Invest surplus and pool resources, Dayton says

Opportunities presented by Minnesota's economic good fortune shouldn't be squandered, Gov. Mark Dayton said Thursday night, as he urged legislators to spend most of a state budget surplus on programs he said would pay off for decades to come.

"During the remaining six weeks of this legislative session, we will face our own moments of truth," Dayton said in the first State of the State speech of his second term. "Will we do what is easy, safe and popular? Or will we risk our political lives to preserve this great state for future generations?"

In the annual speech to a joint session of the Legislature, Dayton ran through major highlights of his legislative agenda. The DFL governor put a special emphasis on his proposal to deliver universal preschool to all of Minnesota's 4-year-olds, which carries a $350 million price tag, and other new spending he wants to direct to schools and colleges.

Spooling out several recent examples of national recognition for Minnesota's economy and quality of life, Dayton framed government spending as investments in Minnesota's future that would allow the state to build on its current successes.

"Minnesota's success will continue, if we do what successful farmers, business owners, homeowners and other franchise owners do," Dayton said to a packed House chamber. "Pool our resources, invest them wisely and create an even more prosperous future."

Dayton's feisty defense of additional spending puts him on a path to conflict with Republicans who now control the House. Pre-empting GOP criticism for his desire to spend about three-quarters of a nearly $2 billion projected budget surplus, Dayton argued that it should be viewed as evidence of Minnesota's success rather than proof that taxes are too high, as some Republicans maintain.

"If we have a budget deficit, it's because taxes are too high. If there's a surplus, taxes are too high," Dayton said of his critics. "Whatever is wrong with Minnesota, taxes are too high."

"We feel the state of the state is improving, and we think that's a good thing," House Speaker Kurt Daudt, R-Crown, said after Dayton's speech. "But as I've said in the past, I think it's a cautious recovery, and I think we ought to be very careful with the surplus and with our spending."

Dayton did not lay out any new initiatives in his 30-minute speech, having introduced them earlier. Instead, he reiterated arguments for his education and transportation plans, and a few other priorities.

"I don't think there's anything new here," said Senate Minority Leader David Hann, R-Eden Prairie. "He's emphasizing more taxes and higher spending, and we've already seen increases in both of those things in the last couple of years."

Among public schools, colleges and universities, Dayton wants to boost state spending by $695 million for 2016-17, compared with the previous two years, more than Senate DFLers and far more than the House GOP. Dayton relayed national statistics showing Minnesota is 24th among U.S. states in per-capita education spending even as its per-capita income is 11th highest.

"The quality of our state is, and will be, determined primarily by the quality of our citizens, which will be influenced strongly by the quality of their educations," Dayton said.

Dayton also repeated several demands that face a skeptical audience with Republicans. He wants legislators to approve an $842 million public-works construction project bill this year, calling the House GOP's desire to wait until next year "inexplicable." And he tried to rally support for his proposal to protect water quality by requiring 50-foot buffer strips around all lakes, rivers and streams, which has also met with indifference from Republicans.

"Our continued success won't just happen," Dayton said. "We must make it happen. We must invest what we have now to improve what we do have. And to correct what's missing."

Staff writer Abby Simons contributed to this report.

Patrick Condon • 651-925-5049