(00:00:05) Well today you will have an opportunity to find out what state policies might be pursued in the Minnesota House of Representatives. If the minority Republicans were in control, they are not as you know, there are 130 for seats in the House. 68 votes are required to pass a bill today Studio guest Dave Jennings has the control of 58 members of that 134 total. (00:00:30) A (00:00:31) few months ago Jim you'll in the Senate Republican leader was in our Studios and just before the session will give you a chance to visit with the dfl leaders who control the legislature speaker Harry sieben in the house and Majority Leader Roger mole in the Senate Dave Jennings is with us today. It's a pleasure to have you here sir. Well, it's my pleasure. I'm looking forward to it. I think the major question that will be talked about during the session is the Surplus. What are we going to do with it? How is it going to be spent saved or distributed to the taxpayers? What are your thoughts? Well the independent Republican caucus in the house as recently as last week offered what we call up program for prosperity in Minnesota, and it's a 60 point program. But as far as those parts of it the deal with the Surplus, which of course will be the most controversial item on the agenda this session, I guess the it really Narrows down to three or four proposals the largest being the repeal of the 10% surcharge on the individual income tax. The governor has called for that repeal to be Active on the 1st of July of this year or in other words a year earlier than anticipated. We would like to see it repealed effective the first of January of 1984 six months earlier than that so that it would be effective for the entire income tax year 1984 a second proposal would be to reduce the basic maintenance Levy for school districts that are as required to Levy against local property tax by four Mills is currently 24 Mills. We would see like to see that reduced to 20 mils that would result in a immediate reduction in local property taxes. The aides to schools would be then funded by the state and we believe that in addition to the property tax relief that would be provided it would begin to restore or begin to reverse the trend in Minnesota in recent years to rely more and more on property tax for funding education. We at one time had a goal of 70% State funding and 30% local property tax funding and we have now come to a point where it's the relationship is more like 5545. We would like to see that Trend reversed. And this is one way we could do that and accomplish some property tax relief in the process. We were also like to see Conformity to the federal government's policies on individual retirement accounts. So that Savers can get the same kind of tax deduction on Minnesota income tax for their IRAs as they can on the federal income tax at the current time. That's not the case and IRAs are in fact taxed what it boils down to is that we know wreck. We recognize the reality that we don't have the votes to do everything we would like to do when we've offered a number of proposals any combination of which we would be pleased with but the bottom line of it is that we recognize that the Surplus is just that it's an anticipated Surplus that it isn't Ben hasn't been collected from the taxpayers yet and that we would like to find a way to leave as much of it as possible exactly where it is and that's in the taxpayers pockets rather than have the state collected at all. We do not want to see the size of the budget increase more than it already is And we would like to see as much as possible done in the way of tax relief. It's about five minutes past the hour. Let's take some questions. If you have a question for Dave Jennings in the Minneapolis st. Paul area. The number to call is two two seven six thousand 2276 thousand in the Twin Cities area elsewhere around the state toll-free one 800 695 hundred thousand eight hundred. 6529700 David. I think some people are already waiting. So let's go to our first caller with a question for Dave Jennings. Hi, you're on the air. (00:04:03) Hi boy. I'd sure like to see us free spending until we get down to about the median level of taxes and which would be compiled by looking at the other 49 states in the United States. But anyway, my question is isn't Minnesota the highest tax state in the country now with his 10% surcharge the high taxes that are on sales taxes, for example, you mentioned the IRA which you of course, you can't deduct in Minnesota and Now Marlene Johnson has come out with his plan for building up dfl patronage by putting these business centers around the state, which is also going to cost millions of dollars and I just can't see how we can continue to spend money on these inefficient and ill-advised programs and drive business continually out of the state and try to balance this on the back of the middle class, you know, the middle class has gone from 32 to 12 27 percent of the population in the last 10 years. We're dividing into a nation of rich and poor and part of the reason for that is the spending policies. I got a letter from the national taxpayers Union the other day and every taxpayer in the United States there percent of the national debt comes to a hundred and fifty three thousand dollars. Okay, every taxpayer. Would you please comment on these facts? (00:05:17) Well lots to chew on their first of all many of the items that you gave in your remarks or items that I've used in probably 50 or a hundred speeches in the last six months, but in regard to your question about Minnesota's level of Taxation, yes, we are in fact among the highest taxed in the country. I believe our sales tax is tied for the highest and I'm if I'm correct on that our gasoline tax is the highest as I understand it if your income is in Minnesota is somewhere between $16,000 a year and $25,000 a year that we are the highest in terms of our state income tax and our property taxes in compared to other states are not the highest but they're getting closer to that all the time we've gone from something like 32 in the nation to something closer to the top. I'm not sure what the latest figures are with these new property tax statements that will be coming out in the next couple of weeks, but we're moving upward rapidly. So Yes, we're very high text. And yes, we and the independent Republican minority in the house sincerely believe that that the effect of that tax burden is to unfairly overburden the middle class tax payer and that it is in fact the middle class tax payer who does carry the load and the result of that is the flight of jobs for Minnesota. We do believe that as a result of that Minnesota is not yet a full partner in the recovery that has happened at the national level things are better in Minnesota than they were but they're not getting better as rapidly as they are in other parts of the country and they're not getting any better because of actions of state government, but rather just the drag effect of the national economy. Let me ask you very briefly before we go on to another listener about the impact of the three proposals you had on the budget the impact of that on the budget and reserved and what an appropriate level of Reserve is now the governor is suggesting that it be increased by another hundred