Gov. Mark Dayton is proposing to use half of Minnesota’s projected $1.2 billion surplus to cut taxes, with another big chunk going to fill reserve accounts. Dayton outlined his supplemental budget plan Thursday, the day the House was planning to vote on a slightly smaller tax bill.
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 its even pitting members of the same party against each other.
Minnesota’s projected budget surplus swelled Friday to $1.233 billion, giving lawmakers more leeway to pursue tax cuts and increased spending this session. State finance officials released the updated outlook that showed the surplus is $408 million higher than what was projected a few months ago.
Republican leaders in the Minnesota Legislature say the $1.2 billion budget surplus is no cause for celebration because it shows state government overtaxes its citizens. Republicans unveiled their response Friday to news of the enhanced surplus: “Give it back.”
Democrats who control Minnesota’s House and Senate agree a $1.2 billion surplus is likely to make for an easier legislative session, but there’s not agreement yet on how much to spend, save or rebate to taxpayers. House Speaker Paul Thissen says he wants to move quickly on more than $500 million in tax relief.
Don’t count on a sales tax rebate check like the ones that became popular in prior years Minnesota ran a budget surplus. Senate Majority Leader Tom Bakk said Monday that it’s unlikely his chamber would go that route if there are extra dollars for lawmakers to allocate next year. A forecast last week showed $825 million available but a new report will come out as lawmakers return in late February. The Democrat from Cook says his preference is to add more money to the state’s budget reserves, consider transportation investments and make other tax and spending decisions that don’t have a lasting budget impact.
An update Tuesday from Minnesota Management and Budget says net general fund revenues totaled nearly $2.5 billion in February and March, which was $106 million or 4.4 percent better than forecast in February.
The state of Minnesota’s economic outlook improved by $323 million on Wednesday, but the new money came with a warning for elected leaders: you can look, but you can’t touch.
Nobody is talking about using Minnesota’s surplus funds for a stadium, but Gov. Mark Dayton admits it clears the way for the debate.