DFL leaders of the state Senate want to spend less than Gov. Mark Dayton and cut taxes less than House Republicans, producing a state budget outline Friday that would significantly boost state spending on schools and colleges but also set aside $200 million for a rainy-day fund as a hedge against economic downturns.

“The appetites get pretty strong on the part of people with all kinds of things that are important,” said Senate Majority Leader Tom Bakk, DFL-Cook. “But you have to be careful that you don’t overcommit.”

The Senate DFL’s $42.7 billion, two-year state budget is $250 million less than Dayton’s. The GOP-controlled House earlier this week proposed spending just shy of $41 billion while returning $2 billion in unspecified tax cuts.

The release of Senate budget targets sets the table for Dayton, Senate DFLers and House Republicans to hash out a three-way compromise on the state’s direction for the next two years. Those talks will get underway when lawmakers return from a 10-day break that starts Monday, but vastly different priorities between the two DFL camps and House Republicans will complicate those negotiations.

Senate Minority Leader David Hann, R-Eden Prairie, criticized the DFL plan, saying that Senate Democrats “clearly refuse to do the hard work Republicans are doing to eliminate wasteful spending.” Republican plans, he said, would help family pocketbooks and grow the economy.

Both Dayton and Senate DFLers have proposed about $200 million in targeted tax credits. Dayton wants credits for child care, school supply purchases and working families; the Senate DFL’s tax cuts have not yet been specified, although individual Senate Democrats have introduced bills similar to what Dayton wants. Senate Tax Committee Chairman Rod Skoe, DFL-Clearbrook, said their plan would also include some property tax relief.

But those $200 million proposals are dwarfed by the $2 billion sought by House Republicans.

“We’ve been pretty up front with where our priority is,” said House Speaker Kurt Daudt, R-Crown.

Another likely dividing line between Democrats and Republicans is in spending for health and human services programs. Both Dayton and Senate DFLers want to boost that by $341 million over two years, while Republicans are looking for more than $1 billion in reductions from the current level of health and human services. That has led to speculation that House Republicans would seek to eliminate MinnesotaCare, a state-subsidized health coverage program, as some GOP members have proposed.

“The Senate will not dismantle MinnesotaCare as a program. The Senate feels very strongly about that,” Bakk said. He noted that its beneficiaries disproportionately live in outstate Minnesota, which has increasingly become a political base of support for House Republicans. Still, Daudt confirmed that getting rid of MinnesotaCare is under discussion among House Republicans.

Education goals vary

With the release of the Senate DFL plan, all three sides in the budget debate want considerably different levels of new spending for public schools. Dayton came in the highest, proposing a $695 million spending increase that would be taken up in large part by extending preschool access to every public school in Minnesota. Senate DFLers proposed $350 million in new money for schools, while House Republicans proposed $157 million.

Sen. Katie Sieben, DFL-Newport, said many Senate Democrats want a higher total increase for public schools and that they would seek to push higher the figure than their own leaders proposed Friday.

Dayton also wants more for the University of Minnesota and state colleges and universities — $288 million more. Senate DFLers proposed $205 million more while House Republicans called for $53 million. It’s likely that only the amount sought by Dayton would allow the two systems to extend a current tuition freeze another two years. Bakk suggested that a one-year freeze might still be possible, or a freeze on tuition only for undergraduates.

Senate DFLers and the GOP House share one goal in common that Dayton does not: Reserving a portion of the projected budget surplus in the event of an economic downturn. The Senate DFL proposed a full $250 million for the rainy-day fund, while Republicans want $100 million. Dayton said Friday that while he did not call for greater reserves, he’s open to that compromise.

“I think it’s prudent to save money,” Dayton said. “I think that’s a good use.”

Bonding — maybe

Dayton plans to unveil a robust capital investment proposal in early April. But the governor may run into stiff opposition. House leaders have said they don’t intend to produce a bonding bill this year and Bakk said the Senate may follow suit.

The House Republican spending plan, in addition to $40 billion in general fund spending, also would transfer $600 million from the general fund dollars for road and bridge repairs. Dayton and Senate DFLers have denounced that approach, instead proposing a gas tax increase as the best way to raise new money for roads.

Details of both the Senate DFLers and House Republicans budget blueprints will emerge in the weeks following the legislative break. Lawmakers have until a mandated May 18 adjournment date to send a budget to Dayton.