Minnesota Republican budget plan features $2 billion tax cuts

Daudt

Daudt

House Republicans want to cut Minnesotans’ taxes $2 billion and increase state spending $1.5 billion in the next two years.

House committees are to work out the details after GOP leaders this morning announced spending targets for each finance committee.

While Republicans promoted the budget growth, Democrats said the plan does not allow as much growth as already planned.

House Speaker Kurt Daudt, R-Crown, said the House Taxes Committee has not decided who would receive tax cuts. However, he said that most would go directly to Minnesotans, not businesses.

The idea is to “put money back into the pockets of working Minnesotans,” Daudt said.

House Minority Leader Paul Thissen, D-Minneapolis, said he expects tax relief to mostly go to corporations who politically support Republicans.

The Republican plan would send back in tax cuts the same amount as projected for a state budget surplus in the next two years. Daudt earlier had said that he did not expect to refund all of the surplus, but state Republican Party Chairman Keith Downey led a campaign to “send it all back.”

Overall, the GOP proposes modest health and human services spending growth from current spending, and Daudt said he expects at least $160 million more for long-term care spending, such as for nursing homes and home care for the elderly and disabled.

Thissen repeatedly compared the Republican proposal to 2011, when state government shut down after the two major parties could not agree on a spending bill.

“It’s a recipe for getting nothing done and shutting down government,” Thissen said.

Republicans said their plan matches what happens in families: not spending more than is available.

“Government spending should not grow faster than family budgets,” Daudt said, echoing comments Republicans made in last year’s campaigns. “We set our budget targets with that value in mind and aimed to prioritize education, roads and bridges and protecting our aging Minnesotans’ quality of life.”

Republicans propose increasing higher education spending $103 million and early-childhood-through high school funding by $1 billion.

Chairman Jim Knoblach, R-St. Cloud, said the increase would be enough to freeze either the University of Minnesota or Minnesota State Colleges and Universities tuitions, but not both. Dayton proposes to freeze tuitions for both systems.

Democrats tend to figure spending based on what had been expected to be spent in the next two-year budget, while Republicans compared it with what actually is being spent in the current budget.

 

Education leads Dayton budget, with elderly care officials disappointed

Dayton

Dayton

By Don Davis, Forum News Service

and David Montgomery, St. Paul Pioneer Press

Gov. Mark Dayton proposed hundreds of millions of dollars in new spending for education and families Tuesday, leaving some senior citizens’ advocates disappointed with what they said is a too-small increase.

The governor’s $866 million proposed budget increase would freeze tuition at state colleges and universities, start a new universal state-funded prekindergarten program and give more than $160 million to lower-income families. In all, Dayton is proposing to spend nearly 80 percent of the state’s $1.9 billion surplus on “Minnesota children, students and families.”

“I believe in these investments because Minnesota faces real challenges ahead,” Dayton said.

As Dayton updated his two-year, $42.5 billion budget proposal with new budget surplus funds, he added $25 million for nursing homes that complain state money does not allow them to pay enough to keep employees.

Nursing home leaders said the increase Dayton suggests in his revised budget is not enough, but said they are optimistic about a legislative funding increase plan that started at $200 million.

Dayton said he is open to spending more once he sees legislative proposals. He did not know how much his $25 million would raise nursing home workers’ wages, which is the main focus of the money.

“I anticipate the Legislature might very well want to go beyond that, and I’m certainly agreeable to doing so,” Dayton said.

Vice President-Senior Services Carol Raw of Morris-based St. Francis Health Services said the $25 million “is not going to solve our problems,” but added that it is a good sign that Dayton included anything.

President and CEO Mark Anderson of the Knute Nelson care center in Alexandria said he is hopeful the legislative proposal will prevail, but also appreciates that nursing homes are on Dayton’s radar.

While Dayton, a Democrat, concentrated funding on young Minnesotans’ education, Anderson said the reality is that by 2020, there will be more senior citizens than school-age children as 60,000 people turn 65 each year.

Administrator Deb Barnes of Lakeview Methodist Health Care Center in Fairmont said that for years, it seemed no one listened to nursing home needs. That is, until this year, when legislators decided “we need to look at grand reform,” she said.

House Speaker Kurt Daudt, R-Crown, said the Dayton nursing home figure is too small, but predicted the final number will be smaller than what care facilities sought.

“Republicans have been talking for months now about how important it is to reform the way we reimburse nursing homes to make sure that we’re showing these folks the respect they deserve,” the speaker said. “We think that number needs to be probably closer to $160 million over the next biennium.”

A group feeling it didn’t receive enough attention, and is unhappy, represents those who care for the elderly and disabled in their homes. They are behind the 5 Percent Campaign, an effort to boost funding.