and twenty-five million of their It's currently at 250 million. Well, the last legislative session set it at 250 million. And the reason for doing that that figure was not to figure that came out of thin air, but rather it represents 5% of the state's annual budget and the belief was that that was a responsible amount of Reserve to keep on hand. There was a great deal of argument about whether in fact it should be more or less than that. But the number that was arrived at was 5% of the annual budget. I do not support the governor's plan to increase that Reserve when we originally budget and we Budget on a two-year basis when we originally put the budget together. We are projecting 30 months into the future what will be happening with the economy and it's very difficult to do that with any degree of accuracy. And so the need for some budget Reserve I believe is legitimate and and the reality of life is now however that we as we come into this session when we button up the 1984 session, we will only be just over a year away from the end of the biennium and so we're only projecting at that point 12 months into the Sure, and and it's much easier to do that with some degree of accuracy than it is 30 months so that we certainly don't need a larger Reserve I would argue we could get by with a smaller reserve and and I would suggest that a figure that's much closer to a hundred million dollars than 250 would probably be more appropriate and would be would be workable at this stage in the biennium. So no, I won't I won't support the plans to increase the reserve my belief is that if we do that That that means that the resulting impact of that would be that the legislature in 1985 would come into session with hundreds of millions of dollars of surpluses by then mostly collected and sitting in the treasury and that the Temptation for that legislature to find ways to spend that money would be too great for them to bear as it was in 1979 when the legislature came into session with a large Surplus. The money would be spent and the state's budget would be increased dramatically and the stage would be set for further financial problems similar to those we experienced after that 79 budget more listeners are waiting. We also have some more lines open in the Minneapolis st. Paul area 2276 thousand 2276 thousand if you have a question for Dave Jennings, we also invite calls from elsewhere in Minnesota. There's a toll-free line for those of you in other parts of the state one 865 to 9700. Hi, you're on the air (00:09:38) the state labor laws affect. Not only the business climate. Also the climate of economic choice for individual workers in the state. I'm wondering if the state and the legislature might benefit from debating a right-to-work bill in the legislature. Thank you. (00:09:58) I don't think there's much doubt that we would benefit somewhat from debating it. I don't believe for a second that the Minnesota Legislature in 1984 given its present makeup is going to do that or is going to certainly not going to pass one. But I think the debate might be a healthy one. It's a discussion that hasn't been conducted in in state government in a long time and it might be healthy to review that whole matter and and sort of reassess where we're at and where we might be heading another caller with a question for Dave Jennings. Go ahead, please. (00:10:29) Yes, I wondered if I've heard from various business people that the cost of having an employee is just about twice the cost of what the employees actually paid. If you pay five bucks an hour that various other cost to head up to another five bucks an hour. And I wonder if your guest is familiar with this and the various breakdowns that how much of that is due to two expenses due to the state and how much due to federal government and curious about this because it seems to me that if you want to do eliminate a lot of unemployment at the had a stroke reducing this essential hundred percent tax on employees would be a good way to start and I'll hang up and listen to the months. (00:11:23) Quite frankly. I don't know what the breakdown is in terms of exactly how much of that would be Federal and how much of that would be State there is no doubt in my mind that at least in the case of certain businesses and industries that hundred percent figure would be accurate there would be others where wouldn't approach that but but certainly in some businesses that would be true as far as what the breakdown is. I would guess that probably the largest portion of it would be due to the state of Minnesota. The federal government does provide some guidelines in the way of what's required for unemployment, but the state of Minnesota goes beyond that and and the state of Minnesota is responsible for the additional cost of having a report employee that are related to workers compensation and those kinds of things so I would guess that of the to probably a slightly larger portion in those Industries where the disparity is that high a slightly larger portion would be due to the state as far as whether or not that's a good place to start doing something about the problem. Certainly is the legislature has failed in my opinion to do anything meaningful about workers compensation costs or unemployment compensation costs in Minnesota. Every year the legislature gets together and passes a bill called the workers compensation Reform Bill and it's mostly Bill and very little reform and and there's just no question that there's room for improvement in those areas and that that would be a good way to Signal employers that we are interested in having them stay and expand in Minnesota again. I'm not particularly optimistic about the 84 legislature being any different than the 83 legislature and my guess is that those kinds of changes the kind you're suggesting aren't simply aren't going to take place unless there's a change in the makeup of the legislature itself. It's about a quarter past twelve Dave Jennings is with us today. He is the minority leader in the Minnesota House of Representatives. We have another listener with a question. Go ahead (00:13:17) please. Yes. I just have a quick question. I was wondering if we have this tremendous amount of surplus that's going to be available. Why don't we just take it all in we're all geared to spend the money. Anyway from the taxpayers Viewpoint bring it in put it into a big fund and make sure that neither party can get ahold of it. And then use the interest that could be generated from that fund to cover us when we're in difficult times and we don't have money and we have to have deficits to me that seems to be a means by which we can kind of level out our problems with respect to income in the state. And if you project the numbers far enough ahead you might be able to take all the people who were 65 years of age off of the tax rolls if they live here ten years or so and contribute to the fund. That's an idea. I don't know. What do you think of that? (00:14:04) Well as I view it the problem with your plan is that it would be in my opinion impossible for the politicians in the legislature to leave that fund the loan. The money would be spent. It would not be left sitting in the fund in the first place. They simply could not resist the temptation. I have served enough years in