Minnesota Republican candidate for Governor Tom Emmer skipped this debate in front of outstate Minnesota Mayors. Emmer is not in good favor with many of the Mayors because of his stance on reducing local government aid. The cuts in LGA have led to rising property taxes across Minnesota. DFL candidate Mark Dayton and IP candidate Tom Horner however were there. Transcript of the debate when you continue reading past the jump.
The “undercard” was the Republican candidate for State Auditor Pat Anderson and the incumbent DFLer Rebecca Otto who have been exchanging jabs ever since Anderson abandoned her run for Governor to seek the job she lost to Otto four years ago. To see live blog for both events, click here. To view the live blog in a new window click here
Transcript of Gubernatorial debate in Winona, Minnesota
I’m very pleased today to be sponsoring this Gubernatorial Forum. The forum is being sponsored today by the Coalition of Greater Minnesota Cities a collection of 75 cities from across greater Minnesota who lobby and who advocate for issues important to rural Minnesota communities. Winona has been a longtime and good member and we’re here as part of our annual summer conference. I’d also like to thank the Winona County Historical Society for hosting us. And if you didn’t take a good look as you were coming please take a look at the building that we are in. All of the wood on the ceiling and the floor in the lobby is reclaimed from an 1880s livery stable. And all the stone that’s in the lobby and around the the elevators is reclaimed from a auto dealership here in town. It is a great example of the kind of progressive sustainable things that the city of Winona and the folks here do throughout their community and so please take an opportunity to look at that on your way out. I’d also like to thank executive director Mark Peterson and his staff and volunteers for hosting us and helping us put on this great event. I’d also like to thank the city of Winona for all their help putting this on especially Verna Olson who’s one of the great city staff people here. We’re very fortunate to have two candidates here for Governor. All of the candidates were invited in June. And there was constant contact. We were able to secure Mr. Horner and Senator Dayton right around the time of the primary. Representative Emmer is unable to join us citing a scheduling conflict. Nonetheless we are pressing forward. Because as I was reminded in a phone call with a reporter down here in Winona, folks down here in Winona take their civics seriously. And indeed they do. As we do throughout greater Minnesota. And that’s the spirit in which we’re going to conduct our discussion today. Our moderator for the forum is going to be Pat Lopez who is a longtime reporter having held posts in Cincinnati and Los Angeles as well as a longtime political reporter with the Star Tribune. She is currently their political editor, which means she helps shape and guide their political coverage both at the national and state level. So we’re very fortunate to have Pat Lopez today with us. A little bit on the ground rules. We’re gonna give the candidates three minutes for opening statements to introduce themselves and give us a little flavor of why they’re running for Governor. We’re going to ask approximately 10 to 12 questions and we’re limiting each candidate to a two-minute response. But we are empowering our moderator to drill in, follow up, ask deeper questions if appropriate. And so be prepared, guys. And then we’ll be going for a three-minute closing statement on why Minnesotans should vote for you. J.D. Burton who’s the handsome fella in the salmon tie down here is our timekeeper. He’ll be flashing you the signals of when you’ve got 30 seconds left and when we’d like you to cease. With that, I’m pleased to bring up Pat Lopez.
Pat Lopez: I want to thank all of you for coming and the Coalition for inviting me and also the Historical Society for the use of this beautiful space for this Gubernatorial Debate. First off I would like both of you to introduce yourselves and tell us a little bit about why you want to be Governor. Why don’t we start with Senator Dayton.
Mark Dayton: Is this the three-minute portion of the
Pat Lopez: Yes, this is your three-minute opening statement.
Mark Dayton: All right, thank you. Well, I’m delighted to be here today. And walking in, I don’t think I’ve ever had so many people thanking me for coming to an event. I almost hate to start. And I’m very very glad to be here with you. And the reason I’m running for Governor is that I think Minnesota is headed in the wrong direction. Earlier this year I traveled to all 87 counties, drove over 9,000 miles, have held 110 community meetings across the state. And I’ve heard from many of you in fact describing yourselves as Republicans, Independents, Democrats, leaders of your communities, say that the fiscal relationship between the state and local governments has been broken. That you can’t trust the commitments that are made. That you budget, budget frugally, and responsibly, and then those commitments are broken, money is taken away unilaterally, and then you’re castigated the Governor Pawlenty saying you know that you’re the ones with your heads in the clouds and you don’t understand the real world when you’re spending more frugally than the state government or anyone else. You’ve been dealing with hard reality all the way through. And you can’t provide the essential services, police and fire. I’m very proud to have the endorsement of the Minnesota Police and Peace Officers Association. Because they understand as you do that their ability to provide those essential services, their protection to have a partner watchin their back as they’re going around a dark corner at night, facing who knows what on the other side there, depends upon Local Government Aids, depends on keeping that financial commitment. Now I respect Mr. Horner for coming here today, and I was looking forward to having a chance to have, hear Representative Emmer explain how it is that his proposal to eliminate local government aids, to transfer that money entirely to the counties was going to be a benefit to the cities of greater Minnesota. I suspect maybe that’s one of the reasons he decided that a fundraiser was more important than meeting here with all of you. Because it is important, it is essential. Absolutely essential. And and so that is the reason I’m running for Governor. I want to restore the trust I want to restore the fiscal relationship, I want to restore the working relationship between state government and local governments and our citizens and head this state in a better direction. That’s the theme of my campaign. A better Minnesota. A better Minnesota depends on all of you continuing to provide essential services. Depends on a Governor to help you do so.
Pat Lopez: Thank you. Mr. Horner.
