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GOP budget $2.5B lower than Dayton’s

One large poster filled with numbers was taken down, and another, even more data-heavy board was put in its place. The even, inexpressive voice of Rep. Jim Knoblach, R-St. Cloud, walked the Capitol press through a line-by-line, committee-by-committee introduction to the Republican budget.

Knoblach’s delivery was aided by the use of a laser pointer, which he deployed to highlight certain figures on the comprehensive chart.

It was, the House Ways and Means Committee chair confessed, a presentation “only an accountant could love.” True enough, though it helps if the accountant is a fiscal conservative.

The budget targets introduced on Tuesday morning leave a gap between the Republican agenda the Gov. Mark Dayton that could comfortably accommodate the GDP of some island nations. House GOP targets add up to $39.95 billion for fiscal years 2016-17, a slight (1.7 percent) increase over the DFL-authored budget of the previous biennium.

That’s about $2.5 billion less than Dayton pushed for in his supplemental budget package, and the difference can largely be credited to three things. In ascending order of size — and related controversy — the House Republican plan would add $100 million to the budget reserves; it keeps $319 on the bottom line, which may or may not still be spent this session; and it leaves room for $2 billion in tax cuts.

The budget was a reflection of House Speaker Kurt Daudt’s approach, as spelled out prior to the session, of not automatically factoring in automatic base-level increases in each successive budget. To that end, the GOP’s spending chart compared its 2016-17 proposals to the corresponding numbers in the 2014-15 biennium, leaving out the “tails” figures that had been built into the DFL’s budget.

Daudt said the nearly $43 billion base, which factors in the projected $1.9 billion surplus, is a “fictitious number,” and wrongly presumes spending must increase.

“What Democrats did during the last two years was hide spending in the next biennium,” Daudt said. He added: “The Democrats didn’t do our homework for us. We can’t just all go home because they put some things in statute.”

The most severe reductions are pegged for the health and human services budget, where Republicans are seeking cuts of about $1 billion from the base level increase. Knoblach said those decreases could come through a variety of means, such as personnel cuts or greater enforcement of eligibility requirements for public programs. He referenced a recent Office of the Legislative Auditor (OLA) investigation that determined an average of 17 percent of Minnesotans receiving subsidized care were not eligible for that program.

Knoblach also said proposed changes to the MNsure insurance exchange, such as defaulting to the federal system, could generate cost savings. If those efforts fall short, he said, the health and human services committee could tap the “as-yet-unallocated” remainder, he said.

“If we find out that we don’t think we can do what is right there, we do have that $300-some million on the bottom line,” Knoblach said.

Also on the chopping block in the GOP budget:

  • The transportation budget would be slashed by $144 million.
  • Economic development, which saw what Knoblach called “one-time spending” in the last budget, would drop $102 million.
  • Capital investment projects and related grants would decrease $132 million; Knoblach added the GOP did not plan to pass a bonding bill this session.

House Republicans do want to push up spending on some sectors, including education, which, at $16.9 billion, comes in $1 billion more than the current budget. Higher education funds would increase by $103 million, significantly less than the combined amount the University of Minnesota and the Minnesota State Colleges and Universities (MnSCU) system has said would be necessary to freeze tuition.

Exactly how those tax cuts would be designed is still being worked out, leaders said Tuesday, though they threw out some hints as to what might be in the offing. Daudt mentioned taxes on Social Security incomes as one that could be done away with, and Knoblach said he likes Dayton’s proposal to expand the child care tax credit for working families.

The DFL governor wants to allow families with combined incomes of up to $124,000 — more than triple the current threshold — to qualify for a tax refund. The credit would cut about $100 million in state revenues in the next budget, and Knoblach said he favors “even a little bit more.”

On the touchier topic of business tax cuts, Daudt was less explicit. There would be “some” relief for corporations, he said, though he could only “guess” that it would amount to less than half of the total $2 billion in cuts.

“Obviously we want to spur Minnesota’s economy to continue to grow, and some of that will be fixing some things that we’ve … done in the past,” Daudt said.

The likely inclusion of relief aimed at businesses was one of two main lines of attack in a DFL response press conference. House Minority Leader Paul Thissen accused the Republicans of loyalty to “corporate special interests” over students, pointing out that the GOP budget adds about 1 percent to education spending in a time of surplus.

Democrats also picked up on a developing theme of this session, warning not to trust the numbers Republicans had used in their press conference. Thissen said the DFL would be on the alert for the possible use of “gimmicks” or “shifts,” which he warned could be used to artificially cut spending totals.

The minority leader also said the GOP’s starkly different budgeting was a “recipe for shutdown,” with the House caucus beginning negotiations at such a large remove from the governor’s plan and what is expected to emerge from the Senate. Dayton, in his supplemental budget, had allocated all but about $13 million of the available surplus.

Later Tuesday evening, the budget resolution was introduced and passed out of the ways and means panel, where the Republican majority voted down a number of DFL amendments. Despite that, Knoblach said he was open to new ideas, particularly for using the $319 million in unspent funds, as action transitions to individual finance committees.

“If anyone from the minority party has places that they think they’d like to spend money, or places they think they can money, or wants to meet with me, and talk to me, I certainly invite you to call … or just catch me on the House floor,” Knoblach said.

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