Many want a piece of Minnesota budget surplus

ST. PAUL -- Minnesota's $1.9 billion budget surplus is in demand.

It could go to transportation, tax cuts, early-childhood education, broadband, transportation, northern Minnesota's miners, Local Government Aid, transportation, health-care programs, racial disparities, transportation, sex offender treatment or any of a number of other issues. Transportation was, by far, the most-discussed topic after state officials Thursday announced the surplus.

If there was agreement that transportation needs more funding, there was little agreement about where to get the money. In many ways, the debate reverted back to the legislative session earlier this year in which Democrats and Republicans could not agree on funding.

However, Democratic Gov. Mark Dayton declared a gasoline tax increase like he proposed early this year dead in light of the newly announced surplus. Beyond that, however, Republicans continued their desire to draw transportation funds from other programs while Democrats stressed that unspecified new funds are needed.

The governor did say he could go along with taking some money from existing programs, but did not detail how far he would go.

Dayton said that the projected $6 billion transportation funding need over a decade is proof existing revenues are not enough.

Senate Tax Chairman Rod Skoe, D-Clearbrook, suggested that surplus money could be used to improve rural transportation, including the Corridors of Commerce program that funds better roads between greater Minnesota regional centers. Most rural products, from corn to windows, move to market on roads, he said.

"I think there are many ways to skin a cat, but if you are not putting new money into this, I would think you probably are not going to make good progress," Skoe said about transportation funding.

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 comes from $682 million in additional resources, generally from higher than expected tax collections, and $249 million less spending than had been planned.

In the economy, which affects state revenue, exports fell and investments dropped in the wake of lower oil prices, which spilled over from the national economy to Minnesota's.

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.

State Economist Laura Kalambokidis said that the current strong dollar actually hurts agriculture and mining sales because it forces lower prices.

Reductions in expected state spending are driven by lower than planned health-care costs. Other spending is expected to grow slightly.

Commissioner Myron Frans of Minnesota Management and Budget said the fiscal ship of state is floating well.

"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 more than a decade ago when she proclaimed, "We have a boatload of money" during another surplus year.

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

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

Dayton said that 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.

House Speaker Kurt Daudt, R-Crown, was not ready to support the broadband figure. House Republicans earlier this year started out with no broadband funding, but eventually agreed to $10 million.

Daudt said that "we also need to help out our farmers."

After Kalambokidis said that the agriculture sector is suffering from low commodity prices, Dayton said that such things are out of the state's control. However, Dayton and Daudt agreed that giving farmers property tax breaks could help them.

Republicans put an emphasis on tax cuts, with Daudt saying he is willing to look at all tax cut proposals.