The head of the Minnesota House and a powerful committee chairman want to drain the state's budget reserves to help repay money owed to public schools.
Minnesota House Speaker Kurt Zellers, R-Maple Grove, and House Education Finance Committee chairman Pat Garofalo, R-Farmington, have introduced legislation that would shift $430 million to repay K-12 schools. A House committee is discussing the proposal Thursday afternoon.
Minnesota state government owes public schools about $2.3 billion after state leaders withheld payments over the last couple years to deal with back-to-back budget deficits.
Repaying public schools has been a chief concern for Republicans and Democrats over the last few months.
House Minority Leader Paul Thissen, DFL-Minneapolis, said he would be open to shifting money from reserves. But he prefers a DFL proposal to close corporate tax loopholes and use that money to repay schools.
The move would leave the reserve fund far below what state budget officials have said would be necessary if the economy sags and tax collections slow.
Years of budget shortfalls had caused state leaders to drain reserves almost completely.
The state's decision to empty reserves and borrow from public schools caused national rating agencies to downgrade the state's credit rating, which means the state will pay more to borrow money.
It is not clear whether DFL Gov. Mark Dayton, who signed off in the latest school shift, would support tapping reserves to pay the school debt.
Minnesota Management and Budget Commissioner Jim Schowalter said a week ago that if the state slipped into another small deficit in the near future, he would not recommend tapping reserves.
Dayton and state budget officials were thrilled that the uptick in the economy finally allowed them to refill reserves the past few months.
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