House Republicans elevate tax cuts in budget plan

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Minnesota House Speaker Kurt Daudt is flanked by Majority Leader Joyce Peppin and Ways and Means Chairman Jim Knoblach. They outlined a budget blueprint on March 20, 2017. Brian Bakst | MPR Photo.

Updated 12 p.m. with Dayton response

The Minnesota budget blueprint produced Monday by majority House Republicans seeks hefty tax cuts and aims to pare down expected costs in publicly subsidized health and welfare programs.

GOP leaders said their framework would deliver long-overdue tax relief given a sizable state budget surplus. The plan would make $1.35 billion in tax cuts the next two years with the details to come later.

It means all of the major players -- Gov. Mark Dayton, Senate majority Republicans and the House leaders -- have now put out at least some detail of how they would set a new two-year budget and divvy up the $1.65 billion projected surplus. Dayton, by law, had to deliver a line-by-line plan in January, and he updated it last week.

House Majority Leader Joyce Peppin of Rogers said their plan puts taxpayer money in the right places.

“We want to respect taxpayers but yet we want to invest in key priorities. Those priorities are providing middle-class tax cuts, improving our roads and bridges, strengthening schools and lowering health care costs,” she said. “We're calling this 'The Minnesota Way.’”

House Speaker Kurt Daudt, R-Zimmerman, said the details behind the budget would emerge in coming weeks as committees draft their tax and spending bills, which will reach votes beginning in early April.

“We’ve given them some guardrails here they need to stay within,” he said.

On the tax front, Daudt said there are no current plans to cut income tax rates. Rather, he said the discussion revolves around targeted reductions for Social Security recipients, farmers, business owners and college graduates with high debt loads, to name a few areas.

All told, the House Republicans would spend just shy of $45 billion in the next two years. That's about $1 billion less than the DFL governor has proposed.

The top Minnesota House budget writer says people shouldn't expect the Legislature to either eliminate or expand the MinnesotaCare health care program for the working poor.

Ways and Means Chairman Jim Knoblach of St. Cloud said there's too much turbulence in the health insurance market right now to make drastic moves.

"With some of the uncertainty going on in the federal level, I don't know it's the time to be making really big changes, whether that's getting rid of MinnesotaCare or expanding MinnesotaCare in a public option like the governor is talking about,” he said.

Knoblach and his Republican colleagues would have to come up with about $600 million in savings from public health and welfare programs to deliver on a budget framework.

While the Republican proposal provides more than the current budget for those things, it doesn't put forward what state officials say is needed to deliver the same services now in place.

Dayton focused on that part of the Republican outline in a brief response to the plan.

"It is impossible to respond to a proposal, for which, when asked how it will cut $600 million from Health and Human Services, the response is, `That's up to the Committee,'" Dayton said in a written statement. "When the Committees start making these numbers real, we will then have something to discuss."

Another area ripe for trims in the GOP plan is state government itself. The proposal would pull $500 million out of state agency budgets, despite warnings from Dayton about making deep cuts.

Dayton said he wouldn’t accept unspecified, across-the-board reductions to agency operations. But Daudt said that’s not what Republicans are doing.

“You’ll see where our reductions are, prescribed in our bill,” Daudt said.

The Legislature has until mid-May to agree on a new two-year budget to avoid a special session or flirtation with a July 1 government shutdown.

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