Pioneer Press: Pawlenty budget fix cuts spending, but also cuts sales tax

Associated Press
Article Last Updated: 03/07/2008 04:03:02 PM CST

Gov. Tim Pawlenty's budget fix comes with a twist: In addition to spending cuts, he's proposing a statewide sales tax reduction.

The 1/8th of a percent cut to the sales tax would actually deepen Minnesota's anticipated deficit, which economic forecasters say will hit $935 million. Pawlenty, a Republican, said today that the sales tax cut would provide an economic stimulus and cost the state treasury $77 million over the next 16 months.

"This is a modest tax cut, but it's a step in the right direction," Pawlenty said.

His plan seeks to use $250 million from the state budget reserve and shifts another $250 million from a health care fund to cover subsidized care for disadvantaged Minnesotans.

Nobody will be removed" from government health programs, he said. But he said a planned expansion of coverage would be canceled.

Tax collectors would pull in $102 million more by doing away with an exemption some corporations used to shield income from overseas operations.


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