the legislature. You know that that just wouldn't happen as far as how we avoid rough times in the future. I think that can be done. But the way it can be done is by reducing the expenditures and by the legislature facing up to the fact that we're spending now now spending more than we can afford more than the taxpayers of Minnesota can afford and reducing those expenditures holding down the growth of government. And in fact, if possible making some reductions and reducing the need for those expenditures would avoid the hard times. It would be a nice world if it were as simple as putting this money aside and leaving it there and that that would solve our problems but it's not going to the only thing that's going to solve our problems is if the legislature can summon up the political courage to do some very difficult things and things that they'll get political heat for from special interest groups, but things that simply have to be done wouldn't your plan to reduce the local sheriff School District costs do just what you say increase the government's commitment toward. Toward spending on education and indeed commit Us in years past 1984 and 85 in the new biennium when we have no idea what the revenues would be. It would for this biennium in it would not increase the government's quote-unquote government's commitment to education the number of dollars that would be spent in the schools would be the same the difference. We split up the difference would be where it was collected from rather than collecting it from the property taxpayers. It would that portion of it though that was shifted by us rather than collecting it from the property taxpayers. It would be collected from the income and sales tax payers and but they're all taxpayers and and the level of spending on education would not change. It's a question of where the resources would come from. So no for this biennium, it would not increase the state's problems as for the next biennium. That's a discussion that can't be separated out from the rest of the budget. Yes education's Action of the state budget in the next biennium would be larger as a result of our plan education's section of the pie would be larger that does not mean that the budget itself has to be larger. It does not mean that that more money would have to be spent what it means. Is that among those things that we prioritize and that's what the state's budget is is a set of priorities we take the money we have and we divided up according to our priorities what it means is that education would have a higher priority and that on State dollars and that more State dollars would be put in that particular slice of the pie and that perhaps some other areas of the pie might have to get a lower priority as a result of that. But when such that we don't think that's bad. Well that's such a tantalizing question. I must ask what would you give less priority to well for one thing. I think we can't address the whole problem of the state budget and I think it's a problem without reviewing the the size and the cost. Cost of government itself about 60% of the current state budget can be directly attributed to the public payroll to public employee salaries and that no one no one responsible can address the size of the budget without addressing what's happened with the state's payroll and with the public employees payroll in general in recent years. There are public services that are legitimate and it requires public employees to perform them. But the fact of the matter is our public payroll has now reached a point where it's very close to 15 million dollars a day where it's 60% of the total state budget in one form or another at one level or another and and we need to begin to review all of those services that are provided by state government and consider or at least reconsider their legitimacy. And that would be all areas of the budget. I would want to take a look at state government in total. I would want to review our present local government AIDS formula if it were up to me, I would Review our School Aids formula more more dramatically than what we're suggesting in our budget this year and rebuild a budget that is one that we believe is responsible in one that we believe is within the income limits of the people of Minnesota. Nobody would Escape consideration all were suggesting is that we bring education back to the head of the list again for the first time in 1983 for the first time in the state's history. The health welfare Appropriations bill was bigger than a school aid bill. And we believe that that our sense of priorities has gotten out of whack and that we have got to re-examine our commitment to education to public education in the state. We better move on to some more listeners with questions for Dave Jennings how you're next. (00:19:09) I'm calling to say that if I think it's well known that we do have a high rate of income. I mean, I'll sales tax in the state, but I'm curious to know why he didn't point out that unlike most States. We do not pay sales tax on clothing and food. It's so in reality, even though the rate is high the actual amount paid in it's not as high as many other (00:19:29) states. Well, I guess the question was about whether or not we're among the highest tax states in the country and those statement I made was that we there are six percent sales tax rate ties for top in the country. And that's true. The fact that I don't have to pay sales tax on the clothes that I buy in the food that I buy and and neither do other people is great. I mean, I think that's wonderful its small consolation when I have to pay it on a car or a washing machine or something else, but that doesn't change the fact that six percent is still a very high rate and then until a couple of years ago. It was only four percent and suddenly the legislature is increased sales tax by 50% The rate has been increased by 50% in just the last couple of years and a temporary tax a tax increase that was promised to have been temporary in the beginning has become permanent. The sales tax is too many people to least defensive of taxes. And if that increase in sales tax had resulted in an equal reduction in some other kind of more onerous tax such as property tax, it would have been more bearable. I don't think that the say Stax is all bad. Even at six percent. What I would argue is that the combination of the sales tax as we have it in Minnesota the income tax as we have it in Minnesota the property tax as we have it in Minnesota the licenses the fees and the charges at all levels to buy a driver's license by license plates by Gasoline by anything that you want to buy and even to go cross-country skiing on a State trail that the combination of those things has become so onerous that it is driving people out of the state. Here's another caller with a question. Go ahead please you're on the air. (00:21:04) Oh, yes. What do you think of the Federal Reserve being a private Corporation and all of our national debt being owed to them? I'll hang (00:21:11) up. It's not something to do with much in the state legislature David. I was going to say I've never thought about it to tell you the truth. I have never given it much consideration. We have got so much problem dealing with the state of Minnesota's budget that I have to confess. I