Tom Horner: Well thank you very much. And let me echo Senator Dayton. I’m just delighted to be here. It is a great opportunity. And as Senator Dayton said, to be so warmly welcomed is so typical of Minnesota and so typical of rural communities. So thank you very much. It is a pleasure indeed. I agree with some of what Senator Dayton said. There’s no question but that we are at a critical point in Minnesota’s future. And I think 2010 this election really does represent a crossroads. Really does represent a choice for Minnesotans in which way we want to go. And there are some difficult challenges and these are perilous times. But you know we’re also a state of great opportunity, a state of tremendous assets. A lot of what we see in the room in your communities reminds us of how great Minnesota really is. And so I’m running for Governor not only to take on those challenges because I see in this time such great opportunity to move Minnesota forward to think differently about how we deliver services how we meet the needs of constituents how we grow jobs, how we have healthy vital communities around the state. I started my political career in 1978 with Dave Durenberger on his first campaign for the Senate and went out to Washington as his chief of staff and I learned a lot of things from Dave. But one of the things he felt most strongly about that I’ve tried to carry over is he always understood that Minnesota is only as strong as its foundation. And its foundation are the communities. And if we don’t have healthy communities, if we don’t have communities in which people can feel as if they are at home for a lifetime, where they can be born there, raise a family there, have great job opportunities and retire in the same community, then we’ve lost something as a state. We need to recapture that. And yes it is a challenge but it is also our opportunity in 2010. So it is one of the reasons why I asked as my running mate Jim Mulder to join the ticket . I think Jim brings such unique experience, understanding of the relationship between state and local governments, of the opportunities and also of the challenges. And so I’m looking forward to the conversation with you today with Senator Dayton to talk about how we are going to approach these challenges and how we’re going to take advantage of the opportunities. Thank you and I look forward to having the conversation.
Pat Lopez: Thank you. I’d like to get started with what is perhaps is the most important topic in this state. There are parts of Minnesota that have had double-digit unemployment for some time now. It’s starting to lower overall but we still have parts of the state where it’s enormous. Please tell us what you would do as specifically as possible in the first year of your administration to grow jobs especially in greater Minnesota. And Mr. Horner why don’t we start with you.
Tom Horner: Sure. Thank you. Well it is one of the critical issues perhaps the critical issue in this election. I’ve laid out a very specific five-point plan to revitalize communities around economic development. And I think it really starts by understanding that each of the communities in Minnesota is a little bit different. Each one has unique assets and we have to leverage those assets. So a couple of things that we need to do. First we need to make sure that we’re allowing our manufacturing base in Minnesota to grow, to compete, to bring on the new technology, new equipment that allows us to create jobs. And so one of the proposals is to eliminate the sales tax on capital equipment purchases so that these small manufacturers can invest in in the new equipment. Secondly we need to make sure that we’re investing in education in all parts of the state and lifelong learning so that we make sure we have strong schools in all of our communities but that we’re also working with our two-year and four-year schools to provide lifelong learning to make sure that those two-year schools are fully integrated into the economy of the communities so that they are providing the job and training skills. Third we need to invest in research at the University of Minnesota at two and four-year schools so that we’re developing the new technologies, the innovation, the new ideas that we then can bring to market in a Minnesota that has a very different tax climate than what it has today – a tax climate -
Pat Lopez: Mr. Horner, could you could you get to some of the specifics for the first year?
Tom Horner: Oh these are the specifics. This is what I’m going to do in the first year
Pat Lopez: Then could you tell us how much you would invest in education, what types of things you would do in that first year.
Tom Horner: Well, we’re going to invest in education, it is more important to invest in early learning, and so we’re coming out with a very specific budget proposal next year, I have said we are going to eliminate the half-cent or the sales tax on capital equipment purchases, that we’re going to invest in research as a separate line item at the University of Minnesota, at our two- and four-year schools, we’re going to hold higher education at the the baseline, that we’re going to invest in a bonding bill in the first year to build out the the ten-ton roads that we need. I mean all of those activities are very specific and all of them are things that we are going to do in the first year.
Pat Lopez: Thank you. Senator Dayton.
Mark Dayton: Well I would certainly agree with what Mr. Horner said about education. That’s key to our future from early childhood through K-12 through higher education. And I will make the commitments to repay the shift. You know one of the euphemisms used to disguise what’s really been going on in the real world If somebody reaches their hand into your pocket and takes out your wallet and says they’ll give it back to you when they feel like it. We don’t call that a shift, so. Well that money’s owed back to the school (audience laughter) it’s actually on the books to be repaid And that would be an increase in spending. And I’ve said I will increase state funding for public education every year I’m Governor. With no excuses no exceptions. In the short term next year I would have a bonding bill also in the first year. A billion dollars look and see if we can go a little higher. Depending on interest rates at that point in time. What the financial experts say. Governor Pawlenty with his veto last spring left 400,000 work hours on the table, left men and women who should be working on the bench left important projects in places like St. Cloud Mankato and elsewhere, civic centers and state universities and even 19 early childhood centers unfunded . I’ll put those projects at the top of the list. And we’ll also – I also promise Thief River Falls a stoplight at the intersection of Highway 59 (audience laughter) where 4,000 workers go to and from Arctic Cat and DigiKey every day. And that’s an example of where a Governor and a state government should be providing the direct assistance he couldn’t provide these 4,000 jobs. With how many employers would it take to replace those. So you know that’s where I will roll up my sleeves and work with you to help the businesses in your community expand. I’ve proposed an energy security savings fund. Where we would do what they’ve done at the University of Minnesota Mora – Morris . Retrofit state buildings there to make better use of energy efficiencies. Retrofit the heating and cooling systems. Use alternative energy In this case they’re buying agricultural residue, corn stalks primarily from local farmers, putting the money in the local economy, investing pelletizing gasifying saving a million dollars a year in energy cost, put that revolving that fund back into those projects, and finally highways. Somebody was just reminding me we need to work on highway 14, we need to increase our highway construction projects, and put people back to work as well.
Pat Lopez: Thank you . A quick followup for each of you. Mr. Horner, if you would please tell us where you are you on repaying the education shift and then Senator. Dayton if you would say where you are on elimination of the sales tax on capital equipment.
Tom Horner: Well on on repaying the shift we need to do two things. First is make sure that the state is paying the interest on the loans that have been imposed on school districts so that they’re not carrying that burden. And then secondly lay out a very specific schedule of repaying the school debt. I mean I appreciate Senator Dayton’s commitment to repay that debt in his administration. I’m not sure that he’s put the funding toward it and so that’s a bit of a curiosity. And you know I’d like to tell you that we’re going to repay it in the first biennium I don’t think it’s going to be possible and still maintain the same kinds of services that we want in Minnesota in the other areas. So we ought to at least repay school districts and hold them harmless on the interest if that’s possible and then lay out a firm schedule that we stick to to repay the full amount.