“Members of The 5 Percent Campaign are stunned that Gov. Dayton’s supplemental budget includes funding for nursing homes, but not a rate increase for home and community-based services,” said Bruce Nelson of the campaign. “It’s really a matter of fairness. It’s important that caregivers in home and community-based services are treated the same as those in nursing homes.”

About 19,000 American Indian students throughout the state, 93 percent of all Indian students, would benefit from $15 million more that Daytona folded into his budget, Education Commissioner Brenda Cassellius said. The money would be used to improve academic achievement and reduce the dropout rate.

Dayton proposed spending $10 million to build 650 housing units in greater Minnesota communities that have job openings but housing shortages.

While Dayton had already announced his prekindergarten plan and tuition freeze, along with a tax credit for middle-income parents and caregivers, some of his welfare proposals were new.

The governor’s proposing $68 million to increase state assistance for low-income families. That aid that hasn’t been changed since 1986, meaning its value has plummeted due to inflation. A bill from DFL Sen. Jeff Hayden of Minneapolis and Republican Rep. Mary Franson of Alexandria would implement a similar increase.

Dayton also wants to spend $83 million to expand eligibility for the Working Family Tax Credit, given to lower-income families, along with $11 million more to help parents buy school supplies and $50 million on child protection.

Leaders of the University of Minnesota and the Minnesota State Colleges and Universities systems praised the governor’s budget for funding tuition freezes, while the teachers union Education Minnesota also backed it.

This is just the opening salvo in budget negotiations that are likely to last until May. A final state budget needs to be approved by Dayton, the Republican-run House and the DFL-controlled Senate.

Legislative budget plans are due out next week.

While Senate Majority Leader Tom Bakk, D-Cook, said that he wants to raise state aid to local governments, Dayton did not include any in his Tuesday budget. Bakk said Monday that he expects some increase by the time lawmakers go home in May.

“By failing to support an increase in Local Government Aid, the message Governor Dayton sent to families and businesses in greater Minnesota is that even with a $1.9 billion dollar surplus the state doesn’t have the commitment, resources or will to invest in your community,” said Ely City Council member Heidi Omerza, Coalition of Greater Minnesota Cities president.

Nursing home leaders have been regular Capitol visitors this year as they try to get more money so they can pay staffs higher wages. They have told legislators that workers often go to higher-paying jobs at hospitals, or even fast-food places. Wages are determined by how much money the state provides.

“I’m trying to be optimistic,” said Raw, whose Morris employer owns a dozen nursing homes around the state from Thief River Falls to Duluth to Renville. “I am feeling better than I have in probably the last 10 or 15 years.”

The $200 million in the initial legislation was what nursing homes need to meet their expenses, Raw said. “We need something that is sustainable.”

“We have critical, critical issues in our nursing facilities,” she added. “We are so far behind that we are desperate for whatever we can get.”

In Alexandria, Anderson said that with a rapidly increasing number of aging Minnesotans, nursing home funding reform is needed.

“Something needs to be done … to ensure that we are able to find sustainable funding sources for the care centers,” Anderson said.

Whatever is done, he added, requires the state to invest more money.

Doug Belden of the St. Paul Pioneer Press contributed to this story. The Pioneer Press is a Forum News Service media partner.

Analysis: Urgent bills only legislative production at halfway point

House opening day

House opening day

By Don Davis, Forum News Service

The Minnesota Legislature is halfway through its 2015 session, with little to show for it. As usual.

In the nine weeks under lawmakers’ belts, committees discussed hundreds of bills from 1,533 House members have introduced and 1,447 that have come from senators.

Some bills passed through one or more committees and await further committee consideration (bills often must go through several committees), while others are ready for full House or Senate votes. A few have passed one chamber or the other, but not both.

Gov. Mark Dayton this year has signed three bills considered urgent: to provide disaster relief funds, to plug holes in the current budget (and delay commissioner pay raises) and to match the state with federal income tax laws to make filing returns easier for Minnesotans.

Many not involved in state government wonder why there has been so little progress, but those who have been around awhile know this is the way it always is.

As bills that involve spending money (which is most of them) move through the committee process, they receive hearings and testifiers tell legislators why they are good or bad ideas. After the testimony is done in all committees, chairmen simply hold onto the bills to be considered part of major spending measures.

“Omnibus” spending bills usually incorporate all the spending for a specific segment of programs, such as natural resources. A committee chairman will take the various spending bills that have been reviewed and fold his or her preferred programs into the omnibus bill, which then can be amended by the committee and the full House and Senate.

A little more than a week ago, state fiscal experts announced the state has a $1.9 billion budget surplus, a number that allows Democrats in control of the Senate and Republicans in charge of the House to establish their budget proposals. Dayton says he plans to release a revised plan in the next few days.

The big full House and Senate spending votes come near the end of the next nine weeks of session (not including a week and a day lawmakers take off for an Easter-Passover break).

