars for reducing class size in the early grades. Wilco will class size improve the achievement. Well, it can one way to help this occur as to encourage teachers to individualize their instruction methods my budget therefore contains 11 million dollars for in-service training new materials and Leadership personnel. Another way is to increase to increase the achievement in the early grades is to encourage parents to participate in their child's education. I'm not talking just about parents visiting their children's classes. I'm talking about the classroom teacher visiting the parents and working with the parents on a one-to-one basis for this purpose. I'm proposing nine million dollars in addition my budget proposes increases in sparsity Aid basic skills education at the secondary level handicap programs and an overall increase in the foundation Aid to offset the cost of inflation. I also feel our present system of school Finance needs re-examination to do this. I plan to appoint two committees made up of parents teachers Civic leaders School administrators and school board members, the education policy committee will examine policy questions, especially the issue of local control. The education finance committee will consider how the state can better fulfill his school Finance responsibility. Specifics of my education policy will be presented in a special message, which I will include programs for the gifted. So far, I've talked today about tax relief and education programs the remaining minutes. I'd like to consider briefly some of my other budget priorities. There are many in our state who are so poor. They do not have any regular income other than welfare payments. When welfare payments are the only source of income for dependent children tax relief means little the average efd see household in Minnesota consists of a parent and two children who live together whoo, together receive slightly more than four hundred dollars per month. They must use this money to pay rent utility bills and transportation costs to purchase food and clothing and other necessary items welfare payments should be increased by the amount of inflation without such an increase or people lose out as we struggle to balance the state budget, but for people should not be expected to balance the budget a balanced budget which neglects the poor is on balance in his terms of his priorities. My budget will therefore increase afdc and general assistance payments by seven percent in fiscal year 1980 another 7% in fiscal year 1981. This is the largest percentage increase ever recommended by a Minnesota governor. And Human Services extend beyond welfare. The cost of Health Care is dramatically increasing and recognizing this I recommended a ninety three point 1 million dollar increase in the state share of providing medical assistance to the needy but 90% of this increase will go to the elderly and handicapped. I'm also recommending that 2.7 million dollars be appropriated to fund 13 shelters for battered women and that we expand our existing programs for assisting displaced Homemakers. Our workers compensation laws and sure that the employees are compensated for time away from work due to work-related injury presently. There is a backlog of cases. I believe the state has a responsibility to ensure that injured employees not only receive adequate compensation, but also prompt disposition of their claims. Therefore, I recommended that we provide a hundred seventy two thousand to the Department of Labor and Industry to better serve those workers injured on the job. Chemical dependency grains our state's economy by 1 billion dollars annually is estimated and causes measureless human suffering my budget contains funds for programs, which address the chemical dependency problem. Healthy local economies are vital to the continued existence of our urban areas. My budget recommends a two-pronged approach first. We must encourage job opportunities for minorities. I propose that we expand vocational training and initiate a basic skills development program at the high school level II I support legislation to authorize an additional 450 million dollars bonding program to finance housing construction and Rehabilitation. I believe that the majority of the proceeds of this offering should be used for multifamily construction and single-family rehabilitation. As a supplement to this Bond authorization, I'm recommending an additional appropriation of 42 and a half million dollars to assist persons who would not otherwise be able to purchase a home. In addition to providing an incentive to redevelop inner-city neighborhoods. These programs will create new jobs. Several of our cities have fiscal needs which are not being met by the existing local Aid formula the budget includes an 89 million dollar increase in Municipal AIDS. I'm recommending the appointment of a working group including local government officials to assist state agencies and preparing a comprehensive Statewide Community Development policy. In the past five years the state has mandated 51 laws requiring specific actions by local governments. I question whether the affected governments had sufficient input prior to the passage of those laws. I will appoint an Advisory Group to ensure consideration of local interests before the state