Mark Dayton: Well the reality is you know we face a projected 6 billion dollar deficit for the next biennium. Which includes the assumption of the repayment of the 1.7 billion of the 1.9 billion in the school shifts. And so that is factored into my equation. I would you know like very much to be proposing tax cuts or tax eliminations for various things. And any good economist will point to any tax and say that there’s an economic disincentive for something as a result of it. But anyone who proposes reducing or eliminating a tax is gonna therefore add to that six billion dollar deficit and needs to be able to tell you in specific dollars and cents terms focusing as specific functions of government where that six billion dollar deficit. In the case of representative Emmer who wants to eliminate corporate taxes entirely, 1.7 billion dollars additional, that’s a 7.7 billion dollar deficit, you know where is that cut gonna occur? Six billion is 16 percent of the state budget. That’s one out of every six dollars the state is projected to spend in the next biennium. And again he at least has not told us where that’s coming from. So is it would it be a good idea in terms of economic incentives to reduce or eliminate that capital investment tax? Yes. But again somebody’s going to have to say where are those dollars gonna be made up.
Pat Lopez: Okay, I’d like to go now like to a question about the state’s budget deficit It’s somewhere in the neighborhood of six billion dollars. Could change, could even grow in that time. Both of you have proposed some tax increases to help deal with this. Please tell us what Minnesotans should expect in the way of budget cuts and please try to be as specific as possible.
Mark Dayton: Well Pat, when your editorial board requested of all of the candidates’ time when we had the others running for our proposals I will say your entire board credited Mr. Horner and myself for having the most specific proposals. And mine is detailed on my Web site www.markdayton.org I proposed $869 million dollars in specific spending cuts. I went through the state budget myself line item by line item I identified reducing the outsourcing the private contacting I think more of that should be done within the state agencies. That’s what they exist for. Certainly the Department of Transportation. I think the trade office and I headed that agency where that office resides twice, ought to be eliminated and the core functions transferred to the Governor’s office where they could be provided more cost effectively. The state Department of Education conducts 61 different tests of students I think that’s excessive. We reduce that you reduce the spending there. Again they’re all detailed there and I’ve we’re gonna restrained by time but the point – And the other point I want to make is that I went to the Minnesota Chamber this last week two days ago and sent a letter also to the Minnesota Business Partnership Spoke to the Minneapolis chamber this morning and (18:40) I would ask all of you too asking over the next month for ideas, specific ideas for where we can make further cuts. You know I acknowledge that mine is about 670 million dollars short of the six billion dollars of the proposal I’ve made with enough revenue increases and spending cuts and so I’m looking for more. And you know Rudy Perpich had a sign on his office wall which I’ll put back if I’m Governor. Said “None of us is as smart as all of us.” And so I welcome ideas. Specific suggestions, ones that are gonna be in the best interest of Minnesotans and are not gonna again have serious effects. But the problem we face is this year’s biennial spending state budget is eight percent lower than it was two years ago. It’s not that as if we’re expanding and now we need to trim. We’ve contracted and now we’re gonna face it necessary to contract more. But that makes it an additional challenge.
Pat Lopez: Thank you. Mr. Horner.
Tom Horner: Well, so we’re going to do a couple of things and I’m going to lay all of this out next week in very specific detail. But a lot of it comes in the area of how do we redesign So how do we change the relationship between state and county governments for example and allow counties to have the opportunity to impose a local option sales tax and then take responsibility for some of the services that now are mandated on them by the state. That’s an opportunity for the county government to deliver the services more directly to hold them accountable. It’s an opportunity for the state to redesign the relationship between itself and county governemtns and to save money while delivering better services. Now clearly there are some counties look at Travers County for example that’s not going to be able to raise the kind of taxes that will allow it to provide services. So we’re still going to have to have a state relationship with some of the counties to make sure that everybody in Minnesota has access to a high level of quality in services. I think we do need to put a freeze on on public employees as we enter the new year with the new Governor and take a look at where at there might be savings there. I think what we’re going to find is that in some of the supervisory levels of state government there are opportunities to reduce costs and to save money long term. I think when we look at older adult services there are going to be opportunities to reduce the role of the state in the institutional care of many older Minnesotans as we start to make a transition to more personal responsibility, more community-based networks. And lastly just as by way of example we certainly need to make investments in health care but do it in a way where we can leverage the federal resources to make sure that we’re driving low cost higher quality health care throughout Minnesota.
Pat Lopez: Thank you. Could as long as we’re on the subject of health care could you please tell us our current Governor has been saying for the better part of seven years that health care costs are running away in this state have to be controlled will bankrupt everything swallow up all our other options you know please tell us what your philosophy is on that and what should we expect on health care. Are cuts unavoidable? Do we do need to do the same level of funding for instance expectations as education? Is it on that level?
Tom Horner: Well I’m not I’m not sure I (laughs) understand the last part of the question Pat so let me talk about the first part of the question.
Pat Lopez: Well most Governors have not cut education.
Tom Horner: Yeah.
Pat Lopez. So is health care at that level so should we raise taxes to meet that need or do there need to be actual cuts?
Tom Horner: There needs to be a reduction in the cost of health care. Without question. But we need to do it in a way that expands services and and enhances quality. And we can do it. And I do think the Governor is right on this point. That the cost of public health programs is unsustainable. But I don’t think that you fix it you don’t reform it by throwing people on the street. And when that doesn’t work you don’t take the poorest of the poor and throw them onto rural hospitals. That’s not going to work. That’s only going to further make your jobs that much more difficult as we lose some of those anchors in the rural hospitals. So we do have to reform. Now the good news is that Minnesota continues to be a leader and we have done some good things in moving to care coordination. When you have five percent of the population consuming fifty percent of the costs there are a lot of good things that are being done with Minnesota companies in which we can better coordinate that care, reduce the costs and provide better quality care by finding by creating systems where we can keep people out of hospitalization. We can identify the warning systems early enough. I think we do need to move to the Medicaid options. Not because it allows us to get the federal dollars in. But because it’s going to increase coverage to Minnesotans. And that’s an important part of reform. We have to have more people covered through Minnesota including rural Minnesota. We also need to make investments in prevention. We need to hold everybody responsible for their own health and for their own health behaviors. And make sure that we’re holding people accountable for good behaviors. With incentive, with investments in good public policy, and with investments in direct prevention kinds of programs. And lastly we need to figure out how we as Minnesotans can leverage the federal health reform. It is not as prescriptive as people think it is. It is a program in which we have an opportunity to define how it’s delivered so we can get that low cost high quality health care for Minnesota.
