Minnesota lawmakers and the governor will have a nice cushion with which to craft a budget after the Minnesota Management and Budget Office on Thursday reported the state will see a $1-billion surplus.
The surplus, though expected, will set the table for the start of the upcoming budget process as Minnesota legislators figure out what to do with the windfall.
State budget officials said Thursday that the surplus is the result of higher tax revenues, mainly in sales and individual income tax collections, and reduced spending in health and human services. Moreover, the budget surplus from the 2014-15 fiscal year, which ends in June, was projected Thursday to be $373 million after diverting a portion of it to the state's budget reserve.
Budget officials said the drop in spending on health care is largely because of a different composition of enrollees receiving medical assistance.
State budget director Margaret Kelly on Thursday said that though the number of enrollees in medical assistance grew slightly from a previous forecast, the uptick of enrollees have been largely adults without children. Since that forecast, the rate of familes with children and individuals with disabilities enrolling in medical assistance has also dropped.
Since February, when the Minnesota Management and Budget agency published its last forecast, the state’s economy has expanded largely as projected, aided by stronger employment growth. The job gains have shrunk the unemployment rate to its lowest level in more than eight years — 3.9 percent.
Minnesota's economic outlook, however, was downgraded Thursday from the February report. State economist Laura Kalambokidis said that despite a turnaround in the labor market, wage growth is now projected to grow more slowly in 2014. Furthermore, it's likely that millennials burdened by high student-loan debt are not buying homes, which is reducing the rate of household formation.
Still, the budget forecast shows that the the state's fiscal picture has brightened considerably since February 2013, the last time the state faced a deficit, which stood then at $627 million.
Thursday’s forecast will guide the governor’s budget proposal, which Dayton has said he will present to the Legislature on Jan. 27. State lawmakers will craft their budget proposals based on a later February forecast, which includes updated economic data such as holiday retail sales and the country's fourth-quarter economic output.
Gov. Dayton has not yet gone into great detail on his priorities, but they are likely to include a request to fund child-care tax credits during next the next legislative session, set to begin next month.
“I’m not going to make any decisions until I see the revenue projections, but that’s still one I would give a high priority,” Dayton said Tuesday.
The tax credit would be intended to help families afford the cost of child care — a goal also supported by DFL legislators. The governor’s budget proposal may include funding requests for transportation, or a specific proposal may be introduced separately early next year. Dayton said during his re-election campaign that funding basic maintenance of the state’s infrastructure will be a key legislative priority.
The $1-billion surplus will likely make for a smoother session. Republicans are back in the majority in the House, but having extra money to work with would help the GOP, the DFL governor and DFL-controlled Senate create some common ground for compromise.
Dayton and legislative leaders on Thursday are expected to react to the complete report that was released at 11 a.m.
The chief information officer for the state of Minnesota is resigning her post, and the Dayton administration said Tuesday it would accept applications for the job.
Carolyn Parnell is the state's chief information officer and commissioner of MN.IT, the agency that manages the technology systems for over 70 agencies, boards and commissions within the executive branch of government. Under her watch, the state consolidated much of its technology infrastructure.
"This consolidation improved agencies' efficiencies and saved Minnesota taxpayers nearly $28 million," Dayton said in a news release.
Prior to joining Dayton's administration in 2011, Parnell had led technology offices at a number of Twin Cities-based organizations and businesses including MnSCU. Dayton's office said applicants interested in the job could submit a resume.
As two white-feathered turkeys looked on from a small coop, Gov. Mark Dayton said Monday he couldn't muster too much sympathy for the fact that within a few days they'd be the main course in someone's Thanksgiving feast.
Pointing out that Minnesota produces about 46 million birds a year -- more than any other state -- Dayton put the perspective of the two 20-pound, 16-pound hens in perspective: "Forty-five million, nine hundred and ninety-nine thousand, nine hundred and ninety-eight other turkeys are headed on to the same fate," he said.
