Minnesota House GOP wants $2B in unspecified tax relief

Republican leaders in the Minnesota House proposed $40 billion in total state spending over the next two years, including $2 billion in unspecified tax relief.

The GOP spending plan, outlined Tuesday, is about $3 billion less than DFL Gov. Mark Dayton's proposed $43 billion budget plan for 2016-17. Dayton wants considerably less in tax relief, proposing a total of about $200 million in tax credits for child care, working families and school supply purchases.

"Our priority, really, is to put money in the pockets of hard working Minnesota families," House Speaker Kurt Daudt said. However, GOP leaders have not yet laid out how they plan to distribute $2 billion in tax relief other than to say it won't be in direct rebate checks.

The $2 billion tax cut proposal matches the size of the state's forecasted $1.9 billion budget surplus, which many Republicans have argued should be entirely returned to taxpayers.

Under the Republican budget targets, most sectors of state government spending would see small spending increases from the current two-year cycle to the next. However, in some cases the GOP plan does not factor growth in the cost of delivering state services that's fueled by inflation, rising population and other factors.

As a result, some areas, most notably health and human services programs, would see a scaling back in the volume of assistance provided.

"That's real cuts to people in this state in a time of huge budget surpluses," said House Minority Leader Paul Thissen, DFL-Minneapolis.

That gives DFLers ammunition to characterize the Republican plan as cutting more than $1 billion from human services. Republicans take issue with that terminology, arguing that cancelling anticipated spending shouldn't be characterized as a cut.

"What Democrats did is hide spending in the next biennium," Daudt said.

Republicans provided few details of how they'd achieve that $1 billion in health and human services program reductions. House Ways and Means Chairman Jim Knoblach, R-St. Cloud, said he hopes a large portion comes from culling ineligible people from the rolls of MinnesotaCare. Further details will emerge in the coming weeks as House committees chew over spending levels, he said.

Republicans would dedicate real new dollars to both public schools and public colleges, although by $775 million less than what Dayton wants in additional new resources. While Dayton's proposed funding boost for higher education would allow two more years of tuition freezes at University of Minnesota and MNSCU schools, Knoblach said the GOP plan would probably only allow such a freeze at one or the other.

Republicans would significantly trim spending in a couple areas. Agencies administering environmental and economic development programs would get less money in the next two years than they did in the last two.

The Republican plan also directs $100 million into state reserve funds, and leaves $319 million unallocated for the time being. Knoblach said that could later be added to the reserves, could serve as a hedge against a future economic downturn or might still be spent in some fashion.

Republicans did not factor into their total budget number more than $600 million in general fund dollars they want to divert to road and bridge repairs in the next two years. If that spending is factored, the gap between the Dayton and GOP plans would shrink slightly.

With the House GOP at about $40 billion in spending and Dayton at $43 billion, Senate DFLers are planning to unveil their own budget priorities this Friday. Senate Majority Leader Tom Bakk, DFL-Cook, has said his total spending figure would likely fall somewhere between Dayton and Daudt.