imposes new requirements. We looked at the recommendations for welfare and health Urban Affairs and local government many other programs that my budget provide needed Services. I wish to emphasize that each of these programs. Our services is individually important to those affected a single program. Our service is of utmost concern. Let me describe some of these concerns handicapped persons represent a largely untapped resource in our society this budget expands for the handicapped educational services at the elementary secondary post-secondary level additional housing opportunities job training Transportation assistance full State funding of the Communication Center for the Blind and a program to provide the severely handicapped with opportunities for Independent Living. second my budget recommendations provide annuitants who retired before July 1 1973 the option to compute their retirement benefits based on their highest five years of salary this recommendation applies to persons participating in the teacher retirement Association, the Minnesota State retirement system and the public employees retirement Association and other smaller public retirement funds and third the special problems of the mentally ill have too often been neglected by government. Those forgotten citizens are discharged from State hospitals and have a difficult time adjusting to society my budget recommends an appropriation of two million dollars to help local governments provide Mental Health and Rehabilitation Services to these people and forth. I support the development and maintenance of the Arts my budget recommend recommendations proposed increase funds for the Arts expanded programs for the Minnesota historical society and additional dollars for educational television V. I'm also proposing several programs specifically directed towards ensuring equality environment for future Generations. I recommend am recommending continuation of the shade tree program to replace disease Dalman oak trees along parks and boulevards and to my budget 750,000 new trees will be planted. I am recommending one and a Million dollars as the state's 20% share of the cost to intensify Timber Management in the counties surrounding the BWC a 6 as I mentioned in my inaugural address. I'm most concerned with the conservation and development of energy supplies. This concern is not immediately apparent in my budget message because most development involves a private sector or occurs through Regulatory Agencies. I would like you to recognize three initiatives. I am proposing. I'm recommending 10 million dollars as the state's contribution to a federal program to insulate schools and hospitals as an initial step towards energy conservation. I'm recommending tax incentives to promote investment in the use of solar energy and appropriate informational literature describing different methods of using solar energy will be prepared for distribution. I'm recommending a half a million dollars for a pilot study and District heating. These funds will be used for an engineering design for the first district heating system in the United States using new technology. My message today is not mentioned every budget line or program the budget and brief will report to the people and particularly to you the legislature be careful accounting of the state's Financial priorities many of the programs and services in this budget call attention to the importance of the basic values of thrift compassion and Common Sense. We the legislature and the governor are called to act out these values in our decision-making for the state of Minnesota. In closing let me emphasize that the people of Minnesota invest more than financial resources to make our state strong thousands of citizens volunteer their talents and their energies from local groups to State commissions, minnesotans are dedicated to serving their neighborhoods and communities and making the democratic system work for some a budget is an end in itself. But for many of us the budget is only a beginning no budget can substitute for individual initiative and a Unity of spirit. Let us look at these figures and dollar signs. Then as a starting point for a proud people of a great state working to serve and to care for one another. (00:33:37) Governor alkies budget message to this joint session of the Minnesota Legislature members of the House and Senate applauding the (00:33:43) governor. (00:33:46) He will shortly be leaving the chamber shaking hands always weaker Rod Cyril and Senate President had dirty. immediately upon the exit of the governor The Joint session will be dissolved. And then the House of Representatives itself will adjourn for the day and John merli will be down on the floor and an effort to get the reaction to the governor's address from some of the members of the legislature who are down there Governor taking his time to leave the chamber shaking hands with a number of members of the Senate who are standing in the aisles also a couple of house members who suits around the whales. Governor of being escorted from the chamber by the same party that brought him in at the beginning of the (00:34:36) address. (00:34:44) We're waiting for a motion for adjournment of the joint convention. In his address as you heard the now here we have the announcement president