With budget surplus in hand, Dayton wants session to focus on jobs

Schowalter, Nelson
Minnesota Management and Budget Commissioner Jim Schowalter, left, and Gov. Mark Dayton answer questions about the state's budget forecast on Wednesday, Feb. 29, 2012.
MPR Photo/Tim Nelson

With the state budget appearing to be on track, Gov. Mark Dayton and GOP legislative leaders say they want to focus the rest of the legislative session on jobs.

State finance officials announced Wednesday a state surplus of $323 million for the current two-year budget cycle. Dayton is calling on lawmakers to pass his job creation bills, but Republicans say the best way to help the economy is to stay out of the way of private businesses.

A year ago, the governor and legislative leaders argued extensively about how to erase a $5 billion budget deficit. Their solution relied on borrowing against future tobacco payments and deferring payments to schools. It put the state in debt for the foreseeable future.

Management and Budget Commissioner Jim Schowalter said the $323 million surplus is already spent. By law, $5 million will go to refill the state's budget reserve. The rest will start paying back the schools. At this rate, Schowalter said it could be quite some time before the state breaks even.

"It's going to be a while before we have a positive forecast balance even if we have good news rolling forward for years to come," he said.

Both Dayton and GOP leaders agree that putting people back to work and paying taxes is a priority. But Dayton and GOP leaders haven't settled on a plan to tackle the jobs issue.

"I would say to the Legislature, where is the jobs bill?"

Dayton repeated his call for the Legislature to craft an economic development bill that includes both his ideas and their ideas. His agenda includes a $775 million public works bill, a new Vikings stadium and a tax credit for businesses that hire.

"They said they are for jobs and want to put people to work," Dayton said. "I offered three jobs proposals and I'm still waiting for a jobs bill."

On Wednesday, the Senate Jobs and Economic Growth Committee held a hearing on Dayton's plan to give a tax break to businesses that hire new workers. Dayton would pay for the plan, which supporters say would result in 14,000 new hires, by raising taxes on Minnesota corporations that operate overseas.

Sen. Geoff Michel, R-Edina, worries that could hurt companies like 3M, Medtronic and Boston Scientific.

"I think we are going to need to be clear though that this absolutely means higher taxes for some important Minnesota companies and job creators. The discussion will continue," Michel said.

The committee delayed action on the bill. Other Republicans expressed skepticism about Dayton's plan to borrow to fund public works projects. Republican Senate Majority Leader Dave Senjem, who also chairs the Senate Capital Investment Committee, discounted Dayton's claim that a bonding bill would create jobs.

"We did a $500-million bonding bill in July. Is that working for us? It perhaps is in some cases but I'm not sure that's the jump start to what we're seeing here today," Senjem said. "Those bonding projects are good. We need them for the right reasons but not for jobs. We need them because we need to fix up our infrastructure."

Senjem said he would support a smaller bonding bill.

As their effort to create jobs, Republicans propose a plan that focuses on cutting taxes and regulations for businesses. GOP House Speaker Kurt Zellers said business owners have supported their efforts.

"By not adding to the burden, by not adding to a tax increase, yes, in that sense we in government have helped. I think that's what the Republican caucus has brought to this," Zellers said. "We're not going to raise taxes. We're not going to add to the burden and we're not going to make it harder to do business in Minnesota."

The positive financial news means legislators and Dayton won't have to work out another budget fix between now and November's election. But the forecast still shows a shortfall in the next two year budget cycle, meaning Dayton and the next Legislature will likely have to do something about the budget. Dayton says he still believes a tax increase will be needed. Republicans say they will oppose it.

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