The day before unveiling his new budget proposal, Gov. Mark Dayton sent a strong message about his plan: He's not backing down on raising taxes on the state's wealthiest residents.
The upper income tax increase was a core platform of Dayton's campaign, and on Wednesday he made it very clear that it is the last item of his proposed budget that he is willing to give up.
Dayton delivered the news to some of the very people who would end up paying it -- business owners -- by going right into the belly of the beast, the Minnesota Chamber of Commerce.
The new revenue forecast shows the state is raking in more money, and that allows Dayton to scale back many of the tax proposals he had previously put forward, including a new round of business-to-business taxes. On Wednesday, Dayton confirmed those business taxes -- and a $500 property tax rebate for homeowners -- are now officially off the table.
Even so, there is one part of his original plan he insists will not disappear -- the tax hike on upper-incomes.
"It raises about $1.8 billion in new revenues -- mostly through an upper-income bracket and a cigarette tax increase," Dayton said.
Dayton's original plan creates a new, fourth-tier income tax bracket at 9.85 percent that would apply to couples making more than $250,000 and individuals making more than $150,000 annually.
"I understand people don't like it, but the facts -- again -- show that middle-income families pay a significantly higher percentage of their incomes in state and local taxes than the wealthiest 1 percent, and that's not fair," Dayton said.
However, the Minnesota Chamber of Commerce, a powerful lobby for businesses in the state, believes no tax increase is fair.
"At this point, no, because we think the reforms that the governor and the Legislature put in during the past two years are working," said David Olson. "We've seen revenues increase."
While they may not see eye to eye, at least one small business owner told FOX 9 News she appreciates the dialogue.
"I actually heard the State of the State address, and I thought he was more personal and spoke to the issues a little deeper, which was kind of nice," said Sue Swiechichowski, of Cornerstone Café and Catering.
What worries many of the business owners most is a proposed increase in the state minimum wage. They warn it could cost jobs and business, but the Dayton argued that employees should be able to live off of what they make in a 40-hour week.