MINNEAPOLIS (WCCO) — Minnesota lawmakers have the kind of problem on their hands that, at first glance, would appear to be a good thing.

Friday the state announced a surprising $1.23 billion surplus. But the debate about what to do with the surplus is so intense, it’s even pitting members of the same party against each other.

Last year, the Minnesota legislature raised state taxes by $2.1 billion. With the state now looking at a $1.3 billion surplus, Democrats say it’s a sign of a strong statewide recovery.

Republicans see it differently. They say the surplus proves that Democrats raised taxes too much last year and that without those tax hikes, the recovery would have been even more significant.

As for what to do with the surplus, Republicans want all of it returned to taxpayers in the form of tax cuts. Gov. Dayton is calling for tax breaks, too, but on a smaller scale. He wants a $500 million rollback with specific breaks for businesses and middle-class taxpayers.

The speaker of the Minnesota House appeared on WCCO Sunday Morning.

“I think some of it should go back in the form of middle-class tax relief because at the end of the day, my focus and what our caucuses’ focus is how do we continue to grow middle class prosperity,” Speaker Paul Thissen said.

But Democratic Senate Majority Leader Tom Bakk says he would like the surplus to go to the states’ rainy day fund to handle emergencies including natural disasters. The backdrop for this debate, of course, is upcoming statewide elections.

While Minnesota State senators are not up for reelection in November 2014, all members of the Minnesota House and the governor are.

You can watch WCCO Sunday Morning with Esme Murphy and Matt Brickman every Sunday at 6 a.m. and 10:30 a.m.

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