The bottom line is that people from around Minnesota testify for and against funding bills early in the legislative session, then lawmakers debate spending as the session nears its May 18 end.

As for the relatively few bills that do not involve money, the House and Senate will debate many of them in the next few weeks, before most of the attention turns to the money omnibus bills.

However, unlike some states, Minnesota bills are not required to receive votes, or even committee hearings. In most cases, committee chairmen and legislative leaders of the majority party can decide whether bills advance.

So just because a bill is introduced, or even if it passes out of committees, it may never receive a full House and Senate vote. In fact, a majority of bills that lawmakers introduce never are heard from again.

Davis covers Minnesota government and politics for Forum News Service. Read his blog at http://capitolchat.areavoices.com/ and follow him on Twitter at @CapitolChatter.

Political notes: Options for rural ambulances approved

Rural volunteer ambulance services that have trouble getting personnel to respond to calls would have a couple options under a bill the Minnesota House passed 130-0 Monday and is making progress in Senate committees.

Rep. Jeff Backer, R-Browns Valley, said his bill would allow an ambulance service to contract with a neighboring ambulance organization to provide service when shorthanded. It also would let a first responder with less training than an emergency medical technician drive an ambulance.

“This bill will help to ensure that our communities in rural Minnesota have the capabilities to respond to an emergency situation in a timely manner,” Backer said.

Rep. Dan Schoen, D-St. Paul Park, said the bill will help a lot of rural services. “There are ambulance services that during the day are just abandoned because no one (on the service) is in town.”

Backer, a Browns Valley volunteer EMT, is a new lawmaker and the unanimous vote came on his first bill.

Sen. Kent Eken, D-Twin Valley, sponsors the Senate version.

Legislative budget office sought

Legislative leaders offer legislation that would take the power of estimating costs of bills away from the executive branch.

“We kind of feel it is a violation of the separation of powers for those of us in the legislative branch to rely on the executive branch for fiscal notes,” House Speaker Kurt Daudt, R-Crown, said Monday.

Daudt and Senate Majority Leader Tom Bakk, D-Cook, are the prime sponsors of the bill.

“We don’t think it is going to cost anything,” the speaker said.

The bill comes as the House is debating a price estimate, called a fiscal note, on a bill that would reduce school districts’ reliance on senior in retaining teachers when layoffs are needed.

Speaker: Give back ‘vast majority’ of surplus

Minnesota House Speaker Kurt Daudt says he expects the House Republican budget plan to include tax breaks with “the vast majority” of the $1.9 billion state budget surplus.

On Friday, shortly after the surplus was announced, the Crown Republican delivered several phrases indicated that at least half of the surplus should go back to taxpayers via tax cuts. On Monday, he used the “vast majority” term.

Republican Party Chairman Keith Downey said he thought all of the surplus should be returned to Minnesotans.

Daudt said the exact amount of tax breaks the GOP will seek will be included in the budget proposal to be released in about three weeks.

Teacher bill moves forward

The Minnesota House Ways and Means Committee on Monday moved a bill dealing with teacher layoffs back to the full House.

The bill, which could receive a full House vote this week, would require school districts to use already-required teacher evaluations when deciding who to lay off. Current law is mostly based on seniority.

Republicans said they did not think the bill would cost the state, but the Education Department and Board of Teaching estimated its price tag at $850,000. With that, the House removed the bill from its Thursday agenda last week and sent it back to the Ways and Means Committee to consider the costs.

Rep. Debra Hilstrom, D-Brooklyn Center, said she is concerned that with the change, a district could lay off a teacher because of favoritism, gender, race or other issues.

Bill sponsor Rep. Jenifer Loon, R-Eden Prairie, denied that Hilstrom’s fears would be realized. She said that her bill adds a hearing option for a teacher who does not agree with layoff decisions.

Study shows drug courts work

A new study shows Minnesota drug courts are reducing crime and lowering judicial costs.

The special courts, which often keep drug users out of prison, are 4 years old and the state courts survey showed that people who go through them are less likely to reoffend.

Drug court participants spent 74 fewer days in jail or prison on average compared to similar offenders not in drug court. That equaled a $4,288 average savings per participant.

Bank to pay $155,000 over discrimination

Bank of America is to pay $155,000 to resolve a discrimination charge dealing with a hearing-impaired customer.

The Minnesota Human Rights Department found that the bank probably discrimination against Kathryn Letourneau, who had a home loan with the bank.

“All businesses that serve the public must ensure that they are providing reasonable accommodations for people with disabilities,” Human Rights Commissioner Kevin Lindsey said.

In her complaint, Letourneau said that she requested the bank communicate with her only by email because of her hearing problem as she tried to negotiate a $140,000 loan modification. But before negotiations concluded, the bank stopped using email, the Human Rights Department ruled.