is answering. (00:35:00) Mr. Coleman moves at the Joint convention do now rise all those in favor. Say aye opposed. So carried joint convention is now adjourned. (00:35:12) I don't know. The members of the Senate will be taking their leave and in just a second. We'll have a motion by a member of the House most likely the house floor leader. Harry sieben that the house session be adjourned. Here's John murli down on the floor now with reaction from Senator Coleman. Thank you. Bob Senator, Nick Coleman the Senate Majority Leader and Senator Robert - Beck seminar leader, Senator Coleman your reaction to the governor's budget message on taxes. Specifically. I think that there were a number of things in the budget message that I could not look forward to supporting rather enthusiastically. I thought that the tax credits for low income workers was very good and I like the increases for afdc in general assistance. I thought the housing programs and educational programs were generally very good. I was disappointed that he did not fund the income tax cuts with any money that he would try to get from a savings and government when you look at the budget nearly all of the individual income tax cuts come from either the Democratic National Democratic Cuts or it would come from the Surplus that was left in the budget when he started in a very very little from any new savings. Also, there's some postponements of his promises which rather surprised me. He's not going to even talk About indexing until next year and there won't be anything in the way of passing through the federal tax cuts, which he promised repeatedly during the course of the campaign municipalities are going to be very disappointed when they look at that program towns and counties are there's nothing for the low income renter or for the low-income senior citizen. So it's there were some campaign promises left along the trail and there's some good things in IT program to what do you think the reality is that this proposal is going to eventually get past the dfl controls the Senate and the house is split even they're going to be some things there were going to be anxious to pass and the dfl Senate what they're going to be things like the low income or credit tax credit. There's going to be things like a housing program on the educational program in general and I would say also the afdc increases assistance. So we will be interested in we're going to pass income tax cuts for the individuals that probably will be stronger now because we're going to slash away at that at the spending which the governor does not really do. This budget message. You think you think the tax cut might ultimately be larger than the 575,000. I think that it can be and I think that it could be a number of this point. Well, it looks as just looking at the preliminary figures yesterday chairman of Finance thinks that he can go into the budget and cut to some place around 5 to 15 million dollars out of the budget. We would pass along to the taxpayer and would reshape some of that tax cut to it's going to go off in a somewhat different form because most of it now is just Surplus and we want to see that it has a more permanent form you very much cinnamon scented Majority Leader Nick Coleman speaking with reporters down here if I can. Pardon me Senate minority leader Robert Ash back is also here and Center - back your reaction to the governor's message. Let's start with taxes. Well, I think the tax relief program was very good. 575 million dollars is a tremendous tax cuts as much more that's been offered in previous administrations and the indexing of the income tax. And giving people a chance to recover some money and not have eaten up by inflation. I think is a striking part of The Proposal. Where do you think the governor will have is what this time in Texas? Probably in the Senate passed Senate Ethics Committee the Senate version of taxes always somewhat different what we've had and I would suspect there'll be some changes but it's a very good to Progressive program. Thank you very much cinnamon or leader Robert Ash back. It's even get over here and get hairy sieben. Who is the chairman? Pardon me is the chairman of the house tax committee. And if we can work our way in here without knocking all the TV cameras over so we can do Surplus not to tax cut out of the 575 million. But what we're concerned about is what it's going to do to real estate property tax is also I think there is a our best estimates and we've only had a few hours to work on this but it appears that real estate taxes may go up 20% over the biennium if that budget is adopted in a 20% of me real estate tax. Well, it's what some my preliminary figures look like and if that's the case, I think we had to be concerned about it. You think this is going to get in the house? It'll get a full Fair fast hearing and the governor will have every opportunity to present every part of his tax plan in any manner that he wants to what chances do you think it has a passing to the house? I think substantial portions of his program have a good chance of passing inheritance tax. I favor and I think a number of members of the House favor. The tax indexing is a concept that in recent times of inflation. We've had a lot of support for it. I voted for it two years ago and some