don't give a great deal of time to thinking about what to do with the Federal Reserve and the federal budget say we have a few more lines open now in the Minneapolis st. Paul area 2 Seven six thousand. If you have a question this noon, in other parts of the state toll-free 1-800 6-5 to 9700. Hi, you're (00:21:40) next. Hi. I'm representative Jennings. I'm a high school student in a school that's going to be graduating nine seniors this year. And I'm from my experience. I've noticed that rural schools are having an extremely difficult time acquiring the facilities for teaching high tech areas. What proposals does the IR have for (00:22:00) that? First of all, it's an increasing problem in Minnesota. It's strictly a matter of the economies of scale as student enrollments continue to decline and as the state continues to fund education on a per capita basis on a per-student basis the problem just continues to grow in rural districts and I represent school districts exactly like the one that you're talking about. And I know that that's the problem all that can be done in my view to to address. The problem is for the state to make it as easy as possible for local school districts to run their own schools are currently something like 2,000 stipulations that a local school district must meet before they can qualify for State AIDS all of those stipulations require paperwork and documentation and somebody to work in the office to handle them in a variety of kinds of computers and equipment and people and then we have very difficult licensing requirements regarding who can teach into can't and we have very strict laws regarding how much teachers Will be paid in won't and whether or not we can reward teachers to do a good job. And the combination of those things makes it very difficult for a local school board to do what it has to do. There is no consideration given to the problems of a small District or the problems of a large District what the state does is they take a look at the average district and they set the rules and make the guidelines according to the average District. So first of all, there's got to the state's got to lighten up on the local school board a little bit of let them have some flexibility in running their school district beyond that and what we have to do is encourage those local school boards. Once we've given them the flexibility to do so, we have to encourage those local school boards to seek alternative ways of providing curriculum that they can't provide on their own. There's there's work being done in some school districts with the low-power television Communications between two school districts two-way communication by television, so that a teacher in one school can be talking to students in both that one in another school down the road. There is a whole new Field opening up in terms of with Satellite communication and the increased use of computers and their software being developed and new hardware for that matter being developed as we speak so that what we have to do is encourage school districts to find more cost effective effective ways of providing education and get away from the idea that because we've always done it a certain way. It has to continue to be done that way. Here's another listener with the question. Go ahead please you're (00:24:24) next the I ask a question sure. My question concerns the cost of Health Care and I was wondering if the legislators could someone enough political courage to do something about containing the cost of Medical Care the cost currently provide medical care. If not consuming more than ten and a half percent of our gross national product and my thought is that since the president the members of Congress the military the Veterans Administration are all served by doctors who are on a fixed payroll for there not be some facility. Whereby through the providers of Health Care would be on a fixed salary serving Medicare the and Medicaid. (00:25:10) Well, first of all Medicare Medicaid are both things that are more Federal in nature than they are state in nature. I could comment however about this whole business of containing the cost of Health where care because it is a very large part of the state's budget as particularly in the area of nursing home care and I would say that yes, there are things that can be done. No, I don't see the legislature working up the courage to do them in the near future. Again. That's one of the kind of things that just doesn't seem to be able to happen at least with the current makeup of the legislature. But I would only sort of close by making a philosophical comment and that is that in my experience if if what you mean by doing something about controlling the cost of Health Care is for the state to arbitrarily say this is what it's going to cost. I don't think that'll work. I think that the more government has gotten involved in what they call Cost containing measures for Health Care. The more Health Care has cost us and I have had some experience in the area of Particularly the States involvement in nursing homes and the States involvement in the regulation of and the control of the nursing home industry more often than not leads to increased cost not reduce cost. Another caller is waiting with the question Dave Jennings is listening. Go ahead, please (00:26:25) mr. Jennings. I will make a statement first and then I will ask you a question. First of all, Minnesota has always been pretty good stayed as far as employment and business is concerned my objection to the Republican philosophy in the state of lead and through the AL quie Administration. He has been a deep-seated pessimism. It's bad advertising when you land at the Minnesota airport. There's not even a paper loon or some big smile or something regarding tourism that can face the people that come in to this airport. It's a cold atmosphere. We've got the climate to face in this state and there's nothing we can do. About it. Our infrastructure is falling apart. The freeways are in Beauty bed sheep, and I really think Republicans should get together with Democrats money is going to have to be spent on this (00:27:22) date. Excuse me, ma'am. Can I ask you to get to your question? Because they're number (00:27:26) one people why you have this bias? So against working people when they are the input of consider buying consumer goods. They do the purchasing even anybody that is on our unemployment compensation or or on whatever the LTI wanted these people buy Goods the more you're going to make Minnesota working people for the worst doctor going to be a tire to live in this (00:27:52) state. Okay. Thank you, ma'am. Let's get Dave Jennings response. Now. First of all, we're not against working people. In fact, our argument is that if we would leave more of the tax dollars in the hands of the working people so that they could afford to buy things that Minnesota would be better off and the more that we take money away from Them with higher and higher taxes the less able they are to continue to survive as regards our business climate in Minnesota and the Republicans attitude about it. You need to know ma'am that that we have a bad reputation Nationwide for being a state that it's tough to do business and for being a state that this is where the state government is hostile