ST. PAUL, Minn. — In his upcoming budget proposal, Gov. Mark Dayton plans to earmark as much as one-fifth of Minnesota's projected $1 billion surplus for an expanded child-care tax credit.
Dayton has said little about the two-year budget he'll deliver to the Legislature in a few weeks, but revealed Friday that it will include up to a $180 million tax break in the form of the care credit. It's his second attempt to substantially expand eligibility for a credit that would save households hundreds or thousands of dollars, depending on the number of children a family has in day care.
Currently, about 38,000 families with income below $40,000 receive the credit. If structured similar to one pitched last year, the credits would be expanded to tens of thousands of more households. Dayton would only say his plan had been scaled back some, but still be of notable magnitude.
"You're talking a significant amount of the surplus," he said. A Dayton spokesman said details would come out with the full budget.
House Tax Committee Chairman Greg Davids, R-Preston, said House Republicans are receptive. He said the credits could offset cost pressures that could increase after a child care unionization push embraced by Dayton.
"I'm glad he has seen the light," Davids said. "I'm glad he's willing to put some of the surplus into a tax credit."
Minnesota Child Care Association President Chad Dunkley said the offering is overdue and critical for middle-class families struggling with rising care costs.
"Quality care matters for all kids, no matter what income level a family is at," said Dunkley, chief executive of the 65-site New Horizon Academy. "The first five years of a child's life is really expensive for young families."
Meanwhile, Dayton continued to push a transportation funding issue that's expected to dominate legislative debate this year with a rebuke of a proposal from majority House Republicans. Their $750 million spending plan for four years is based largely on rearranging existing expenses.
Dayton argues the state's transportation needs — fixing existing roads, building new ones and adding more transit options — will require $6 billion over the coming decade.
He lashed out at the GOP's opening bid as something from "la-la land." ''It's not a short-term solution, it's not a long-term solution," Dayton said. "I'll wait until they decide to get real about it."
House Speaker Kurt Daudt, R-Crown, had a measured reaction.
"I'm disappointed in Governor Dayton's tone today, but I'm going to keep working on him," Daudt said in a written statement. "I will win him over because I believe we can work together to solve the problems Minnesotans care about."
Cheap gas prices could put a dent in Dayton's own funding proposal, which would tack a new 6.5 percent tax on fuel purchases. But he acknowledged the revenue stream would fall short of expectations if today's gas prices stay this low.
He has said he'll push a $5.8 billion revenue plan for the next decade, which is based partly on gas prices averaging $3.25 per gallon — substantially more than the $2 many motorists are paying now. As gas prices rise, so would the state's tax take, which is legally dedicated to road construction.
Driving habits change based on fuel prices, so crafting firm tax estimates will be difficult regardless.