form of indexing I think is a wise thing. I don't know if it should be on tax credits during the tax rates have been the credits but I think that has a good chance across-the-board reduction all the way across the board. He didn't propose that exactly but I would think that we'll probably not fast, but we want to know what it means to real estate taxes. We want to understand the implication it For local government Finance before we take firm opinions on it. What about specifically the corporate tax end of The Proposal? Well as I understand it from reading a speech. He's proposing reduction in the first twenty thousand dollars of income if that's the case. I think it has a I don't know what to say a reasonable chance of success. I'm not opposed to it. I'm not necessarily in support of it. I want to see what the implications are. I don't know what the cost item. And that was I don't remember it was Harry sieben who was chairman of the house tax committee tfl. And yes, Bob John if you go right across the back there he'll be able to get to speaker Raj sir. Yeah, just on the other side speaker. Mr. Speaker. There are about I suppose 25 or so reporters down in the well of the house seeking reaction to the speech and now John Marley has Beaker Cyril. Yes speaker Cyril your reaction to the governor's address start with taxes like I'm sorry. I didn't hear your color your reaction to the governor's budget message beginning with taxes. If they were proposals the ten percent average income tax cut. Well, I think that the the governor certainly lived up to the spirit of his campaign promises. I think many people expected him to have just a straight ten percent across the board. I think he went beyond that and averaged on a 10% but gave more credit to those who were least afford to pay more taxes because of the inflation and I was delighted to see his approach of allowing the low-income people to either eliminate entirely or to have pets be no tax at all. And that is those who can least afford to pay taxes. So I was delighted to see that did you who think during the campaign that when the governor was talking about a 10% across-the-board income tax cut personal income that he meant 10% for every one that seems to have confused several people because now he's Would be talking about net take of 10% as much as a hundred percent for some people and very few percent for loose depending on and go. Well. I think most people just took it as though we're going to be ten percent across the board, but I think in studying it his approach today was was much more compassionate to more people of this state than doing what many people thought he was going to do. Thank you very much speaker or a rod Searle independent Republican and I see Senate text German Bill McCutchen, but it might take a little doing to get to him Bill Bob. Let's go back to you for a couple of minutes. Okay, John John Burley is working his way around on the floor with a whole horde of reporters both print and electronic trying to get reaction to the governor's speech from the members of the House and Senate particularly the leadership versus the the budget message now, we'll be going to the to the legislature and it'll Gone over in great detail each item line by line. Now, let's go down to John murli again and Senator Bill McCutcheon inflation Factor. The local official is going to have to go to the property tax. He has no other resource, you know, unfortunately in or fortunately I suppose how you look at it. But right at this time Carter has said at the federal level we're going to reduce our heads to the cities. Now the state of Minnesota looks like it's going to reduce the age of the cities that combination adds up to a very severe crunch four minutes Valley cities and towns police fire snowplowing. That's a very basic Services. You know, we've been we've been holding the municipalities to a very slight increase since 1970. We talked about a 6% increase. In fact, it's about 3% They are in my meetings with the Suburban city managers. They have said there isn't anything else you can take away from us, unless you're talking about police fire Public Works Health cuts. That was the year that we were moving into now with this will But it doesn't look good at this point. I'm so you expect some feedback negative feedback from disabilities on this I would be I would suspect that the you say the city managers the mayor's the league of cities will have a position that would suggest that we forgot something in the message. The AIDS are going on but your point is they simply don't keep up with it. They don't keep up their going out. Well the what he did the message of a reader talks about 89 million dollars, of course 66 million dollars was appropriated by the Democratic Senate and House and the governor's office last year so that you're talking about an increase between the 66 in the 89 which is twenty three million dollars at least that we've been looking at is 30 million. So there's a subjective Central differencing synonym coaching. We joined a little bit late. Can you tell us again your initial reaction to the tax proposals you want you had talked about property to yeses in terms of the total dollars. I'm you know, very excited. I think that's the only appropriate that we return as much as possible all