Pat Lopez: Senator Dayton
Mark Dayton: I have long believed in a national single-payer health care system to get the particularly the insurance company profiteering out of health care. When United Health Care, the largest health insurance company in the country, reports a quarterly profit of over one billion dollars, one point two billion to be exact. And by its own accounting it pays only 81 cents out of every healthcare premium dollar it collects for health care. Medicare which is certainly far hardly from perfect it pays 97 cents of every health dollar it collects for health care. That difference between 81 cents on the dollar and 97 cents on the dollar is one of the big reasons why health insurance is unaffordable for so many Minnesotans and why health care is so unaffordable even for those who have health insurance. I remember a woman from St. Louis Park said well I She made $7,000 a year she’s a single woman mid fifties probably works for a small employer the best coverage she can get She pays $7,000 a year for health insurance and she still has to pay the first $7,000 for health care before that health insurance pays one dollar. And that’s part of what is fundamentally wrong. Now Minnesota is not an island unto itself. And Senator John Marty who has been the lead proponent of the Minnesota plan has said that he thinks the way to start is to have a study and I would support that as Governor and Let’s have a study and let’s certainly look before we leap into anything. The citizens certainly would expect that and should be assured of that so let’s do a study. Colorado did one actually a subsidiary of United Health care did the analysis and said it would be cheaper for the state of Colorado to provide universal coverage through single payer than any other option so let’s look at that. We should invest the $188 million dollars at net cost to the state to the early opt-in to Medicaid to get 1.4 billion in state money. Both to provide better coverage to those 102,000 Minnesotans and also very importantly for the rural hospitals to provide a stable source of funding, a sufficient source of funding so that they can stay in business and provide quality care so when your constituents get ill and go to the hospitals, they have the best quality medical care as others enjoy at Regions or HCMC.
Pat Lopez: Thank you. Over the last seven years local governments have seen their aid fall by a billion dollars. In the wake of that they have cut laid off workers, raised property taxes. Please tell us what you would whether you would continue LGA in its current form and if not what would you do as an alternative.
Mark Dayton: Well, I certainly want to hear anyone’s alternative because I don’t know of one myself. LGA is essential. Local government aid under Governor Pawlenty’s two terms have been cut by fifty percent in real after inflation dollars. And half of that has been made up with property tax increases and half of that has been made up with service cuts. And again you have been responsible and you have been penalized and castigated for your fiscal responsibility by others who have not been fiscally responsible. And it’s essential that those funds be continued. It’s essential that those promises be made. When Mayor Wolden who I believe is here who is mayor of Wadena took me around after the aftermath of the devastating tornado there and showed me amazingly with whole blocks flattened that there was no loss of life. I hope I’m quoting you correctly Mayor. You said you know that you’re a poor community. That you know, that half of your households have a household net worth of less than $35,000 dollars. A third of them less than $15,000 dollars. You couldn’t afford to provide these emergency response capabilities, early warning to prevent any loss of life, without the assistance of local government aid. And I’ve heard that all over the state. I’ve heard from mayors such as the mayor of International Falls who said We relied on the promise of Governor Pawlenty just before the last election that he would not touch LGA. And then he turned and so he cut our levy by 16%. And then he didn’t keep his promise. And so now we’ve had to turn around and raise our levies by 17%. Well you know, that’s unfair. And again, for your fiscal responsibility you should be rewarded with a partnership in the state government. So I will continue LGA I will continue the funding I believe there’s about nine hundred a little over nine hundred million dollars committed in dollars for the next biennium I will sustain that and that will be a promise made, a promise you can rely on a promise you can take to the bank and budget on and spend on and know that nobody’s gonna come and take it away from you in the middle of your fiscal year.
Tom Horner: Well because I can answer (audience applauds Dayton) Because I can answer the LGA question quickly let me use part of my time to go back to the health care question. And Pat I have to say I’m a little surprised that you didn’t hold Senator Dayton accountable. He gave two answers to the health care question. One was he’s going to take the early Medicaid opt-in. I agree. Second answer, he wants single-payer system. It is not politically viable. We don’t have what Matt Entenza estimated to be a 12 to 15 billion dollar cost when we have a 6 billion dollar shortfall. How can that possibly be an answer to health care reform? It’s not an answer. Democrats have had a large majority in the Legislature for the last several years. There has been one vote on single-payer system. It was brought up by a Republican to embarrass the Democrats. There’s no political groundswell for it. It’s not an answer. It’s a copout. So LGA. I think we need to do a couple of things. I mean by your own statistics, when a one percent increase in local taxes raises $3.85 per person in Crookston and $41 per person in Wayzata how can anybody deny that we need some formula some way for the state to share the cost of essential public services in communities around the state? Of course we need LGA. And of course we need to fund it at an adequate level. And that is a commitment that I will make. Not just to the communities of Minnesota but to the people of Minnesota. But I think we need to go further than that. I think that we ought to repeal the sales tax paid by local governments. That you know is just one of those kinds of silly things that we shouldn’t be doing. It is just a bureaucratic waste of time and resources and we ought to get rid of it. Some of these things are just common sense. We need to make those commitments. We need to do it because it’s in the best interest of Minnesota.
Pat Lopez: Let me let me go back to that since you brought that up. Senator Dayton why don’t you address the single payer health care issue and then I have a followup for Mr. Horner.
Mark Dayton: Well I recall saying about three and a half minutes ago that I believe the first step is to have a study and an analysis. And let’s look at it and then I will support that in the legislative session we’ll show the people of Minnesota what the cost would be. With all due respect for former representative Entenza I don’t agree with his numbers. And again the analysis done by a subsidiary of United Health Care for the state of Colorado came to exactly the opposite conclusion. So let’s you know just look at the facts. But anybody who thinks health insurance and health care, the cost of health insurance and the cost of health care is not one of the driving factors behind the lowering the standard of living for Minnesotans and making their lives miserable. When they can’t afford health care and they can’t afford health insurance. And there’s one you know a newspaper editor in greater Minnesota said to me his daughter needs an MRI and probably surgery and he can’t afford to pay for it. And the anguish in his heart that I could see as a father to a father who can’t afford to provide health care for his daughter teenage daughter even though he is covered by not only health insurance is something no one in this state or in this country in this era with all of our resources should have to endure. So what is the better answer? I’m all wide open to the possibility. But I’ve heard from Minnesotans in 110 community meetings all over the state. It’s one of the things that’s ravaging their lives. And any public official has a responsibility to acknowledge that and start to do whatever they can about it.
