In these final weeks of this legislative session, policymakers are putting together the state budget for the FY 2018-19 biennium, in which the state has a projected $1.7 billion surplus. Policymakers have laid out their different visions for what the state should prioritize.
There is a lot at stake in these final budget negotiations, including whether Minnesota policymakers will use the surplus to invest in a more durable prosperity that reaches into those communities with less access to opportunity. And whether they will pass a modest tax bill that supports the efforts of Minnesotans across the state working hard to join the middle class – or instead pass an unsustainable, unbalanced tax bill that provides large tax reductions to those who are already doing well. The table below compares Governor Mark Dayton’s budget proposals to the budget targets set by the House and Senate and the joint Legislative targets agreed to on April 28.
|General Fund Net Spending (FY 2018-19)||Governor||House||Senate||Legislative Agreement|
|Tax Cuts and Aids to Local Governments||$192 million||$1.3 billion||$903 million||$1.1 billion|
|E-12 Education||$714 million||$271 million||$300 million||$303 million|
|Higher Education||$318 million||$149 million||$100 million||$125 million|
|Health and Human Services||-$412 million||-$599 million||-$335 million||-$505 million|
|Agriculture, Rural Development||$10 million||$0||$0||$0|
|Environment, Natural Resources||$65 million||-$21 million||-$40 million||-$30 million|
|Jobs, Commerce, Energy||$111 million||$11 million||$11 million||$8.8 million|
|State Government and Veterans||$136 million||-$90 million||-$29 million||-$60 million|
|Transportation||-$18 million||$343 million||$400 million||$372 million|
|Judiciary and Public Safety||$253 million||$102 million||$50 million||$76 million|
|Debt Service, Capital Projects, Other||$72 million||$0||$19 million||$0|
|Other Bills||$0||$140 million||$240 million||$142 million|
|Total||$1.4 billion||$1.6 billion||$1.6 billion||$1.6 billion|
In his budget, Dayton has proposed using more than half of the surplus to invest in E-12 Education and Higher Education. His budget proposal expands voluntary pre-kindergarten and improves the state financial aid program for college students. His Health and Human Services budget proposal expands access to health care and improves child care assistance. He also includes a targeted tax plan that prioritizes the work efforts of Minnesotans living paycheck to paycheck by expanding the Working Family Credit and the Child and Dependent Care Tax Credit. The governor also leaves about $200 million of the current surplus unspent or “on the bottom line,” in order to be better prepared in this time of uncertainty.
In contrast to Dayton’s proposals, the budget proposals passed by the House and Senate allocate a majority of the surplus to tax cuts and transportation. This leaves very little room for additional funding for child care, services for Minnesotans living with disabilities, and basic resources for very low-income families. Their tax bills include estate tax cuts for a small number of the largest estates and tax cuts for businesses, but devote much less to provisions focusing on everyday working Minnesotans. To pay for the tax cuts and still provide limited investments in some budget areas, that means that both the House and Senate propose large cuts to Health and Human Services and several cuts to State Departments.
We’re urging Minnesota policymakers to practice great caution as they finalize these budget decisions. The increased uncertainty around policy changes at the federal level is coupled with the possibility that the next recession could be in the not too distant future. Policymakers should prepare for these uncertainties by not making large and unsustainable tax cuts or weakening the budget reserve.