of that returners 228 million that was there because of previous year's accumulations and he's talking about Some additional dollars to that. I'm not sure that I support the way he goes about returning all that money, but it certainly in terms of the amount. I think it's the minimum that we should be doing. And in fact, I would hope that as we go through the process we try and hold down spending and we free up more money and we do some we make some effort to return an additional month. Whatever that additional Mount Tabor the the average 10% income tax cut where the gradual but the bigger the cut the smaller there are eight different ways to provide tax indexing and until I see the specific proposals very difficult to respond to it indexing brackets does not provide Equity. So there has to be some combination of indexing and credits or some waiting formula. And until I see how that's done. It's pretty difficult to respond to it. Thank you very much, Senator Bill McCutchen chairman of the Senate tax committee back to Bob Potter and the gallery. Okay, John. Thank you very much. And I think the Point that Senator McCutchen was making there at the end is is an interesting one. And that is that the governor Qui will in fact be sending a special message to the legislature dealing specifically with taxes will outline all the technicalities and all the details of what he is proposed in general today. Of course the budget message that the governor gave was really just a brief highlight of what the budget fully consists of it's a very large document probably an inch or inch and a half thick on paper larger than legal size. It will be going to the Senate and House money committees the Appropriations Committee in the house the finance committee in the Senate. There will be a great deal of discussion about these various items in the next few months the possibilities, of course are that the fact the likelihood is that there will be some additions and some track subtractions and some changes from what the governor has recommended. There's a delicate political balance that must be struck in all this the governor of course is an independent Republican Senate is controlled by the dfl and the house is evenly divided between the dfl and the independent Republicans. So we'll be having plenty of material to keep an eye on in the coming months. Let's go down to John merly again. And he has dfl leader Irv Anderson, Senator Anderson. Can you give us your reaction once again to the I'm sorry the tfl leader in the house your reaction to the governor's address starting with taxes. Yeah. I think it was a basically a very good message to the people of the state of Minnesota. One of the things that I noticed was lacking. However was that he did not say thanks to the dfl for providing all these monies that are available now for these programs and he's tax relief measures a couple of areas that I had some concern about is in the field of Education. He provided three million dollars for a declining enrollment program for the rural areas calling the sparsity factor, but did not provide any such monies for the metropolitan areas where they also have sparsity problems or not sparsity, but the declining enrollment problems and then of course, I have some concern about the lack of additional monies in the field of higher education. Also, I feel that he has not really met the challenge of property tax taxes in Minnesota. I'm a little bit concerned that there's going to the property tax. They're going to rise rather than than hold their own. And so you like Senator McCarthy would like to say a little more emphasis on property tax. Yes keeping things stable right now. That's I believe that should be one of our goals during this biennium is to make certain that our property taxes. Do not rise. What about the apartment? Well, I can recall back in 1971 when we really had a taxpayer Revolt when they came down here and filled the National Guard Armory and told the leaders of the legislature at that time that they were not satisfied with just a freeze on property taxes, but wanted to decrease and this time around I find that it's been mostly political rhetoric that has caused a so-called tax revolt if you want to call it that and that I believe that the people themselves if we do not keep on this question will vote again. What about briefly Senator Brown jarmo Finance chair? And his idea to return the 228 million dollars or whatever is in the State Surplus automatically return all of that and then go on with more tax breaks. What do you think about that? Well, I have some reservation about that program. There's nothing wrong with it. However is to immediately return the money to the people but I prefer other methods than that course other methods, that would be in the Omnibus tax bill. Yes. Thank you very much. Durov Anderson dfl leader in the house back to you Bob. Okay, John. Thank you very much live from the Minnesota House of Representatives. You've been listening to the budget address by Governor Al quie and reaction to that address by some of the key leaders of the Minnesota House and Senate the technical director for this broadcast was Linda Murray with help from Lynn Cruz and back at the studio Tom Keith along with John Murray. This is Bob Potter now back to Danielson in St. Paul.