Pat Lopez: Mr. Horner I want to go back to your answer on freezing public employees. That was tried under the Pawlenty administration. It – do you really feel that that would reduce costs enough? And how would that work get done? Should there be more outsourcing? Should there be fewer services provided? What’s the mechanism for making it work?
Tom Horner: No I don’t think freezing public employees saves a penny. And that’s not what I said. What I did say was I think the new Governor ought to put a freeze on public employees so there’s an opportunity to take some time and figure out how we can deliver those services better. To look at a solid evaluation a thorough evaluation of where we can gain efficiencies. Of where these public employees are, what they’re doing and can we do it better. And I think it is that kind of efficiency, that kind of thoughtfulness that we do bring- that we need to bring -
Pat Lopez: But we have had a freeze on public employees so have you
Tom Horner: But but Pat you’re missing you’re missing the point. We had a freeze as a means of reducing the budget. Period. I don’t think a freeze does reduce spending. What I’m saying is put a freeze in to buy time. So that we can do the kind of evaluation that every business goes through to see how we can do it better. We shouldn’t be building up employees as Senator Dayton would do. At a time when we have a six billion dollar shortfall and adding more cost. When you’re sinking, you can’t keep pouring more water into the tub. So just freeze it buy some time to do the evaluation so we can figure out where we’re going. I think that makes all the sense in the world.
Pat Lopez: Let me go back to property taxes. Since 2003 city property taxes have gone up about 64% statewide. How would your administration’s policies affect property taxes in Minnesota? Senator Dayton
Mark Dayton: First Mr. Horner I wish you’d take your time to describe your proposals rather than mischaracterizing mine. And I would just say to all of you that you know. That you have reduced the number of local employees in your cities. Virutally every one of you. How many of you have reduced employees in the last five to ten years – so. Y’know to say that governments have not been involved in making these hard decisions is just y’know not the case. If you’ve talked to teachers who have been laid off all over you find the same thing. So. You know. A freeze sort of somehow again suggests that Minnesota ranks according to the census bureau that the tenth lowest state in the number of state and local government employees per capita among the states. So y’know it’s just one of these myths that’s perpetrated that we’re you know over inflated with a number of public employees. It just simply isn’t true. And again anybody that wants to reduce the number should be prepared to say who’s gonna provide those services. So many people run for these offices on the ideology that government does everything badly. And once elected they go out to prove themselves correct. And they defund the programs or they try to destroy the programs and they come back and say “See! We proved our point! We made government worse! So re-elect us and we’ll do it again.” Y’know. I believe in government. I’ve been proud to have worked in state government, headed three different state agencies, unlike anybody else running. One of which was state auditor, auditing local government, counties, all of the cities, pension funds and the like. I know the realities out there. Are there further efficiencies? Absolutely. And we should look for them. And I will search with you to do so. But I’ll do so responsibly. And property taxes again. You don’t continue funding for LGA, you don’t continue funding for fund state aids to education, you force property taxes up. Basic equation. This election isn’t about tax or no tax, but which tax on whom. And if you reduce or eliminate local government aids further cut back state aid for K-12 public education you force property taxes up. You also force four-day school weeks and overcrowded classrooms and some other bad things as well.
Tom Horner: Again Senator I don’t have any question but that the folks in this audience and across the state have made very difficult decisions. And that Democrats, Republicans, the Legislature, the Governor, have imposed a lot of responsibility on these communities, on these counties, on these elected leaders, and then has turned around and as you said beat them over the head. And I think that is unfair. Again. That’s not the point. We have a crisis. We have great opportunity. We have a great opportunity to figure out how we redesign government. How we make it work better. But you don’t keep marching down the same path when you have a problem. You don’t keep adding new costs when you have a problem. We have a crisis. You don’t go to single health payer system and say “Well, that’s the answer.” I mean, I agree. Of course that father and daughter ought to have health insurance. Of course. I have solutions. I’ve proposed them. A study for single payer system just defers getting that person health care coverage. Look. I ran a business. I understand what it costs to provide benefits for employees. I get it. I’ve had to sign paychecks. I’ve had to go out and shop for benefits. I’ve had to provide health care coverage in times when my employees have suffered from cancer when their family members have had serious illnesses. I understand what it takes. We need to make those reforms and we can’t have responses we can’t have answers that just simply aren’t politically viable while people are suffering. And so on property taxes. That’s another one of those answers. Pure and simple we do need to keep LGA but we also need to keep the unfunded mandates that are imposing costs on you. Forty percent of the costs of county of many county property taxes are due to unfunded mandates. We ought to put a sunset on them of of no more than 5 years. We ought to evaluate every unfunded mandate. We need to increase the property tax refund by 100 million dollars. These are the kinds of things that are real solutions. That are going to get to the kinds of challenges that the people in this audience are dealing with.
Pat Lopez: How do you propose we close a funding gap that we still have in transportation? There’s been stimulus money there’s been an increase in the gasoline tax. We still have about a $50 billion dollar backlog. Should we just lower our expectations on that? Is that something you will address and please tell us how you will prioritize that funding. Senator Dayton.
Mark Dayton: Well you’re absolutely right Pat. That’s the MnDOT’s projection of unfunded transportation or highway costs. You know this is for starters This is again where we don’t make the investments on an ongoing basis we pay the price later. If we had maintained the same level of funding for our highway projects that we had in 1990 we would have spent an additional 15 billion dollars. We’d still have a gap but it would be significantly less. We are behind the eight ball. You know, I mean in 1981-82 when I ran for the Senate I’d leave one town and I could hand-write thank you notes to the next one. And now in a lot of places I’d be lucky if I could keep my pen on the paper. The deterioration of our highways around this state is serious for people it’s serious for the economic vitality especially in greater Minnesota businesses can’t get their goods to markets, their people to and from work, that’s a huge impediment to economic growth. And that’s where the Increasing congestion the same. We need to do what I believe it’s 21 other states have other done at this point.. Which is take some of the federal highway funds, the increase and the federal highway fund and issue highway construction bonds, they’re called Garvey bonds the federal program. South Carolina has a program called 27 in 7. Where they can complete in seven years projects that would otherwise take 27 years if they paid for them piecemeal. I worked with many of you on Highway 14 and other projects around the state. And you know that’s where again piecemeal piecemeal piecemeal over 20 years is not the solution. We have to you can complete them using this program in two construction seasons. In terms of job creation that’s a huge employer and it’s also one where again you have to sustain that commitment. It can’t be this year and then not for five or ten more years. It has to be this year and next year and next year and next year and next year. And the next Governor needs to provide leadership there I would set up a highway finance authority and tell us where the experts tell us how to do this but we have to face up to it.