toward business and the Republicans didn't take that reputation out there that reputation got out there on its own what Republicans are trying to do is force state government to admit that you see people businessmen all over the country already know about it, but state government has been going around telling people that there is no problem that the problem it doesn't exist. And what we're trying to do is for state government to admit to the fact that we do have a problem that businessmen in New York and California and Florida don't think about moving to, Minnesota. And then until we do something about that. Our economy is not going to continue to prosper as it has in the past we've gone too far 12:30 is the time Dave Jennings is with us today, the Republican leader of the Minnesota house taking your questions during the hour. We also have a couple of lines open again at 2276 thousand for Minneapolis. St. Paul area listeners. In other parts of the state. The toll-free number is 1-800-695-1418. My mentioned that the lines fill up again. So if you get a busy signal got the number down and try again in a few minutes because we clear them up pretty quickly. Go ahead. Please your next (00:29:38) representative Jennings. I moved here to the Minneapolis area about a year and a half ago from the New York metropolitan area. I was born and raised in a large urban city in the New York metropolitan area. I came here to go to school and fell in love with the place. I'd just like to make a statement that yes, indeed. We are we are very heavily taxes tax on gasoline and It's and liquor and property tax and sales tax and and income tax and but but I would like to make this statement that it costs some money to run an efficient and good system. And I'd like to praise you for the job that you're doing and if it costs a little money, will you get what you pay for the question that I have for you sir, though, is that when I was figuring my Minnesota income tax this year. I've started in an entry-level position in the low income individual. I looked at the low-income alternative tax and come to find out that it was a higher tax than then the regular tax and tax table is concerned and I if you could explain this to me, that would be a big help to me and I'll just hang up and listen to your answer. Thank you. (00:30:50) Well, first of all, I can't explain it to you. I don't know enough about your income and and the low-income alternative table and how your income fit into that to know to account for that. I simply don't have enough information. To all and secondly, I'm not a tax man. So I can't give you an explanation of how in your case that happened. The only other comment I would have is that that I agree with you that Minnesota is a great place to live. I was born and raised here and want to stay here and state governments making it tougher and tougher for me to do that. And we do have legitimate public services that are necessary. We do have to provide education and transportation and Public Safety and all of those things but in my experience while I was growing up in Minnesota, I also after that during my military and educational time spent time in places like California North Carolina, New Jersey and Florida and all of those states have roads and schools and Public Safety just like Minnesota does and they don't have the tax burden that Minnesota has so that what I am suggesting is yes, some taxes are going to be necessary at some expenditures are going to be necessary and some public services are very much legitimate services. But that we're not doing a very good job of it here in Minnesota that efficiency that you mentioned just isn't happening. Okay, another caller with a question for our guest. Go ahead. (00:32:12) Please representative Jennings. I'm a farmer and we raise corn and soybeans and oats and hay and have a small count calf operation in Carver County. Our taxes went up 40% We got the statements last week in researching the our neighbors taxes in the same area. They also have gone up anywhere from 20 to 70 percent. And my question to you is have I know the state's tax structure hasn't has an effect on our on our County Texas and I'm aware of the egg Reserve programs in the homestead credits and all that. But nonetheless just about the time. We thought we were going to break even we're getting whomped with another $10,000 which is going to put us well in the in the Red again, and I and a lot of farmers are going to have to close up the store of because we can't afford to pay our bills the seeds the fertilizer the one guide and me works on the farm and these taxes and a do you have an opinion of how this this isn't just happening to one Farm its many how this is going to affect the the metropolitan area. And of course the whole state in the long run as well as do you have an opinion about how this is going to affect the price of food, which is apparently in the minds of great many City people. Hi. Okay. Thanks for (00:33:48) calling from Carver County. Well, I don't think that there's any question that any time there's an increase in the cost of the of the people who do business as a part of the food chain, whether they raise the grain or whether they raised the livestock or whether they Sailor or whatever they do any time there's an increase in cost that cost is ultimately going to end up coming out of the consumers pocket. There's no question about that at some point down the road. It's going to happen. You're right. It is a Statewide phenomenon. I represent an area in southern Minnesota along the Iowa border. We have seen similar property tax increases in that area and I also have visited with assessors from West Central Minnesota and the farming areas into the Red River Valley and they are going to experience similar increases in those areas. It is a direct result of what state government has done. It revolves around the elimination of local government aids to some of units of government. It revolves around a conscious decision on the part of the legislature to shift more of the cost of education on to local property tax. And the combined effect of all of those things is now being felt in the air in the way of a property tax increase it was something I alerted the legislature to last year during when we were debating the tax bill told them it would happen and the bill passed anyway, and now sure It's happening. I think it's going to have a depressing effect on our economy. I think it's going to hurt a number of farm families very dramatically particularly at a time when they see the market value of their Farm declining in many cases to have at the same time large property tax increases is just something that many of them for some of them. It's going to be the difference between surviving or not surviving as far as what can be done about it it all gets back to the same basic thing and that's whether or not government particularly state government is willing to get spending under control. I think overall what happened very briefly is that in the early late 60s and early 70s property taxes have gotten very high the state government adopted something called the Minnesota Miracle which dramatically shifted the cost of government on to income and sales tax and reduce property taxes for a time. However, the politicians