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Minnesota budget surplus: $1.9 billion

By Don Davis

Forum News Service

ST. PAUL -- Minnesota's budget surplus has ballooned to $1.9 billion, state officials announced Thursday morning.

The surplus, more than double what lawmakers had when they finished work in June, drops to $1.2 billion when $665 million is allocated to reserves and to make payments required by state law.

The money is projected to be available for the current budget, which ends June 30, 2017. The announcement gives state officials an idea about how much they can spend during the 2016 legislative session, which begins March 8.

Minnesota's two-year budget funded by state taxpayers is $42 billion.

Most of the surplus came from $682 million in additional resources, mostly higher than expected tax collections, and $249 million less spending than had been planned.

Commissioner Myron Frans of Minnesota Management and Budget called the forecast sunny, like weather outside.

"The ship continues on course and we are improving the stability and control of the ship," Frans said, continuing a marine theme that then-Finance Commissioner Pam Wheelock began years ago when she proclaimed, "We have a boatload of money" during another surplus year.

Gov. Mark Dayton said that when took office five years ago, he faced a $6.2 billion deficit and the state owed schools $2 billion.

For the change, he credited working Minnesotans and he said that "my first rule is to be responsible" with using the surplus.

Dayton said the surplus should be used, in part, for transportation funding, increasing early education spending and to provide $100 million in broadband high-speed Internet help for greater Minnesotans. He also said those in greater Minnesota should receive some property tax relief from the surplus.

Moments after the surplus number was released, Senate Minority Leader David Hann, R-Eden Prairie, gave the GOP's priority for added money: "We should immediately approve the roads and bridges plan put forward by Republicans in the 2015 session and give the rest of the surplus back to taxpayers."

He was joined by other GOP leaders in saying that the surplus means Minnesotans were overtaxed.

Republicans agreed with Democrats that more transportation funding is needed, and said they were happy to see the Democratic governor declared a gasoline tax increase was dead. They supported their plan from earlier this year to move money from other programs to transportation.

House Speaker Kurt Daudt, R-Crown, said Republicans would "look at all the proposals on the table" that would provide tax cuts.

The Coalition of Greater Minnesota Cities renewed its regular call for increasing Local Government Aid paid to cities.

"Because the Legislature failed to pass a tax bill last session, LGA is one of the few budget issues still up in the air," coalition President Robert Broeder, Le Sueur mayor, said Thursday. "Today’s surplus announcement proves that legislators have no excuses - they need to finish this unfinished business and pass a modest increase in LGA funding."

The coalition wants $45.5 million, to return LGA spending to 2002 levels. Senate Tax Chairman Rod Skoe, D-Clearbrook, said his chamber already has a bill that would do that.

Next year's session will last less than three months, in part because nearly all of the Capitol building is closed for renovation, so the time to make budget changes may be limited.

Advocates of home and community-based care givers for the elderly and disabled and transportation supporters this week were among the first to announce their desires for more money. Other interest groups are expected to follow, especially in light of the growing surplus.

"Minnesota’s budget outlook has improved from previous estimates despite a weaker economic outlook," Minnesota Management and Budget reported Thursday.

Exports fell and investments dropped in the wake of lower oil prices, Management and Budget reported. That has lowered the national economic outlook, but it has not reduced the Minnesota budget forecast.

Individual Minnesota income taxes fell $100 million from expectations a year ago, but revenues in sales, corporate and other taxes rose to offset lower income taxes.

While Management and Budget predicts a continued good budget outlook, it warned that budget changes made in next year's Legislature could affect it.

Reductions in expected spending are driven by lower than planned health-care costs while other spending grew slightly.

A new budget and revenue forecast will come in late February or early March, giving lawmakers and Dayton an updated look at how much they have to spend.

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