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Minn. GOP proposes $1.35 billion in tax cuts

Chairman Jim Knoblach of the Minnesota House Ways and Means Committee points to a chart showing House Republican budget plans on Monday, March 20, 2107. Don Davis / Forum News Service1 / 5
Minnesota House Speaker Kurt Daudt talks about a Republican state budget proposal on Monday, March 20, 2017. With him are Chairman Jim Knoblach of the House Ways and Means Committee and Majority Leader Joyce Peppin. Don Davis / Forum News Service2 / 5
Chairman Scott Newman, R-Hutchinson, of the Minnesota Senate Transportation Committee outlines a bill on Monday, March 20, 2017, that he says will add $3.6 billion in road and bridge funding over a decade. Don Davis / Forum News Service3 / 5
Minnesota House Speaker Kurt Daudt points to a chart showing House Republican budget plans on Monday, March 20, 2107. Don Davis / Forum News Service4 / 5
Chairman Jim Knoblach of the Minnesota House Ways and Means Committee announces on Monday, March 20, 2107, that House Republicans want a nearly $45 billion, two-year state budget. Don Davis / Forum News Service5 / 5

ST. PAUL—Minnesota lawmakers plan to figure out their state budget plans in the next two weeks.

With that deadline in mind, House Republicans announced Monday, March 20, they want to cut taxes $1.35 billion in the next two years. Later in the day, Senate Republicans said they want to spend $3.6 billion for transportation over 10 years.

The bottom line is that the state taxpayer-funded budget likely will be around $46 billion for the two years beginning July 1, but details need to be decided by the constitutional legislative adjournment date in two months.

A key point of disagreement appears to be tax cuts.

House Republicans' desire to cut taxes $1.35 billion over the next two years would take most of the state's projected $1.65 billion surplus.

That is more than the $900 million in tax breaks Senate Republicans announced last week and the $300 million Democratic Gov. Mark Dayton included in his updated budget plan released Friday.

Republicans say taxpayers pay the state too much and should get some money back.

The Taxes Committee will decide how tax cuts are arranged, House Speaker Kurt Daudt, R-Crown, said, with an emphasis placed on helping the middle-class. No income tax cuts are expected, Daudt said, and automatic tax increases now in law for tobacco products and statewide business taxes likely will disappear in House legislation. The House GOP's announcement on Monday came as part of a budget framework that would spend more than $46 billion over the next two years, documents presented to the House Ways and Means Committee indicate. The budget that ends June 30 is expected to spend nearly $42 billion.

"We want to make sure we keep our government spending in check," Daudt said. Daudt and other House leaders' Monday announcement said finance committees will decide specifics about how to spend the money, but with guidance from leaders and the GOP caucus in general.

"We are going to try to bend down the growth of government," Chairman Jim Knoblach, R-St. Cloud, of the Ways and Means Committee said.

Nearly all categories of spending would rise from current spending under the plan, other than a $94 million drop in natural resources and environment programs, and $430 million in state government and veterans' affairs.

However, there are areas where Republicans would spend less than expected, which some people in funding debates call cuts.

Dayton said he cannot say much about the Republican plan until he sees more specifics. "When the committees start making these numbers real, we will then have something to discuss," the governor said.

Daudt said he expects the full House to begin debating budget bills the first week of April.

Knoblach said about $450 million is expected to go to roads and bridges from general tax revenues in the next two years. The full House transportation plan has not been announced.

Senate leaders Monday revealed their transportation proposal, which they said would pump $3.6 billion into roads and bridges over the next decade. They said the money would replace 8,800 miles of roads and fix or replace 200 bridges.

Similar to the House, Senate Republicans say they would count on $400 million in the next two years from sales tax on vehicle-related sales, such as auto parts, and another $170 million from money the state Department of Transportation now spends on other things.

Plus, the Senate plan looks to $466 million in federal grants and $300 million the state would borrow.

Chairman Scott Newman, R-Hutchinson, of the Senate Transportation Committee said it is impossible to predict how much money taxes will bring in down the road or what future legislatures may do, but he plans on the $3.6 billion figure over 10 years.

Newman said three projects will have earmarks in his bill, while state officials can pick how other money is spent. The earmarks will be U.S. 14 across southern Minnesota, U.S. 212 west of the Twin Cities and U.S. 12 in Hennepin County. Dayton has said he opposes earmarks, preferring to let transportation officials to decide funding priorities.

Democrats said they do not think Minnesota can count on the funding in the GOP bill.

"I have serious concerns about the reliability of this funding, should our economy falter," Sen. Susan Kent, D-Woodbury, said.

Don Davis
Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.