and st. Paul soon found out that there was a limit to how much income tax and sales tax people were willing to pay and we reach that limit and so their only choice if they intended to continue Ending at an ever increasing rate was to begin raising property taxes again to pick up the tab. I think that's what's happened. The only thing that's going to cure it is less spending. Well wasn't the cause of the big tax increases over the past several years the recession though in the fact that income tax revenues and sales tax revenues did not keep up with expectations because of the recession and all the cause of the tax increases was government spending when we were faced with recession and with declining revenues. We had two choices one was to reduce spending and one was to increase taxes and government chose to increase taxes. They could have chosen to reduce spending but they did not they could have for example in this biennium in the night when the 1983 budget was adopted without extending the temporary surtax on the income tax without making the sixth sent on the sales tax permanent without eliminating local government AIDS. They could have in still increased spending by seven percent. But instead they chose to extend those temporary taxes to make the sales sixpenny of the sales tax permanent to remove the local government AIDS causing the shift to property tax and thereby increase spending by more than 20 percent. So there's only one thing that causes high taxes and that's how I spending. It has nothing to do with recession or not recession. It's how much money the governor government spending 21 minutes before one another caller with a question. Go ahead, (00:37:22) please. Yes. I'm asking. Mr. Jennings about are their plans in the legislature to pass the Constitutional amendment to balance. The federal budget is only a few more states needed to do this. I think would really solve a lot of problems. Thank you. (00:37:41) Well, I don't know I wouldn't go so far as to say there are plans to pass it. There are a number of legislators including myself who support the concept and have supported the bill in the past. It has been addressed by the legislature in previous years never successfully. The bill is never passed the amendment has been offered but never passed. Traditionally what kind of happens is someone introduces it it never gets a hearing in committee and therefore never comes out to the house floor for a vote and at some point during the session someone offers it then as an amendment to some other bill in an effort to get it brought before the house in that manner and the amendment is either ruled out of order or voted down and another year goes by so yes, there are still many people in the house who support the idea but the difference between that and getting it past is is a long ways Republicans are ten votes short. And so even if every Republican in the house is willing to vote for it and I suspect they are we're still 10 votes short of having the votes to pass it. Another caller with a question. That's known. Go ahead, please you're on you're next. Hello. (00:38:47) Oh, yeah. Well, I personally have mixed emotions regarding horse dogs racing or a lottery. I guess I'd like to speaker. What do you think of them and to do you think it would be better served to put the money into General Revenue rather than Economic Development. I'll hang up (00:39:04) now. Well, first of all, I guess I'm keeping an open mind on the lottery question at this point. I voted before the last general election. I voted to put the paramutual question on the ballot before the voters at that time and have no particular philosophical problem with with having the voters face the question of whether or not we're going to have a lottery in Minnesota. It's not a philosophical problem that I had with gambling in general, but I do have a bit of a problem with supporting it at this point mainly because of the question that you referred to and that's where does the money go? I think that state government if it's nice and it's a nice buzz word to use the words Economic Development right now and everybody was interested in economic development. But if that means that the dollars are going to be used for the state government to provide subsidies and tax incentives and decide which businesses are going to succeed with State help in which businesses aren't or if Economic Development means that the state Going to create some jobs and public service kinds of jobs that are temporary in nature. Then then I don't want to see the money spent for that that is not in my view anything that remotely approaches economic development on the other hand. I'm not too crazy about putting the money in the general fund either. I'm I'm convinced that the state legislatures already spending too much money and I see no reason to give him two fifty or a hundred million dollars a year more to spend even if the monies raised voluntarily if they want to have a lottery and if it will raise let's say fifty million dollars a year and if as a result of that we could realize a 50 percent of fifty million dollar cut in some other tax that is involuntary then I think we'd have a good plan. But all if at all it's going to do is give the legislature fifty million dollars more to spend than I don't like it. Here's another caller who has a question for Dave Jennings. Hi, you're on the (00:40:53) air. Thank you representative Jennings. I had first of all like to compliment you for your efforts in the legislature. I think it it must be frustrating as a minority party, too. Genuinely be in that position. I have a couple questions. The first is rather tongue-in-cheek, but it's something that thought of the second one maybe less. So the earlier collar wondered why the IR had a particular event seemingly not interested in the working class. I think one of the things that we continually do is point fingers if we had only one party in this state the legislature then would ultimately be responsible to the taxpayer interested in your comment on that second one perhaps again along the same lines in that my analysis of the tax tables indicates that we hit the maximum bracket that is I believe 14 and 16 percent at the twenty two twenty four thousand dollar income level which to me is far from upper class first, I guess my question is do you feel that? Accurate and secondly. My observation is that someone else noted that it is the middle or even in this case? Maybe the upper end of the lower class, which really Bears the brunt of the of the taxation system in Minnesota at least in the income (00:42:23) level. All right, Dave Jennings. Go ahead, please. Well, first of all regarding your first question of whether or not if we only had one party in Minnesota would they be responsible to the public? I would submit that for all practical purposes for the last 12 or 14 years. That's what we've had dominating government is one party what it gets down to on the important questions the questions of taxing and spending is who's in control of the legislature not who's in the governor's office and not who's in the White House and not who's even in Congress, but who's controlling the legislature for about 12 years? It's been one party controlling both houses and they pretty much had their way now