Republican gubernatorial nominee Tom Emmer's plan for closing Minnesota's yawning budget gap starts with making the deficit bigger.
Emmer outlined a proposal Monday for a bundle of business tax cuts that, on paper, would add at least $626 million to a budget hole that state finance officials say will approach $5.8 billion over the next two years. The deficit would grow because the state would have less money coming in from taxes if his plan were enacted.
But the state legislator from Delano said the income and property tax breaks for corporations and small businesses would help the state in the long run because employers would have more money to hire workers.
"The biggest problem we face is not that government has a budget deficit, but that Minnesota has a jobs deficit," said Emmer, who was surrounded by workers and idled machines at a high-precision manufacturing plant called Permac Industries.
He added, "I'm not here to tell you I can save or create some number of jobs. Governors and governments don't do that, whatever some like to say. But what we can do is create a business climate that will lead to job creation."
Among his recommendations:
—Reduce the state corporate tax from 9.8 percent to 7.8 percent within two years and to 3 percent by 2015. The cut amounts to $368 million through 2013.
—Let business owners who file taxes through the personal income tax subtract 10 percent of their income, a proposal worth $158 million in the first two years.
—Cut the state property tax levy by $100 million in his first budget.
Emmer has been criticized by his rivals, Democrat Mark Dayton and the Independence Party's Tom Horner, for waiting so long to come forward with a specific budget proposal. The one Emmer described Monday didn't provide details about programs he would cut to offset the tax cuts and balance the budget.
Emmer's campaign said he will roll out two more details on his budget plan within two weeks.
He has been trying to recast Minnesota's budget problems in recent weeks, noting that state revenue is expected to grow but not as fast as spending. Emmer declined to say Monday whether his first budget would limit two-year state spending to $33.2 billion, the amount projected to come in. Running the same programs the state has now would take $38.7 billion, according to the Department of Minnesota Management and Budget figures.
The state Democratic Party slammed Emmer's proposal as "smoke and mirrors."
"Minnesotans still don't have a tangible plan from this out of touch candidate," party spokeswoman Kristin Sosanie said.
Dayton's campaign didn't immediately respond to a request for comment.
Horner agrees with Emmer's call for business tax cuts, spokesman Matt Lewis said. "The difference is that Tom Horner has the political honesty and the plan that tells Minnesotans how we will pay for that tax reform," Lewis said.
Dayton and Horner have built tax increases into their budget proposals. Dayton would create a new top tax bracket and raise property taxes for homes worth more than $1 million. Horner has said he would raise cigarette taxes and expand the state sales tax to cover more purchases and professional services, while lowering the overall rate.
Emmer's campaign also scrambled to defuse a potential embarrassment over the venue for his budget announcement. Permac Industries, which makes parts for soda machines, motorcycles and other devices, benefited from federal programs meant to stimulate the economy.
Emmer has been critical of stimulus money from Washington, calling it a "phony" way to prime the economy.
Permac was touted by President George W. Bush's White House as a success story from a 2008 law that gave tax incentives to encourage investment in manufacturing equipment. Company president and CEO Darlene Miller said at the time the first-generation stimulus package would help small employers like hers.
Miller and Emmer insisted Monday that the company hasn't directly tapped into additional stimulus money authorized under current President Barack Obama, a Democrat. Miller said recent factory hires, including one employee partially trained at a government work force center, were not a direct result of stimulus money.
"We have never received any federal stimulus money for employees whatsoever," Miller said.
The Dakota County work force development center was closed for the Labor Day holiday and a message was not immediately returned.
