CHICAGO – Minnesota Gov. Mark Dayton wants to spend $700 million of the state's $900 million surplus on various initiatives and tax relief while leaving $200 million as a cushion should state revenues falter.
"The supplemental budget that Lt. Governor Smith and I are proposing would protect the financial stability of our state government, while making essential investments to continue to build a better Minnesota," Dayton said Tuesday in releasing the plan.
The state's formal February forecast put the surplus at $900 million. While it shows the state's economy remains strong, it did show signs of slowing growth, with the figure was down $300 million from the November forecast. The two formal revenue forecasts influence budget-making. The state's current two-year budget runs through June 30, 2017. Officials blamed the lower surplus on the impact of economic strains.
The supplemental budget provides $100 million for the expansion of broadband in rural areas, $25 million to expand pre-school programs, $28 million for child care programs, and $12 million for teacher training.
The plan provides $150 million for human service programs, $58 million on court and corrections programs, $46 million for cyber securities measures, and $21 million in higher debt service costs to support projects. Higher education would get $56 million more and local governments $46 million.
Tax relief would total about $117 million and be targeted for low- to moderate-income families through an expansion of child care tax credits, working family tax credits, and tax cuts for education expenses.
About $400 million represents one-time spending measures.
Lawmakers will take up the package along with the state's capital budget known as the "bonding bill." Dayton has proposed a $1.4 billion package. Republicans want more of the surplus to go to tax relief and have raised concerns over the size of the bonding bill and some of the proposed projects.
Dayton, a member of the Democrat-Farmer-Labor Party, enjoys majority support in the Senate but the House is controlled by Republicans.
It's unclear what will happen on the transportation front. Dayton has proposed a gas tax hike but Republicans have proposed using the general fund to support increased transportation funding. The upcoming session faces heightened political pressures because all lawmakers are up for election.
Standard & Poor's last year revised its outlook on Minnesota's AA-plus rating to positive from stable. Fitch Ratings rates the state's general obligation debt AA-plus with a stable outlook and Moody's Investors Service rates it Aa1 with a stable outlook.