Klobuchar, Franken fight invasive species

U.S. Sens. Amy Klobuchar and Al Franken, both Minnesota Democrats, are co-sponsors of legislation to help stop the spread of invasive carp and other species.

The bill would give federal agencies authority to take more actions than they now can.

“We can’t overlook this issue any longer, and that’s why I helped introduce this legislation to take both immediate action and a long-term coordinated response to stopping the spread of invasive carp in the Great Lakes region,” Franken said.

Klobuchar singled out invasive carp, which she said “threaten Minnesota’s strong recreation and fishing industries, which are critical to our state’s economy. We must do everything we can to protect our waterways, including moving this legislation forward to help stop the spread of invasive carp.”

Minnesota firearms permits down

Fewer Minnesotans sought, and received, handgun carrying permits last year.

Sheriffs reported to the state Bureau of Criminal Apprehension that law enforcement officers issued 41,493 permits in 2014; Minnesotans applied for 43,315.

Since licenses were first required in 2003, the new figure means 181,402 permits are held by Minnesotans.

The 2014 issued-permit number was down from the 60,471 issued in 2013, but much bigger than earlier years, which ranged from 17,240 in 2010 to 31,657 in 2012.

Hennepin County lead with the number of permits issued last year, 5,279. Four other counties followed with 2,200 to 3,000: Anoka, Dakota, Ramsey and St. Louis.

Political Chatter: White House touts Minnesota exports

Minnesota exported $21.4 billion of goods last year, the White House has announced.

President Barack Obama talked Thursday about his economic plan, which he said resulted in an American record $2.35 trillion in exports. Part of the White House push included highlighting state trade.

Obama’s team said that Minnesota’s exports supported 106,000 jobs in 2013.

“On average, jobs in these export-related industries pay up to 18 percent more than non-export related industries,” the White House reported.

Minnesota exports were boosted by the Obama “Made in Rural America” initiative, the White House said.

The report emphasized Obama initiatives including the White House Rural Council, which hosted a series of workshops to “connect rural leaders and businesses with resources to expand exports and to identify barriers to exporting for rural businesses.”

Feedback from those conferences resulted in actions to help export rural products.

Minnesota’s exports came from a number of areas, the White House reported, led by computer and electronic products ($3.8 billion); machinery, except electrical ($3.2 billion); and transportation equipment ($2.6 billion).

The state exported $10.2 billion of good to countries around the Pacific rim and $4.2 billion to the European Union.

“Minnesota has a diverse and robust export economy, with more than 930 different products going to 192 countries in the fourth quarter,” Commissioner Katie Clark Sieben of the Department of Employment and Economic Development said.

Poll shows mixed message

A new poll shows Minnesotans are split about Gov. Mark Dayton’s performance, but don’t like his highly publicized boost in commissioner pay.

SurveyUSA’s poll 600 Minnesota adults for KSTP-TV indicated that 46 percent approve of the job Dayton is doing, while 42 percent oppose, with a 4.4 percent margin of error.

At the same time, 70 percent of Minnesotans oppose the Dayton move to give raises of up to $35,000 a year to his commissioners. Nineteen percent approved the raises, with 11 percent not sure.

The Legislature approved and Dayton signed a bill temporarily rolling back the raises, but allowing Dayton to reinstate them — or other sizes of raises — on July 1. Beginning July 2, any raises would need legislative approval.

SurveyUSA’s poll showed 74 percent wants the Legislature to have that final approval.

The poll also shows that Dayton may face problems in passing his $6 billion, 10-year transportation plan. Fifty-one percent oppose the plan, with 43 percent in favor.

At the same time, a preliminary Republican plan to spend $750 million on highways and bridges received 75 percent support. However, the poll did not tell respondents that the GOP plan is just a temporary one, with a full proposal expected in coming weeks.

Peterson backs pilots

U.S. Rep. Collin Peterson, a pilot, has introduced Pilot’s Bill of Rights legislation to increase protections for pilots.

The Peterson bill would reform the pilot medical certification system and make it easier to provide no-cost transportation for patients receiving medical treatment to assist in disaster relief.

“The Pilot’s Bill of Rights II takes important steps to strengthen the rights of general aviation pilots and address burdensome government regulations,” the western Minnesota Democrat said. “The bill will promote safety while reducing barriers to pilot certification and protecting volunteer pilots who support the public good.”

Franken hails FCC vote

U.S. Sen. Al Franken was thrilled with the Federal Communications Commission took a vote backing up his feeling about the Internet.

The FCC adopted new “net neutrality” protections meant to ensure that the Internet remains open and free for all.

“This is an enormous victory,” the Minnesota Democrat said. “This is the culmination of years of hard work by countless Americans who believe, just as I do, that the Internet should remain the free and open platform that it’s always been.”

One part of net neutrality is preventing charging Internet users who want faster access. Franken said that such charges would allow the rich better internet access than others.

