In a news conference Tuesday meant to outline how he wants to spend the state’s $1.9 billion budget surplus, Gov. Mark Dayton opted to kick things off by dismissing an idea that’s been gaining steam with Republicans around the Capitol: giving the cash back to Minnesotans in the form of tax cuts.
He did so by offering a bit of a history lesson, decrying a decision by lawmakers in the early 2000s to give budget surpluses back, a move that was followed by a decade of near-constant deficits. “As the saying goes, those who fail to learn the lessons of history are doomed to repeat its mistakes,” Dayton told reporters.
Then he pivoted to his plan, which entails spending nearly every penny of a surplus that grew by nearly $900 million in the February forecast. His priorities: pre-kindergarten education for all 4-year-olds in the state; freezing tuition at college campuses; and child-care tax credits for families.
“If we give it all back, there’s nothing left to invest in Minnesota,” he said. “Some want to give $1 billion or more back to ourselves. I prefer to give $1.2 billion more to our future.”
Dayton admitted that there was a strategic component to the breadth of his proposal, standard operating procedure in politics. Both sides start out articulating their ideal plan — and then negotiate their way to somewhere in the middle.
But Dayton’s new budget bill and strong statements against tax cuts were the starkest example of a dynamic that’s been developing at the Capitol since the legislative session started: Instead of moving toward common ground, the two parties seem to be moving further apart.
Differences go beyond taxes
For even the most seasoned Capitol watchers, it’s hard to imagine what an overarching deal might look like in 2015, and there are only two months left before lawmakers are required to adjourn.
As the surplus figures have grown, so have Dayton’s ideas on how to spend the money. At the same time, Republican legislators seem to be moving in the opposite direction: GOP leaders in the House have grown more brazen in calling for $1 billion or more in tax cuts — a big departure from January, when Republican House Speaker Kurt Daudt said only that they would consider the idea.
But the differences aren’t only over tax cuts. On transportation, for example, Dayton and Lt. Gov. Tina Smith are traveling around the state in an effort to pressure legislators to pass his plan to raise gas taxes at the wholesale level; the tax would pay for $11 billion in new road, bridge and transit projects over the next decade.
As the surplus figures have grown, however — in part due to lower gas prices — Republicans have gone from keeping the door open to a gas tax to calling for the governor to drop the idea altogether.
Then there’s MNsure, the state’s oft-maligned health insurance exchange. Earlier this week, Dayton circulated a plan to spend $500,000 out of the surplus to create a task force to study the future of the program, which would even include looking at the possibility of moving the state onto the federal exchange.
Legislative Republicans were having none of it, though, despite the fact that they have long campaigned against MNsure, greeting the plan with skepticism and a fear that the task force would only delay action that should be happening now.
‘Waiting around’ to compromise
Dayton said the biggest hindrance to finding common ground is that he hasn’t seen a GOP budget yet. That will change next week when the House releases its budget targets, as well as a new version of their transportation plan.
“I have very few proposals from the Legislature, particularly the House majority, so I don’t know what’s up for negotiation and what to negotiate with,” Dayton said. “I’m still waiting around.”
Dayton wouldn’t list specific proposals in his amended budget bill that he will put on the top of his list when negotiating with Republicans, but says he’s willing to compromise. “Compromise means you agree to things you don’t agree with,” he said.
And yet, before closing out an hourlong press conference, Dayton made one last effort to quash the idea of a tax cut.
“Tax cuts are very popular,” he said. “It’s like M&M’s: You give them out, everybody’s happy and they taste good. You get a little sugar energy and you’ll feel better for a little while. [But] it’s not a wise investment in the future of Minnesota and it’s not sound fiscal policy.”