not every issue. In fact most issues most votes that are taken are not decided along party lines, but the important ones are decided on a party basis and and so we've had one party domination and I would argue that it hasn't been responsible. I don't know quite frankly from my five years in the legislature whether it's possible. Well for the legislature to be responsible or not. I keep hoping it is but I haven't seen it happen yet. And I would add as a footnote that the same thing seems to be true of Congress regarding the second item that you referred to. Yes. You're right the highest income tax brackets the highest burden that we have in terms of other states compared to other states and so on does fall upon taxpayers who are in that twenty thousand to twenty four thousand range. We are we hit him hard there and yes the middle text middle class tax payer does carry the load The Facts of Life are that that's where the taxpayers are that that most taxpayers fall into those middle categories and that they're the ones who bear the brunt of the cost of government. It is always been that way and probably always will be that way because simply that's where most people come and that's therefore that's where most dollars come from and and therefore as I said before I would argue that those of us who fight hard for tax relief are For the working people in this state not the rich as some would like you to believe it's about a quarter to one Dave Jennings with us today minority leader in the Minnesota house. Here's another listener with a question. Go ahead, please. (00:44:30) I'm an aspiring entrepreneur whose efforts to set up a prototype manufacturing operation have been temporarily stymied for a lack of capital and what I'd like to ask representative Jennings is his feelings regarding the use of money raised from a lottery for use in providing venture capital for business startups. If the system could be done efficiently through the use of successful entrepreneurs to pick out those Ventures which have a lightly chance of succeeding and it's Mike. (00:45:08) Okay, if you think we get the gist of it there David do you want to respond to that possibility? Well, first of all as an aspiring entrepreneur in Minnesota, I want to wish you luck. I think you've got a difficult road ahead. I understand how difficult it is to get started in business anywhere in the country. And certainly that's the case at the present time in Minnesota as for the lottery money being used for venture capital. I understand I think what you're suggesting and I am sure that too many and particularly to those of you who would be interested in applying for some of this Venture Capital that it appears to be a real sort of optimistic approach in the kind of thing. You'd like to see happen. I would caution you with something. However, and that is that that even if this were done and even if you were able to get some Venture Capital At A reduced cost to you to start your business that until something is done about the cost of doing business in Minnesota, you ultimately your chances of success would not improve. So my first preference would be for any monies anything done by the state to reduce the cost of reduce the cost of Again the need for for having government programs that that single out this business or that business for a low interest loan. If government spending is reduced and if the tax burden and the regulatory burden is reduced and if Minnesota is made competitive again, there won't be a need for State Venture Capital to be provided businesses that have a chance of succeeding will be able to get the Venture Capital. They need investors will be willing private investors will be willing to invest in Minnesota. So I would argue that using the lottery money for that purpose would be at best a temporary solution for a few people and certainly wouldn't solve the problem. We face onto another listener with a question for Dave Jennings high. You're next. Hello, are you there? I guess not. We'll try that line. Okay, you're on the air. (00:47:10) Okay. Yeah. One thing I'd like to comment on is Minnesota's now allows capital gains in federal government. And I think that one of our biggest mistakes were making is allowing capital gains for non-productive speculation. I've been in both Jews and if I'm building homes and hiring carpenters and making actually producing and making jobs. They rolled come the end of the year. I don't get any deductions cabin gained. If I buy a piece of property No, don't touch it don't know value-added and make my money on that sell it pawn. It is raise the price a piece of property. I can take my six percent capital gains. I think at this is very contrary to what would be good for the economy and jobs everything else and like some comment on (00:48:10) that. Well, I would be less than candid with you. If I said that I was sure that I understand the difference between the two and if I was said I was sure that I understand your question. I guess I would say that I would like to see a tax code in Minnesota that encourages investment and encourages development in those areas where development is appropriate both. And I guess I don't understand why it is that as a contractor you would not if that why it is if you did something with the land you would not be qualified for the capital gains. Whereas if you did didn't do anything with the land you would I guess I'm not familiar with with the difference there. Okay, we will move onto another listener with a question at any rate. Go ahead please you're (00:48:58) next. Yes. I'm I want to ask representative Jennings question about the Minnesota Surplus that we're all having reading about and that's what there is. No definitely no guarantee that the economy is going to stay level or Rising. As it is presently, even if presidential advisers and Washington item Got Confidence in it. And is that mental microbe in Washington DC gets re-elected economy may go to a tailspin again. So why don't we keep the surplus of just stand by with it? (00:49:28) Well, I guess there is no guarantee. I would agree with you that there's no guarantee. The economy is going to continue to to maintain at the level that it's at now or grow at the level that it's at now, and I'm certainly no one position in no position to guarantee that to anyone I would suggest however that we do have adequate revenues. We have used very conservative estimates. We have used a very responsible approach to putting the budget together and there is strong reason to believe that our present budget will hold up and that are present revenue forecast takes into account the fact that the economy might not continue at the rate that it's at and so that I what I'm saying is I think despite the fact that the economy A not continuous strong as it is, we have considered that and we still end up projecting a surplus and the government ought not to operate at a profit and ought not to just hang on to the money because as I said before even if it was a good idea for them to just hang on to the money, I don't think that the politicians in the legislature would have the courage to do that. I don't think that they could resist the temptation to put it into circulation and that's the last thing we need. What about the idea that was floating around a