Trafficking bill heads to vote

U.S. Sen. Amy Klobuchar’s anti-sex trafficking bill is heading for a full Senate vote.

The Minnesota Democrat’s legislation, which passed the Senate Judiciary Committee, is modeled after a Minnesota law that helps to make sure minors sold for sex are treated as victims, and not prosecuted.

The U.S. House already has passed a version of the Klobuchar bill.

“Sex trafficking isn’t just happening in some far-away nation, it’s happening in our own backyard,” Klobuchar said. “In Minnesota, we’ve already recognized that kids who are sold for sex are not criminals who need jail time; they are victims who need support.”

Page leaving

The best-known Minnesota Supreme Court justice is retiring.

Alan Page, who gained fame in the 1970s as a Minnesota Vikings defensive tackle, reaches the mandatory retirement age of 70 this year and leaves the court at the end of August.

Gov. Mark Dayton has asked the Commission on Judicial Selection to review candidates for the Page position and any others that open this year. Justice Wilhelmina Wright has been recommended for a federal post, which could produce another opening.

Dayton asked that applications be made by April 10.

Tax rebate not favored

Senate Finance Chairman Richard Cohen of St. Paul followed Friday’s announcement of a $1.9 billion surplus with his opposition to sending rebate checks back to Minnesotans as occurred when Jesse Ventura was governor.

Cohen recounted that his “Jesse Check” was for $250, which paid for about half of an airline ticket to New York City. He said that while he enjoyed the trip, he paid for it “over the next decade with higher property taxes, higher fees.”

House Speaker Kurt Daudt, R-Crown, wants to send much of the surplus back to Minnesotans in the form of tax cuts.

When asked if he would like to send “Kurt Checks” to Minnesotans, he quickly responded “that’s a good idea,” but just as quickly said he was joking.

 

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.

Surplus up to $1.9 billion

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.

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.

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.

Details of the budget report are due out later today.

Chairman Ken Martin of the Democratic-Farmer-Labor Party credited lawmakers and the governor of his party for the good news.

“DFL leaders have made it a priority to improve the economy, create jobs and invest in education,” Martin said. “We’ve seen great progress, evident in today’s budget surplus, but we know more work needs to be done.”

One of the first Republican reactions came from Rep. Pat Garofalo of Farmington, who said the surplus means both parties will look at the surplus to fund transportation.

“Jump in surplus kills attempts at raising gas sales taxes,” he tweeted. “Both sides will move toward dedication general fund revenue for transportation.”

Gov. Mark Dayton released his first budget proposal on 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 budget deficit this year.

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 like higher salaries to be handled by his commissioners within existing budgets, not in higher budget requests.

 

Legislative notes: Budget forecast due Friday

A report that gives Minnesota’s governor and legislators information they need to write a two-year budget will be released Friday.

The so-called budget forecast will look at the economy and revenues coming to the state and predict funds available in the next budget cycle.

Gov. Mark Dayton already has released his budget plan, as required by law, but will tweak it after the Friday report. Legislative leaders will develop their budget based on the Dayton plan and Friday’s forecast, likely with considerable differences from the governor.

An early December forecast predicted the state will have a $1 billion surplus, but good economic reports since then have led many state officials to predict better news Friday.

The actual surplus numbers will be a tightly held secret until Friday morning.

Hemp legalization bill advances in Minnesota House

An effort to legalize hemp in Minnesota continues.

A state House committee Wednesday unanimously approved a bill by Rep. Mary Franson, R-Alexandria, to allow limited hemp growth. Hemp farming has been illegal in Minnesota since shortly after World War II.

Franson’s bill would allow hemp as a crop if the producer is licensed by the state Agriculture Department and follows federal law, which now only allows researchers to grow the plant.

Hemp is used for products ranging from ropes to clothes.w

It was declared illegal due to its close relationship with marijuana, although using hemp would not make a person high.

Franson said Minnesota hemp farming has a lot of potential and her bill would develop “on a very small scale” the beginnings of a hemp industry in the state.

A similar Senate bill passed its first committee test last week.

Phasing out Social Security tax on seniors considered

A Minnesota House committee dealing with aging Minnesotans voted Wednesday to phase out the tax the state charges on Social Security benefits.

The House Aging and Long-Term Care Policy Committee sent five bills to get rid of the tax to the Taxes Committee.

If Social Security were not taxed, the average Minnesota senior citizen would save $600 a year, the committee heard.

Most states do not tax Social Security.

Supporters of the bills testified that getting rid of the tax would help Minnesota’s elderly afford to live in their own homes longer.

The bills vary on how long it would take to phase out the tax, with two taking 10 years and the others less time.

Education-focused Dayton budget covers a wide range of issues

Dayton

Minnesota Gov. Mark Dayton’s two-year budget plan would pump more than a half billion dollars into education, increase the number of food inspectors by 26, add facilities at some parks, fund better supervision of child abuse programs, improve railroad crossings and provide hundreds of other changes.

