(Updated at 5:54 p.m. with committee vote)
With a focus of keeping government spending in line with family budgets, House leadership released their budget adjustment targets Thursday.
A resolution to adopt them was approved 17-10 by the House Ways and Means Committee. Senate leadership is expected to release its targets next week.
The February Budget and Economic Forecast lowered the state’s projected surplus at the end of the current biennium to $900 million, down from an estimated $1.2 billion forecast last December.
Saying the plan allows them to dedicate the surplus to their priorities while focusing on what matters for middle-class Minnesotans, Republican leadership wants that money to go toward the state’s burgeoning transportation needs and middle-class tax cuts.
“Those are things we are committing the resources that we have to really make a meaningful difference in the lives of Minnesotans,” House Speaker Kurt Daudt (R-Crown) said at an afternoon media availability with Republican leaders.
Touting additional investments made last year in education and health and human services spending, Rep. Jim Knoblach (R-St. Cloud) called this is “a reallocation budget” whose net spending change is zero. He chairs the House Ways and Means Committee.
“We are looking at basically splitting the $900 million between the tax bill and the transportation bill,” he said.
Calling the proposal “disappointing,” House Minority Leader Paul Thissen (DFL-Mpls), at his own media availability, said the Republican proposal does not help Minnesotans, but would help businesses via tax cuts.
“It’s a typical budget from Republicans,” he said. “They’re not making investments that are going to help average Minnesotans get ahead. We have an historic opportunity to do this now.”
Holding his hands a ways apart, Thissen added the proposal puts the parties further away from each other.
“With five weeks to go in the session the Republicans are way over here and the Democrats and the governor are in a very, very different place. This is not a budget that’s moving toward compromise and actually bringing this session to a close.”
“They intend to spend this biennium’s entire $900 million surplus on tax giveaways and one-time transportation funding. I await their details on which tax beneficiaries they consider more important than the needs of our children and college students. I also keep waiting for their reliably funded, long-term solution to our state’s deteriorating highways, roads, and bridges and inadequate public transit systems.”
The second year of a biennium is traditionally focused on capital investment projects, with the state budget set in the first year.
The resolution calls for a nearly $3.14 million cut in capital investment spending, but enables funding for a bonding bill with $600 million in general-obligation bonds. A 2015 bonding law calls for more than $180 million in general-obligation bonds.
Daudt said last year’s budget included debt service money for about $800 million in biennial bonding. Dayton’s bonding proposal offered in January calls for $1.4 billion in borrowing this year.
“I don’t know if that’s what you consider living within your means,” Daudt said. “We think we can represent Minnesotans priorities and come up with a bill with plenty of infrastructure … and meet those needs in a bill that lives within what we worked with the governor, and is in our budget, to cover debt service.”
Knoblach said debt service is the fastest-growing area of state government.
“We really feel that the state does need to live within its means, we need to be careful about how much money we’re borrowing,” he said.
Thissen said a $600 million bonding bill would not provide needed investments at a time of low interest rates.
“We need to deal with our wastewater treatment issue; we need to deal with affordable housing in this state; we need to deal with our colleges and universities and the backlog that we have and investing in an innovation economy.”
House Republicans are proposing $35 million to increase broadband in Greater Minnesota — $65 million less than Dayton is proposing.
Peppin said the $35 million would be more than the DFL put into broadband in the previous biennium when they controlled the House and Senate and Dayton was in office.
Thissen claims the Republican plan spends less on an annual basis than the initial investment DFLers made in 2014. “We know that the need is substantially greater, probably greater than the $100 million the governor has put in.”
The proposal would add $11.67 million in jobs and energy, including $13 million in Fiscal Year 2017 and $15 million in Fiscal Year 2018 toward Minnesota’s Border-to-Border Broadband Development Grant Program. The additional funding is to be offset by savings from other areas as determined by the committee.
An additional $3.9 million would be allocated for the DNR to uphold decisions regarding copper and nickel mining by Polymet in Northeastern Minnesota.
The resolution calls for a $9.5 million decrease in state government spending, with efficiencies to be determined by the House State Government Finance Committee; $1.93 million in agriculture by repurposing remaining funds from the 2015 Avian bird flu outbreak for livestock disease prevention efforts; and $1 million in public safety by recouping extra money from the MINNCOR enterprise fund.
“The state government area went up something like well over $100 million in terms of funding last year,” Knoblach said. “I think there are plenty of opportunities for finding some of those numbers. … I think there are savings to be had.”
No change is called for in health and human services spending, although those committees can repurpose federal grants for different priorities.
Neither K-12 nor higher education would see no additional funds, under the proposal. However, an extra $50 million of additional K-12 spending would be offset by allowing school districts the option of early state loan repayment. Of that amount, $7 million would go toward expanding broadband access for schools and students in underserved areas.
“We provided many additional resources to schools in this budget cycle and we think they’re happy with the increase they got,” Daudt said.