Pardoning a turkey is a presidential tradition going back years. But it's equally a tradition for a Minnesota governor to send them on to slaughter.
"The president can pardon turkeys but governors don't have that clout," Dayton joked at his annual turkey press conference, which traditionally promotes Minnesota's nation-leading turkey industry.
John Gorton, president of the Minnesota Turkey Growers Association and a turkey farmer from Pelican Rapids, said 2014 was a good year for Minnesota growers. "The price of turkey is up and our input costs are down," Gorton said.
Dayton has kept a low profile since his recent re-election victory. He said Monday that he was taking some personal time for the Thanskgiving holiday, with plans to spend the long weekend in San Francisco where one of his sons now lives.
Over a lunch of pork and potatoes at the governor's residence in St. Paul on Thursday, Gov. Mark Dayton and Rep. Kurt Daudt -- soon to be the Republican speaker of the House -- discussed the upcoming legislative session, and also took a few minutes to talk about their dogs.
Dayton and Daudt, R-Crown, met privately for a little over an hour. Shortly after Republicans retook the House majority earlier this month, Daudt's GOP colleagues chose him to be the next speaker. He'll officially ascend to the post in January, when the new session starts.
"The governor said it was a congenial conversation, and a great opportunity to get to know the new speaker better," said Matt Swenson, Dayton's spokesman. Dayton and Daudt share a love of dogs, and both own two.
While the lunch chatter may have been friendly, the new Republican majority is likely to complicate the DFL governor's efforts to pursue an ambitious second-term agenda. The last time Dayton shared power with Republicans at the Capitol, in 2011-12, it led among other things to a 21-day state government shutdown amid disputes over taxes and spending cuts.
Swenson said the two men didn't talk with too much specificity about issues, although he said both transportation and education were among the discussion topics.
Democrats and Republicans have both argued that the state needs to put more money into upgrading the state's transportation infrastructure, but the two parties differ in how best to do that. While Democrats are more likely to look for new sources of revenue, Republicans will argue that should be accomplished by spending less in other areas of state government -- including money for transit projects prized by many Democrats.
Dayton has been meeting privately with the Legislature's top leaders in recent days. Prior to Thursday's meeting with Daudt, he met with Senate Majority Leader Tom Bakk, DFL-Cook, and with Rep. Paul Thissen, DFL-Minneapolis, who in January will transition from speaker to minority leader.
Swenson said Dayton was also seeking to meet soon with Sen. David Hann, R-Eden Prairie, the leader of Senate Republicans.
Gov. Mark Dayton on Monday heaped praise on the Minnesota National Guard soldiers who will be deployed to Liberia next spring to help in the fight against the Ebola virus.
Noting the federal nature of the deployment, Dayton said he understood why Minnesota soldiers were chosen. "We have the best guardsmen and women anywhere in the country," he said. He quickly added: "It's a tough assignment, clearly. It's going to be tough for their families to go through that period of uncertainty."
The Minnesota National Guard announced Sunday that nearly 700 of its members would be deployed to the West African country for about six months starting in April. Liberia has been hardest hit by the recent outbreak of the deadly Ebola virus, with more than 2,800 deaths.
The Minnesota Guard members will not be treating Ebola patients, but rather will oversee and coordinate military activities including the contruction of Ebola treatment centers. Still, Dayton said their safety during and after the deployment would be of paramount concern.
"We will go to every length humanly possible to make sure they're protected while they're there, that they come back and they're protected, and their families and everyone else is protected until they're given a clean bill of health to return," Dayton said.
The citizen-soldiers are part of the 34th Red Bull Infantry Division based in Rosemount. The group previously participated in peacekeeping missions in Bosnia and Kosovo, and in wartime fighting in Iraq and Afghanistan.
Dayton noted that some units from the Michigan National Guard are in Liberia now, and said that Minnesota would be watching and learning from those efforts.