He would do it without a general tax increase.

Dayton’s increased spending, which would bring the budget that begins next July 1 to about $42 billion, comes from a $1 billion surplus.

The surplus, announced late last year, normally would have been taken up by state agencies paying for higher wages, utility bills and other inflationary costs. However, Dayton said, he wants agencies to absorb most of that inflation by taking money-saving measures such as leaving jobs open.

Dayton surprised no one by making education his top fiscal priority, as he has since he ran for governor in 2010. He proposes setting aside $418 million of the budget for education through high school and $93 million for higher education.

“Minnesota’s future success — and health of our families, the vitality of our communities and the prosperity of our state — will depend upon our making excellent education available to all Minnesotans,” Dayton said. “That is exactly what my budget proposal aims to do.”

Commissioner Myron Frans of Minnesota Management and Budget said the state is in better fiscal state than it has been for years. Many state officials expect a new state revenue report due in a month to show a larger surplus, and thus giving legislators and Dayton more money to spend.

The budget continues a modern-day trend, broken just once, of increasing the budget each year. The current two-year budget is $39.6 billion.

After Dayton, a Democrat, and the Democratic-controlled Legislature raised taxes $2 billion two years ago, there was little change in taxes in this Dayton budget.

“We are in a position where we can meet the needs without a general tax increase,” Dayton said.

The governor’s budget plan will be used at the basis for legislators to draw up their own spending plans. However, those will not come until after a new report on the state’s economy and expected tax revenues, tentatively scheduled for Feb. 27. Dayton also will revise his budget proposal after the report and propose a public works bill funded by the state selling bonds.

One item not in the Dayton budget drew the ire of nursing home advocates and Republicans.

The Long Term Care Imperative, representing facilities such as nursing homes, issued a statement saying members were disappointed that Dayton did not include more funds for their cause.

“As 60,000 Minnesotans will turn 65 this year, and next year, and until at least 2031, the demand for care will continue to grow,” the imperative statement said. “We need to start the conversation immediately about how we are going to address the care of aging Minnesotans.”

House Republicans won the majority in November’s election by winning Democratic seats in rural areas, where the most nursing home fiscal problems are found. House Speaker Kurt Daudt, R-Crown, said he was not happy that Dayton skipped increasing funding for them.

Dayton said that nursing homes have received $93 million in new founds in the past four years, so opted not to include new funding in this budget. However, he said in response to a reporter’s question, nursing home funding will be near the top of his priority list if the Feb. 27 report shows a bigger surplus.

Overall, Republicans were critical that Dayton wants to increase spending as much as he does.

Daudt said that if Dayton’s budget were to be adopted, its increased spending would cost every Minnesotan $1,244.

Democrats were happy with the Dayton plan.

“Gov. Dayton’s budget proposals reflect the values and priorities all Minnesotans share,” Senate Majority Leader Tom Bakk, D-Cook, said. “I am pleased his budget proposal funds a comprehensive transportation plan, invests in our youngest learners, supports economic and workforce development initiatives, and maintains the balanced budget in the years ahead.”

Dayton took the rare step of withholding new money from the Minnesota State Colleges and Universities system until a dispute between faculty and the administration is settled.

The money would have gone to allow MnSCU continue a tuition freeze. The governor proposes to give the University of Minnesota $93 million more to continue its freeze.

The MnSCU controversy centers on an initiative, Charting the Future, established by Chancellor Steven Rosenstone. Seven faculty organizations have passed “no confidence” votes against Rosenstone for the initiative, which is designed to streamline the system.

MnSCU leaders on both sides of the dispute said Tuesday that they are working toward an agreement.

Youth-related programs and health and human services spending account for 75 percent of Dayton’s new proposals.

Featured in his education funding plan is providing free pre-kindergarten programs to 4-year-olds.

Education Commissioner Brenda Cassellius said the programs will be voluntary for school districts, and local officials could decide what schools would offer the programs.

Dayton also would put more money into general public school needs and he wants $100 million available for child-care tax credits that can be used for working families.

The Dayton budget plan also would spend:

– $30 million to improve broadband Internet service, mostly in rural Minnesota.

– $33 million gained from a railroad assessment would help improve rail safety, mostly on tracks that carry North Dakota oil. He also plans to ask legislators to approve borrowing $43 million for rail safety (mostly to improve rail crossing in the Prairie Island Indian Community, Willmar and Moorhead).

– $10 million to buy two used airplanes for state use, replacing two aging ones that need more maintenance than they are worth. He said the state will reduce the number of airplanes and helicopters it owns.

– $2.5 million to improve oversight and training for county public health workers dealing with child abuse. Human Services Commissioner Lucinda Jesson said more money may be needed after a series of recommendations is released in March.