Pat Lopez: Thank you. Mr. Horner.
Tom Horner: Well we do have a fifty dol – fifty billion dollar shortfall between now and 2030 in in highway maintenance and construction. But we also have 15 billion dollars that we’ve identified in how we in the funds that are available. So let’s start with 15 billion dollars. Because the typical way that we would do it is that we would take the 15 billion dollars divide it by 201, the number of legislative districts, and everybody gets a little piece and we hope everybody goes away happy. And we can’t do that anymore. We need to start thinking completely differently about this. So my approach: So let’s start with the outcome. What do we need. We need a highway system, we need a bridge system, we need a transit system that meets the economic development needs of all of Minnesota. What are the systems? What are the roads? What are the bridges that are critical for that economic development system? And there goes the first 15 billion dollars. And all of those systems, all of those roads will not be in the metropolitan area. We will fund in greater Minnesota because there are important economic assets out there. And then we take the next layer of priorities and we say All right, now we need to find new funding. Might be user fees, might be the gas tax, might be bonding, we might be other things that we haven’t thought of. And then we fund those. And then we have to say as a state, we now have another level of roads that just don’t have a lot of value, and we’re not gonna fund it Because instead of having a lot of roads that are okay or pretty good or passable we ought to have a system that is really good to serve all the economic needs of all of your communities of all of Minnesota and no more. And we have to set priorities to do that. So in addition to that I think we also have some immediate short term needs and so I would propose a 2011 bonding bill that would include money for the local bridge improvement program and for ten-ton roads. We need to make sure that we are upgrading our roads to ten-ton roads to get our products to market.
Pat Lopez: I’d like to ask a quick followup question to that. Should another increase in the gas tax be under consideration? And also Mr. Horner you seem to identify what you consider shortcomings in the Department of Transportation. Is that – how would you revisit them?
Tom Horner: Well, I wouldn’t close the door to an increase in the gasoline tax. And again, given the challenges that we have, we have to be open to all funding sources including user fees including other kinds of revenue. So we do need to be open to that. But again you gotta start with the priorities What is it that we absolutely need to fund to make sure that we have a state that is economically healthy economically competitive? And then you achieve that outcome. And I’m sorry remind me of the second. Oh the Department of Transportation.
Pat Lopez: Yes.
Tom Horner: Well the first thing you don’t make your Lieutenant Governor the Commissioner of the Department of Transportation. Mulder wouldn’t be very good at it and he’s got a lot of other things on his plate. The real answer and it applies to all of our Cabinet in the Horner administration and that is y’know you do what Jesse Ventura did. And that is you appoint people because they’re the best in the field. Because they know what they’re doing. Because they’re smarter in the Governor in their area of expertise. You ask them to work against a clear strategy a clear set of principles to do what needs to be done. And you don’t have people in there solely because you’re paying off this constituency this ally this political party this union this whatever. You have people in there who are there because they’re smart because they’re good because they have the relationships and they know how to get things done.
Pat Lopez: Senator Dayton On the gas tax and on and how MnDOT should be. Changed.
Mark Dayton Well again we need to redesign how we’re spending our highway dollars state and federal. Because we’re so far behind now that the increase in the gas tax just doesn’t raise those revenues. It’s not y’know what you can get politically is simply not begin to be adequate. So we need to look at this issue of how we can stretch these dollars. If a company needs to make those capital improvements it issues corporate debt. If a farm wants to acquire land it usually has to issue debt. So you know we need to look at how we can utilize dollars – there’s no free lunch with this obviously, it has to be repaid but the economic benefits the social benefits of people being able to get from home to work to drop their kids off at school or a doctor’s appointment again businesses being able to get their goods and services goods to market especially in greater Minnesota with the distances as you well know just means that we have to make the investments commensurate with the needs to improve our highways system and again reverse these years of deterioration. And so I’ve always said I’m willing to hire a highway finance authority and bring some experts in and tell us what we’re gonna have to do to make up for this fifty billion dollars systematically. It’s not gonna happen overnight and it won’t happen in a decade.
Pat Lopez: Okay and just to clarify yes or no on a gas tax hike consideration.
Mark Dyaton: So no at this point no because I don’t think I don’t see how those dollars without utilizing them in a different way translate into what the need is. In terms of the commissioner absolutely it needs to be a top-notch professional. As would all of my agency heads. I want the best people possible. I want them committed to public service. I’m going to send out an executive order on day one to every state employee, “Arrogance ends.” I want agencies that are gonna be responsive and responsible. That are gonna work closely. And many of them do. And many of the regional offices of MnDOT I’ve heard work very constructively and very responsibly with you. And your planning officials and your local transportation people. That needs to be built upon and needs to be consistent statewide.
Pat Lopez: Both of you have said that you support a bonding bill in the first year of administration. Different Governors have had different criteria for bonding in the past. Some have wanted it be of statewide significance with pretty much a ban on regional projects. Sometimes there doesn’t seem to be a rhyme or reason to it. Please explain to us as much as you can what your criteria for bonding would be. And do you believe that it is a way to jump start the economy or should it be based on needs only? Senator Dayton.
Mark Dayton: Well we have a state GDP of $280 billion dollars so one billion or 1.2 or .3 billion dollar bonding bill obviously has an incremental effect on that but you do what you can with what you have available. As I said earlier the veto that Governor Pawlenty exercised, your own paper has said that left 400,000 work hours unfulfilled this year and men and women sitting on the bench who could and should be working around the state for projects that were ready to go, important projects. Public improvement projects, civic centers MnSCU buildings, as I say early childhood sites, Why wouldn’t we want to take advantage of low interest rates. Which your editorial board has also opined is that actually bonding is a fiscally responsible time to be doing that. And so my priority would be first of all be for the projects that were vetoed this time. I would look at all of them again. I mentioned the stoplight in Thief River Falls. Anybody else who has a stoplight or other things that are crucial to economic growth that’s a key priority. These are projects that should put people back to work but they also need to be public improvement projects. Shovel ready projects is the vernacular, projects that are ready to go, that are really going to put people to work immediately in the building trades and construction industry and also gonna provide a direct benefit to citizens for those investments. And there needs to be statewide a fair distribution statewide and that’s part of the process that the Governor engages in with the Legislature Projects come in but it’s gotta be as fair and equitable across the state.
