Surplus Drop Complicates Gov. Dayton's 2016 Plans

MINNEAPOLIS (WCCO) -- Minnesota got some unexpected financial news Friday, and it is not good.

State finance officials say Minnesota's $1.2-billion surplus has dropped to $900 million.

It will have an impact on the governor's budget proposal before the upcoming legislative session.

Officials say the United States economy is slowing down, and Minnesota is feeling the effects.

And though Minnesota's economy is still growing, it is growing at a slower pace.

"This is concerning, and it's a wake-up call for all of us," Gov. Mark Dayton said.

The governor and state lawmakers had expected much more money in the bank going into the election-year session.

But Republican leaders are renewing their call to use parts of the surplus that is left for middle class tax cuts.

"Instead of worrying about how much money we're taking out of their pockets, let's put some money back in their pockets. That's going to help this economy," Republican House Speaker Rep. Kurt Daudt said.

State officials say warning signs of a slower economy include higher gas prices, lower consumer spending and fewer homes getting built.

"It just got harder," Democratic Majority Leader Rep. Tom Bakk said.

Top Democrats say it is time to put the brakes on tax cuts and spending.

The Senate Democratic leader remembers years of Minnesota tax cuts, followed by more years of budget deficits.

"And we're not going to repeat the same mistake and plunge ourselves into deficits for the next decade going forward by some phony idea that somehow if we cut taxes the economy is going to grow," Bakk said.

Dayton says all day pre-kindergarten programs remain his number-one priority, but he admits the session suddenly got a lot more complicated.

"People said they wanted divided government," Dayton said. "Well, they got it."

Minnesota lawmakers return to St. Paul for the 2016 legislative session on March 8.