Also folded into the budget is money for more Agriculture Department food inspectors: 11 wholesale food inspectors, 10 retail inspectors and five meat inspectors.

Natural Resources Commissioner Tom Landwehr said parks and trails would receive $7.2 million more, going to things such as new facilities at state parks.

The budget plan Dayton released Tuesday is for state programs funded by general tax revenues. However, when transportation, federally funded state programs and other initiatives are considered, the all-accounts budget can nearly double the state taxpayer-funded portion.

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Some examples of two-year budgets over the years:

– 1964-1965, $770 million

– 1974-1975, $3.5 billion

– 1984-1985, $9.8 billion

– 1994-1995, $16.7 billion

– 2004-2005, $28.1 billion

– 2006-2007, $31.5 billion

– 2008-2009, $33.9 billion

– 2010-2011, $30 billion

– 2012-2013, $35.3 billion

– 2014-2015, $39.6 billion

– 2016-2017, $42 billion

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How the governor’s proposed budget funded by general tax revenues would be spent:

– Public school education: 42 percent

– Health and human services: 28 percent

– Property tax aids and credits: 8 percent

– Higher education: 7 percent

– Judiciary, public safety: 5 percent

– Other: 10 percent

Notes: Property tax aids and credits include programs such as aid to local governments. Most transportation funding comes from other sources not included in the state’s main budget.

Legislative notes: Species tag repeal attempted

An effort is being made to repeal a new law that mandates an aquatic invasive species boat trailer decal.

As of July 1, the decal must be placed on trailers after owners pass 30 minutes of training about the dangers of invasive plant and animal species.

Joel Carlson said the Congress of Minnesota Resorts that he represents at the Capitol want the law overturned because it could inconvenience resort visitors. He said the law is overkill in the fight against invasive species.

Sen. Jeremy Miller, R-Winona, is among those sponsoring bills to get rid of the law.

“After speaking with constituents, sportsmen and women, other legislators and interested groups, it has become clear there are many concerns about this particular law,” Miller said. “It’s critical we continue to raise awareness about invasive species and while this provision was well intended, we can find better and more productive solutions to provide training and information.”

Minnesota revenues up

Minnesotans paid more in taxes than expected the last two months, Minnesota Management and Budget reported Monday.

The state finance agency said tax collections were up 6.4 percent over November projections. Individual November and December income taxes were nearly $1.6 billion, up from the previously estimated $1.4 billion, to lead the increase.

The total increase was $212 million over all taxes.

If the increase continues, it is good news for lawmakers crafting a two-year budget expected to top $41 billion.

MMB officials warned that the increased income tax revenue could be due to the timing of tax payments rather than more money being paid. However, they reported that lower gasoline prices and other improved economic news is good for the state.

Vets hiring bill back

Minnesota state Rep. Anna Wills, R-Apple Valley, has brought back unsuccessful legislation she authored two years ago to give a tax credit for hiring a military veteran.

She said that would help lower veteran unemployment.

“With thousands of Minnesota veterans returning from Iraq and Afghanistan, now is the time to ensure our servicemen and women have good-paying jobs to come back to as they transition back to civilian life,” Wills said. “This bill is a win-win for Minnesota veterans and Minnesota employers; it helps address the unemployment rate for Minnesota veterans who served our country, and helps Minnesota businesses lower their tax burden by hiring highly skilled and qualified employees.”

Veteran unemployment is much higher than for the overall population.

A separate bill, by Sen. Paul Gazelka and Rep. Josh Heintzeman, both R-Nisswa, would exclude retired military members from state income taxes.

“The unfortunate fact is that Minnesota has consistently ranked in the bottom half of states to retire as a veteran, Gazelka said.

Inflation eats away surplus

Lots of charts

The Minnesota state budget surplus sits at $1 billion, but not really.

While state officials said a Thursday economic and budget report was good news, Minnesota’s top finance official said that inflation will eat up what many called a surplus. Still, political leaders agreed that the added money, unlike deficits they often have been dealt, will make budgeting easier when legislators return to St. Paul Jan. 6 and that no overall tax increase will be needed.

“Inflation is essentially everywhere,” Commissioner Jim Schowalter said of the state budget, and the $1 billion “surplus” mostly will be used to counteract it in the state’s two-year budget that begins next July 1.

“Yes, if you add in inflation, it evens out,” his boss, Gov. Mark Dayton, said.

However, Dayton and most other political leaders said Thursday’s report was good news and the governor insisted there is a surplus.

After raising taxes more than $2 billion in 2013, Dayton said that he sees no need for a general tax increase. On the other hand, the Democratic governor said that some type of new revenue is needed to inject needed money into road and bridge budgets.

House Speaker-designate Kurt Daudt, R-Crown, said that he does not think higher taxes will be needed for transportation, although all ways to increase transportation funding “are on the table.”