couple of years ago during the recession that some of the recipients of state aid school districts local governments and so on so forth should be willing to or be required to take the risk of a less amount of Aid if State Treasury revenues do not permit the full amount as as required by law. Well, first of all, simply by being in a position of having to rely on state aid, they're already assuming the wrist. We there it's not on a formula. It's not in that sense formalized I suppose but they simply by the fact that because of our taxing structure Minnesota. They're required to rely on state AIDS in some form or another they are automatically taking a risk in terms of what the economy will do whether or not somehow making that a more formal Arrangement would improve it or not. I'm not at all sure. The best thing the legislature can do is make as responsible a budget and as conservative and estimate as possible put that budget together and then hope for the best and if Hard Times come upon us as they did in the last biennium before this one then begin to make some rational decisions about what to do about it. I don't know that putting a formula in law would change much when the time came and the shortfall was there and those local government AIDS were reduced even if it were done by a formula the political reaction out in the Your side would be such that the legislature would probably end up in special session tampering with it. Anyway, six minutes before one. We have a lot of listeners left. Let's see if we can satisfy all their concerns during the hour remaining. Go ahead, please you're next. (00:52:14) Thank you. Have two questions for mr. Jennings one in regard to the cost of maintaining our highways. Certainly all states have highways, but the severe Winters and Minnesota certainly result in higher costs to maintain hours and second question is in regard to businessmen's cost of doing business here as opposed to other parts of the country, isn't it? True that in other parts of the country particularly in the South? It is cheaper to do business because they have gotten rid of unions and therefore can pay lower wages. I'll hang up and listen. Thank you. (00:52:50) First of all regarding your first question on maintaining highways in Minnesota. You bet it cost more. There's just no question about that our severe weather both summer and winter sometimes has to do with that plus the fact that we do have a very large State geographically speaking compared to many others and a lot more miles of highway to build the Republican program for 1984 calls for a transfer of Motor Vehicle excise tax namely the sales tax on cars and trucks to be true be transferred to the highway trust fund which is the fund that that pays for those highways in the maintenance of them and and we strongly support providing adequate funds to keep that super structure in place and to keep those highways safe and and and in fact are supporting in our program a plan to put more money in that Highway trust fund by using the sales tax from Cars and Trucks as for the cost of doing business in the Sunbelt States. Yes, you're right some of those states do not have they have so-called right-to-work. Which means they do not have unions which means that they pay their labor last they also have in some cases reduced energy costs and all kinds of other considerations. It's not true in all Sunbelt States, but it certainly is true in some and I don't know again give you a complete list of which is which okay, we got about four minutes left will take another call. Go ahead, please you're on the (00:54:11) air. Yes. I have a quick question. And then a follow-up is the Republican caucus planning on supporting their state or federal ERS this time around. (00:54:22) First of all, the Republican caucus in the Minnesota house has no position never has a position on what the federal government does. That's the federal government's thing. So I can't speak to what Congress is considering as terms of a federally area regarding a state era. There is no official caucus position that all 58 members of the caucus take a number of Republicans in the house are authors of or support era bills, and and then Breaks down some are authors of and supporters of the so-called clean. CR a bill and some are authors of our supporters of ERS that are that have amendments added to them other than the basic year. They were familiar with so there is no unanimous position of any kind. There are some on both sides I think in the interest of time and fairness to other callers, we will move onto another listener that one person get another question and go ahead please your next (00:55:15) legislature do something about the number of education courses teacher candidates are required to take because they reduce it. So take more courses in the major subjects going to teach. (00:55:26) Yes, the state legislature has the authority to do that. The state legislature has is the one who created the system of the State Board of teaching and the licensing requirements and so on and the state legislature could make changes in that area. I for one would strongly favored relaxing in some areas those licensing requirements not just in terms of courses, but we want to make sure we're getting good teachers, but I think we've gotten to a point where we've made the licensing requirements own. Carol that a lot of people that are good teachers aren't making the cut. All right, we've got time for one maybe two more. Go ahead please you're next. (00:55:58) All right Lee. Minnesota legislators have been part-time individuals and it seems to be going to a full-time thing where we get those making laws that take lawyers to interpret plus the fact wouldn't it cut down on expensive state government If We Had A one-house legislature (00:56:22) Well, I'm not at all sure. It would cut down on the cost of government. It would save some salaries in terms of what we pay the legislators whose jobs would be eliminated. But there's no guarantee that a single house in the legislature would be any more responsible than a two-house system. And so the overall cost of government might not be reduced at all. You're right. However about the trend from part-time to full-time. I think it's bad. I think it's a mistake. I think it's something that is correctable. But it's going to require considerable public pressure to do that. The legislature has been steadily on that Trend toward full time for many years now and it can do the trend continues at this point and only through strong voter support for a change. Is that going to happen? Do you like the idea of reducing the size of the legislature? Well, I've got mixed emotions about it. There has to be more explain to me about what we're going to do when we reduce the size if reducing the size means that it will increase the likelihood of going toward that full-time legislature, if increasing the size of the districts and reducing the number of legislators means that we'll have more staff. Finn and that will have more full-time legislature than no. I don't support it. Well, I'm afraid we've run out of time on that note Dave Jennings. Thank you very much for coming in and visiting with us today. My pleasure a few people left on the lines that we didn't get to but that seems always to be the case.