Pat Lopez: So just to clarify statewide significance not an absolute criterion?
Mark Dayton: What do you mean by statewide significance?
Pat Lopez: Well, I
Mark Dayton: A better civic center in St. Cloud has statewide significance. Y’know again the multiplier effect of both that’s an important regional center so it certainly has regional significance, it’s putting people back to work and maybe you’ll have your next conference next year in that center. And that will add tourism dollars. So you know all of this is a multiplier. What do you mean by statewide significance?
Pat Lopez; No, I think that clarifies it.
Mark Dayton: Okay. All right.
Pat Lopez: Mr. Horner.
Tom Horner: Well I would approach it a little bit differently. I think that we ought to make judgments on the basis of what adds to our economic assets. What allows us to create good long-term well-paying jobs as well as provide some immediate stimulus. So I would look at it in the way of certainly we need to again build out the roads, the local bridge improvement program. I mean those are our economic needs because of the asset, not just because they put people to work. But because they support a strong economy in rural Minnesota along with the ten-ton roads. But I think we have to go beyond that and I’ve proposed that we use bonding to build out in some areas the access to ultra high speed broadband. I don’t think that we are going to have an economy that can compete in Minnesota with other countries. I don’t think we’re going to make sure that every Minnesotan has access to world class health care, world class education, world class economic development opportunities until we start thinking of technology as an economic asset that ought to be worth taking on some debt. Y’know I would hope that in a lot of areas with population density that broadband is a private investment. In other areas it’s likely going to be a private/public partnership. And there are some areas of Minnesota where it is going to be a public investment. And we ought to do it and we ought to make that commitment. I think we also look again if we’re thinking about building out economic assets then I do agree that projects like the Science and Engineering Building at St. Cloud State should be funded because that’s what’s creating the knowledge, the information and the leaders that are going to create jobs in the future.
Pat Lopez: Okay now we’re going to have to go very quickly because we’re running out of time. Senator Dayton I want to ask you about your tax policy specifically. Your income tax proposal would not make Minnesota the highest taxed state in the country but we’d be up there and we’d be higher than probably anyone else in the region. What are the assurances you can give people that that is not going to hurt business development in a time when people are really worried about that?
Mark Dayton: Well according to the Minnesota Taxpayers Association we ranked twenty-first in state and local government taxes per $1,000 of personal income. And if you were to add my proposal of two billion dollars per year that would put us to eleventh. It would not make us the highest income tax state. And if you were to take the top ten percent of wage earners of income earners in the state they have a combined total income for the biennium of $160 billion dollars, four billion dollars of that is two point five percent. And the point again is according to Minnesota Department of Revenue – these are not my statistics – they are now paying a smaller percentage of their income in state and local taxes than everyone else. They’re paying about 80%. The richest 1% of the people in Minnesota who make over a million two a year are paying two thirds of a percent of their income compared to everyone else. Now both of my opponents have said they’re not going to raise income taxes one dollar. Which is fine in some respects but on the one hand it preserves this tax unfairness in Minnesota and I think that’s what Minnesotans want. I think the richest people ought to at least pay the same percent of their income as they do in taxes. And secondly we have a six billion dollar deficit. So if you’re not gonna make the richest Minnesotans pay their fair share, then what are you gonna do in the alternative, and that’s what I’m still waiting to hear from my two opponents. So two point five percent of their total biennial income is what would be addressed here and as I say it would restore a fairness where they would pay the same percentage of their income in state and local taxes as everyone else. It would return a percent of their income to what was existed under Republican Governor Arne Carlson under the end of his first term in 1994. And again if you don’t agree with that proposal then you have a responsibility to spell out in dollars and cents where that four billion dollars is gonna be made up instead. What other taxes are going to be raised, what spending is gonna be cut.
Pat Lopez: Mr. Horner I want to ask you about your proposal to broaden the sales tax. You’ve described your opponent’s proposal as a “job killer.” When Governor Ventura’s administration proposed broadening the sales tax it was described as a job killer. Please tell us why you think this is a better way to go. And again what kind of assurances can you give to people that it’s not going to hurt consumer-oriented businesses, where it’s hairstylists, barbers, et cetera, customers would have to pay that tax?
Tom Horner: Well, the response to the first point is that public policy always sounds better when it’s said without a boa on. (audience laughter) Y’know but I think again, what Senator Dayton is proposing is not just a tax on success it is a tax on job creators. When we have small businesses, most small businesses in Minnesota paying taxes at the individual income tax rate, we’re now robbing their ability to make investments to retain some of their earnings, and make investments in new jobs, new equipment, new technologies, all the kinds of investments that grow jobs. So my proposal is yes absolutely, I think we ought to lower the rate on the sales tax and broaden the base to include clothing and some personal services. I would not include business to business services because again that is a job depressant and we can’t afford to do that. Now, we can do it in a way that protects the regressivity, guards against the regressivity of a sales tax that makes sure the poor are protected from the impact of a sales tax. And in my proposal I will have a very specific plan in which we guard against the regressivity. But a regress- a sales tax does a couple of things. First of all, it does tax the wealthy. They buy more. They don’t have the exclusions, they don’t have the loopholes , and they don’t have the ability to move out of Minnesota for six months and a day to avoid paying it. They pay on everything they buy in Minnesota. Secondly we do collect more revenue from people coming out of state and that has some value. But mostly it’s a stable predictable source of revenue that is fair, that is equitable, that matches the economy as it actually exists today. But you also have to take it in the context of the whole proposal. Unlike Senator Dayton I’m not just a Johnny One Note on tax. It is not enough just to say “We’ll raise this tax, dump all of the money into protecting the status quo program s it to protect the status quo of government programs and everything will be great.” I have a comprehensive tax program that goes with comprehensive program redesign and spending reductions to make Minnesota a stronger, smarter, more efficient state.
Pat Lopez: Mr. Burton, do we have time for a thirty second rebuttal from each of the candidates on the positions?
Pat Lopez: Senator Dayton.
