Gov. Mark Dayton on Thursday proposed his supplemental budget of tax and spending changes. The governor’s proposal comes after the Minnesota Management & Budget last Friday released the February economic forecast that projected a $408 million increase in the General Fund surplus. The surplus is now pegged at $1.23 billion for the 2014-2015 budget period that ends June 30, 2015.
Dayton is proposing $616 million in tax relief, which is more than the $503 million tax bill. The governor’s tax proposal includes $301 million in conforming changes to federal tax law. The changes would enhance the working family tax credit and student loan interest deduction. Dayton has signaled to lawmakers that he wants the bill on his desk by March 14 so that taxpayers can take advantage of federal tax conformity provisions that are retroactive to the 2013 tax year.
Dayton also includes $232 million in his tax proposal that would eliminate three business-to-business taxes that were enacted last year and have prompted a backlash from citizens. Two of them, a tax on farm repair services and a tax on telecommunications equipment, have already taken effect. The third, which will tax warehousing and storage services, is scheduled to take effect April 1.
Dayton’s supplemental budget boosts the state’s budget reserve by $455 million. He is also proposing $162 million in spending increases, including $11 million to patch a projected deficit in the Department of Corrections budget.
House Speaker Paul Thissen (DFL-Mpls) released a statement praising Dayton’s proposal to help middle-class Minnesotans.
“Minnesota is headed in the right direction and the way to continue building on our progress is to expand middle class economic opportunity,” Thissen said.“Governor Dayton’s supplemental budget has the right priorities to continue growing our economy from the middle out.”
Rep. Greg Davids (R-Preston), the Republican lead on the House Taxes Committee, said during a Thursday news conference that Dayton is “going in the right direction” with a larger dollar figure than the House.