The T Word: When will DFLers broach the subject of tax increases?

Welcome to the T Word, a new recurring department in PIM’s coverage of this year’s legislative budget battle.

Now that GOP Gov. Tim Pawlenty has submittted his 2010-11 budget, two central dramas will define the next couple of months at the Capitol. The first involves the revised deficit forecast due from the state in the first week of March, which will give Pawlenty and the Legislature another $1 to $2 billion in red ink to confront. The second is when, and how, the DFL will propose to raise new revenues, whether they be called taxes, fees, or surcharges. There’s really no "if" about it; it’s either bring in more money or sign off on all the cuts the governor has suggested–and more–while leaving the state in a similar mess come the 2012-13 biennium.

Yet the Democrats in the Legislature, by and large, have refused to broach the subject publicly. They want to see the terms of the federal stimulus package before committing themselves. You can hardly fault them for that: So does the governor, who penciled in $920 million in found money and openly pines for more. But it’s already clear that the federal package can’t be big enough to solve Minnesota’s general fund problem; in fact, as our sister publication Capitol Report’s Bob Geiger wrote, the state may have to put back a substantial part of the $1.4 billion in human services cuts proposed by Pawlenty in order to qualify for up to $2 billion in Medicaid dollars likely to be included in the final stimulus plan.

DFLers also have little stomach, understandably, for talking about tax hikes as the economy continues to plummet. But governments that can’t run a tab by racking up deficits can find themselves in the position of having to raise extra money regardless of economic conditions. Any reasonably bright person can infer as much, and a large portion of the public already has.

So the Democrats will have to break their silence about tax hikes at some point. But when? And what are they considering in their private deliberations meanwhile?

In the days and weeks to come, we’ll be watching the T word beat in this space–tracking various, um, "revenue enhancement" ideas as they make their way round the Capitol, drilling down into the details, and talking policy and strategy with key players and experts.

Up next: Five tax ideas circulating at the Capitol.