Dayton said that what he called a “surplus” could help fund some child care tax credits, increased broadband facilities across greater Minnesota and other needs.

As soon as the $1 billion surplus was announced, groups ranging from the University of Minnesota to those representing nursing homes said they need some of that money.

Part of the $1 billion is $373 million that is not being spent in the current budget and can be spent in the next two years. State law automatically requires another $183 million to remain in the reserve and not be folded into the next budget.

The news gives Dayton a benchmark as his administration works on a budget proposal that he plans to give legislators Jan. 27. The Republican-controlled House and Democratic-controlled Senate will draft their own budget plans, most likely based on the Dayton budget, after another revenue report in late February or early March. Dayton will tweak his budget after that report.

Thursday’s report, known as a budget forecast, takes a look at the national and state economies and predicts how much is available to spend on state programs.

The state general fund budget has grown from $31.5 billion in 2006-2007 to $40 billion now. It is expected to top $40 billion for the two years beginning next July 1, a figure state lawmakers and the governor will work out in the legislative session that begins Jan. 6.

The general fund budget is that part of state spending funded by Minnesota taxpayers. When federal and other funds are included, the state’s total spending can be twice the state-funded total.

While Democrats, who have controlled the Legislature and governor’s office the past two years, were celebrating Thursday’s report as good news, Republicans had their doubts.

Daudt said that the state is bringing in more money, but Minnesotans’ personal budgets do not appear to be improving.

The Minnesota economy is closely tied to national trends, State Economist Laura Kalambokidis said. That includes a worse-than-expected housing market, which affects industries across greater Minnesota such as lumber and window makers.

Senate Majority Leader Tom Bakk, D-Cook, said that he hopes the budget cushion announced Thursday gives lawmakers a chance to work on one of greater Minnesota’s most pressing issues: housing.

Industries located in communities from Roseau in the north to Jackson in the south say they have jobs available, but need housing for workers, and in many cases potential workers need more training.

Most of the state’s key political leaders specifically said after Thursday’s budget forecast that it means no overall tax increase will be needed. However, Dayton emphasized what he sees as the need to raise revenue for transportation.

While he said he is open to ideas about how to raise that revenue, one possibility he has discussed would be to add a tax on gasoline at the wholesale level. The current gas tax is added at the pumps.

Daudt, whose Republican candidates this fall campaigned on improving roads and bridges, said he is not convinced higher taxes are needed. He and other Republicans have said they prefer to cut other state programs that may not be needed and transfer those funds to transportation.

In general, state political leaders were waiting for the budget forecast to draw up specific proposals.

Besides transportation, Dayton specifically mentioned the need to fund expansion of high-speed Internet, known as broadband, across the state.

Broadband, he said, is “crucial for economic development over the state.”

Dayton and legislators this year approved a down payment for improving broadband access, but some projections indicate that billions of dollars more are needed to bring greater Minnesota to the same level as the Twin Cities.

 Key budget numbers

in next two-year budget

$1.037 billion: More money expected than earlier projections

$412 million: Lower revenues expected than earlier prediction

$502 million: Expected drop in overall state spending

$443 million: Less spending needed than expected in health programs

$2 billion: Expected gain in individual income tax receipts

$598 million: Expected increase in sales tax collections

Bakk

Dayton

Daudt

State economist

$1 billion state budget surplus predicted

Minnesota legislators and governor will have a bit more to spend in the next two years.

State officials announced this morning that better-than-expected revenues are expected to give the state budget $1 billion more than previous predictions. Revenues are expected to be up compared to a February version of the revenue report.

A summary of a report due out later today shows that total revenues are expected to be $41.9 billion, 4.8 percent higher than the current budget.

Part of the $1 billion revenue expectation is $373 million not being spent in the current budget and can be held over for the next budget. State law automatically requires another $183 million to remain in the reserve and not be folded into the next budget.

The news gives Democratic Gov. Mark Dayton a benchmark as his administration works on a budget proposal that he plans to give legislators Jan. 27. The Republican-controlled House and Democratic-controlled Senate will draft their own budget plans. Another revenue report in late February or early March will lead to tweaks in early budget plans.

The report, a short summary released two hours before the full report was made public late this morning, takes a look at the national and state economies and predicts how much more is available to spend on state programs.

November budget forecasts in recent years have had their ups and downs, with mostly deficits in the first 10 years of the 2000s and mostly surpluses since then. At times, budget forecasts in late February or early March have shown dramatically different results, and those reports are the ones used to develop final state budgets.

The state general fund budget has grown from $31.5 billion in 2006-2007 to $40 billion now. It is expected to top $40 billion for the two years beginning next July 1, a figure state lawmakers and the governor will work out in the legislative session that begins Jan. 6.

The general fund budget is that part of state spending funding by Minnesota taxpayers. When federal and other funds are included, the state’s total spending can be twice the state-funded total.