Mark Dayton: Well again, I would ask Mr. Horner and Representative Entenza why shouldn’t someone making 10 million dollars a year or a million dollars a year or $500,000 a year not be required to pay just one dollar more in increased personal income taxes? When the facts are that our tax system now is regressive. That’s a basic standard of fairness. And the revenues are necessary. I mean we had progressive taxes back in the eighties and seventies. We were one of the best states in the nation in terms of employment growth, personal income growth. Because employers job creators recognized that was a shared responsibility and they got benefits with a better education system. We’re not talking raising taxes
Pat Lopez: I’m sorry we only have thirty seconds.
Mark Dayton: for the sake of taxes we’re talking about raising taxes to invest in education and the future of this state.
Pat Lopez. Thank you. Mr. Horner.
Tom Horner: Well Senator Dayton if in fact we were just talking about raising taxes on people making a hundred million dollars a year or more we’d have a different conversation I suspect. But as Speaker Kelliher said you’re taxing the household that has a cop and a teacher. A nurse and a maintenance worker. That’s who you’re going after. You’re not going to get the money from the hundred million. You’re getting the money from the average workers. Sales tax: it does go after the wealthy. They buy more. And I’ll put in protections to guard against the regressivity of it. Now we have a stable predictable source of revenue. Whether people live in Minnesota twelve months out of the year. Or five months and 29 days.
Pat Lopez: And now we need to go to closing statements. Please be patient. I know we’ve already hit our limit on time. But I don’t want to let these gentlemen not be able to make their closing statements. Senator Dayton we’ll start with you.
Mark Dayton: Two minutes?
Pat Lopez: Three minutes.
Mark Dayton: Three minutes. Well Mr. Horner I’ll say the same thing to you I said to Representative Kelliher: It’s just not true. My income tax proposal would raise taxes on individuals with a gross income of $152,000 or more, a combined income of joint filers of $173,000 or more. And if you think that’s what the average worker in Minnesota makes, you’re seriously out of touch with the reality of this state. (audience applause) And the facts are that someone making that amount of money is better off than 98% over 90 percent of the people of Minnesota. More power to them. I think it’s fantastic. But I also think they need to pay their fair share of taxes when we have a six billion dollar deficit and kids are going to school only four days a week in many of in an increasing number of your school districts because we don’t have enough money to send them to school for five days and overcrowded classrooms that are leaving children behind. I mean again you know this is about values and priorities as well as about dollars and cents. And years ago my Uncle Ken who along with my father built Dayton Hudson with the help of thousands of Minnesotans, well educated, hard-working productive citizens which are essential to every other business success in this state. and looked at our combined family income one year about fifteen years ago, he’s passed on, you know we’d gone up from the year before and so our taxes had gone up. And one of my cousins complained about higher taxes. And my Uncle Ken looked at me and I said “We should want to pay more taxes. Because that means we’re doing better. And if we’re doing better that means we have a responsibility to pay more taxes.” And you know I think Minnesotans are really amazingly better than some of the politicians here think they are. I don’t believe Minnesotans are going to leave the state. I don’t think they’re going to destroy jobs. I don’t think they’re going to take their businesses and the jobs that 10 or 50 or 500 people depend upon and move them somewhere else out of spite because they have to pay their fair share of taxes. You know President Obama said he would cut taxes for people making less than $250,000 a year and raise them on people making over $250,000 a year. And he won the election in 2008 by more than two to one among people making over $250,000 a year. Because he showed there was something bigger than that. Has he fulfilled that? I don’t know. The judgment still remains. But people are bigger than that. They’re better than that. They we know we have a common stake in the future of Minnesota. They know the education of our kids depends on this. I still wait for anybody who doesn’t want to raise a nickel of taxes on anybody making $500,000 a million or ten million to provide a budget that’s not going to have devastating effects on education and healthcare for the poor and transportation and public safety, the essential things that the well being of this state depends on. Not rhetoric. Dollars and cents facts. I’m waitin’ for them.
Pat Lopez: Thank you. Mr. Horner.
Tom Horner: Well, as the only person at this table who has had to sign the front of a paycheck not just the back of a paycheck I don’t have to think about my Uncle Ken. I’ll tell you what it does Senator. For those businesses that need to retain some earnings to invest in new jobs to pay ahead the insurance premiums so that we can provide healthcare and not wait for some pie in the sky single payer health care system that even your own party doesn’t support. We need to have an environment and economic climate in which we’re supporting job creation. We need to have comprehensive tax reform. It is not just about punishing success. It is about creating success. Creating the opportunities for all of us to succeed. Saying to all of the small businesses in your communities “We want to you to have the resources to succeed.” We shouldn’t be adding to the tax burden of small businesses that are creating jobs. We ought to have comprehensive tax reform that allows an exemption on some of the flow-through for sub-S and LLCs That’s how we’re going to create jobs. Give them the resources to buy the new equipment. To invest in the expansion. To hire that new person maybe a little bit ahead of the curve before the income is there. The proposal you’re making robs small businesses of those opportunities. And I know because I’ve had to meet those payrolls. I’ve created those jobs. I’ve run that business. I understand what it takes. It’s not about Uncle Ken. It’s about all of the small businesses out there. That’s what we need to be doing. This is an election in which Senator Dayton says, “If we just add a lot of revenue and expand the status quo everything will be fine. “ And Representative Emmer says “Oh no, we just need to slice everything to the bone and cut the status quo to nothing.” And I’m the candidate up here saying “For a lot of working Minnesotans, a lot of Minnesotans who have been playing by the rules, the status quo isn’t working. “ It’s not creating jobs. It’s not providing quality education. It’s not meeting the needs of our communities. We can’t just keep deciding whether the status quo is too small or too large. We need new ideas, new solutions. New approaches. And that does take some courage. We need a tax reform that is comprehensive. That invests in incentives for new businesses for startups. We need to make sure that we’re investing in research at the university and our 2 and 4-year schools. Applied and basic research and then we have a tax environment in which those new technologies, those new ideas can come to market in Minnesota businesses creating Minnesota jobs. We need to respect the great assets that you have regionally. Those economic opportunities. Just increasing the income tax doesn’t give you the opportunity to compete for businesses against the metropolitan area. And so that’s what I’m offering is an opportunity for Minnesota to grow as a state. Not to divide but to grow as a state, grow jobs, invest in the future, invest in the economic prosperity of all Minnesotans. Thank you very much. You’ve been a great audience.