Updated: Minnesota Surplus Rises $832 Million

Frans
Frans

Minnesota’s real budget debate began today when state finance officials announced a $1.9 billion surplus, an increase of $832 million from a report less than three months ago.

Gov. Mark Dayton said he has been told it is the largest-ever state surplus, but Minnesota Management and Budget officials worked to confirm that this afternoon.

The governor, a Democrat, said that he will propose using the new money for education and transportation programs, along with adding to nursing home funding and providing money to make payments to borrow $850 million for public works projects.

House Speaker Kurt Daudt, R-Crown, appeared to say he wants at least $900 million of tax cuts, as well as increasing spending on some programs such as nursing homes. He was not specific about tax cuts.

“Today’s news is very good news,” Commissioner Myron Frans of Minnesota Management and Budget said in announcing the surplus. “Over the last few years, we have righted the ship.”

Added Dayton: “This surplus comes from more Minnesotans working than any time in Minnesota’s history.”

The surplus did not influence Dayton to reverse his desire for a $6 billion, 10-year transportation plan, funded in a large part by a new gasoline sales tax.

“They are still proposing a huge tax increase on Minnesota families in the form of a gas tax increase,” Daudt said. “I am going to challenge Democrats in the Legislature and the governor to take this off the table.”

Instead of raising taxes, Daudt promised to push a plan to lower them. However, he had no specific proposals.

The surplus will allow lawmakers and the governor to spend more money, use it to cut taxes or increase the state’s reserves — or a combination of them. State legislators and interest groups already have announced desires to increase spending on a variety of programs.

Dayton said that spending for education and transportation “will pay off for Minnesota for years to come,” and it makes sense to spend the money in good economic times because it will not last forever.

Revenues are expected to be $616 million higher than expected in December and spending is predicted to be $115 million less. Other changes add $107 million more to the surplus, Minnesota Management and Budget reported this morning.

Dayton released his first budget proposal Jan. 27, based on an early December budget prediction showing a $1 billion surplus. Now he will tweak that $42 billion, two-year plan about how to spend state tax revenues to reflect today’s refined numbers.

Also, today’s announcement gives legislative leaders information they need to write their own budget plans, which will come out in the next few weeks.

Legislators have until May 18 to write a two-year budget and send to Dayton for his signature.

Today’s report was based on national economic forecasts and altered to fit anything different in the Minnesota economy.

Minnesota’s economy has shown good signs in recent months, including a lower unemployment rate than the national average. It is doing better than rival Wisconsin, which faces a $2 billion budget deficit this year.

After releasing his budget plan on Jan. 27, Dayton told reporters that if more money were available, nursing home funding would be at the top of his list for increased spending.

When state officials announced their budget forecast in December, they said that the $1 billion surplus would be eaten up if inflation were factored in. However, Dayton said that he would expect things such as higher salaries to be handled by his commissioners within existing budgets, not in higher budget requests.