Been there, done that. Governor Mark Dayton says the state has learned that you don’t refund surpluses “Those, who fail to learn the lessons of history, are doomed to repeat its mistakes,” Dayton told reporters as outlined how he would devote about 80% of a projected $1.9 billion state surplus to Minnesota children, students, and families.
Dayton’s took shots at Republican leaders suggesting that they “feel ashamed of our state’s economic successes, feel guilty about having a surplus.” He skewered Republican Chair Keith Downey’s suggestion that returning the surplus would mean $350 to every man, woman, and child in Minnesota.
“$350 might make our lives a little better for a little while. I’d rather invest it to make our lives better for a long while,” said Dayton noting that when that was done 15 years ago the state faced deficits just two years later. “It’s taken us over a decade to recover from those mistakes,” he added.
News conference video and text of Governor Dayton’s prepared remarks on the supplemental budget
Last month’s state Budget and Economic Forecast projected a $1.867 billion surplus for the next two fiscal years. That is $831 million more than the surplus predicted by the November 2014 Forecast, just three months before.
Surpluses are a welcome change for Minnesota. Before last November, ten of the previous twelve state Budget Forecasts had projected deficits. They followed right after the last “Give It All Back” tax cut frenzy in 1999, 2000, and 2001. As the saying goes, “Those, who fail to learn the lessons of history, are doomed to repeat its mistakes.”
As we consider what to do with this new surplus, let’s remember how we got it. It resulted primarily from more Minnesotans working than ever before, earning more income, buying more goods and services, and, thus, paying more state income and sales taxes.
Last year, the legislature and I cut state taxes for over two million Minnesotans through adopting federal conformity, marriage penalty relief, estate tax relief, and homeowners and renters’ property tax credits. We did increase state taxes in 2013 by $2.1 billion; however, over $2 billion of that increase came from the wealthiest 2% of Minnesotans, large corporations, and smokers. The Effective Tax Rate on middle-income Minnesotans actually dropped as a result of the combined 2013 and 2014 tax changes.
So let me repeat: This current surplus resulted primarily from more Minnesotans working than ever before, earning more, buying more, and, thus, paying more income and sales taxes.
Nevertheless, some people now say that we should feel ashamed of our state’s economic successes, feel guilty about having a surplus, and “give it all back.” $350 to every man, woman, and child in Minnesota. Well, as I said before, the legislature and governor did just that fifteen years ago. They returned the expected surpluses to the taxpayers. Within two years, those surpluses disappeared. It’s taken us over a decade to recover from those mistakes.
Furthermore, if we “give it all back,” there’s nothing left to invest in Minnesota. There’s no money to give all of our state’s 66,000 four year-olds quality educations. There’s no money to continue the tuition freezes at our state colleges and universities. There’s no money to improve nursing homes, expand broadband coverage, or fix our aging roads and bridges.
$350 might make our lives a little better for a little while. I’d rather invest it to make our lives better for a long while.
In my initial Budget Proposal, I called for increasing our investments in Minnesota’s children and families by $473 million in the next biennium. It included partial funding of optional, all-day pre-K for Minnesota’s four year-olds; providing free school breakfasts from pre-K through third grade; eliminating the waiting list for Head Start; and expanding tax credits to help working parents offset the rising costs of child care.
Now I am proposing to invest an additional $735 million in Minnesota’s children and families, for a total increase of $1.2 billion. Some want to give a billion dollars or more back to ourselves; I’d prefer to give $1.2 billion more to our future.
My Supplemental Budget would fully fund universal pre-K educations for our four year-olds, building on the success of our all-day K initiative. When I took office in 2011, 54% of Minnesota’s eligible children were enrolled in kindergarten. Now, 99.6% of them are in free all-day kindergarten. Not only does that boost their learning and achievement opportunities, but it also saves working parents anywhere from $2,000 to $15,000 a year for private child care.
My Supplemental Budget would also enable the University of Minnesota and MnSCU to continue to freeze tuitions for the next two years. It would increase funding for Indian education, for Special Education, and for the upcoming recommendations of my Child Protection Task Force.
In addition to the Child Care Tax Credit I proposed earlier, I am also proposing to expand the income eligibilities for both the Working Family Tax Credit and also the K-12 Education Credit to include more lower-income and middle-income families.
Some people might question this additional spending for education. What they might fail to realize is that, until recently, Minnesota had fallen behind other states in our expenditures for public education. According to the latest reports, while Minnesota’s per capita income ranked 11th highest among the states, we ranked only 24th in K-12 education expenditures per pupil. In FY 2012, our state expenditures for higher education was, in real dollars, the lowest it had been in over 30 years.
Evidently, after leaders gave the state surpluses back to taxpayers from 1999 to 2001, there was too little left for our children and grandchildren’s educations. We must not make that same mistake again.
My Supplemental Budget also increases funding for Nursing Home employees, for the Fugitive Apprehension efforts by the State Corrections Department and by county law enforcement agencies, for chemical dependency and mental health services, and to support the $850 million Bonding Bill, which I will announce later this month.
It’s a budget for a Better Minnesota. I believe in these investments because Minnesota faces real challenges ahead: providing better long term care for our seniors, reducing the achievement gap and other persistent disparities, aligning our higher education to the jobs of the future without burdening our young people with insurmountable debt, protecting our children from abuse and neglect, and ensuring that our roads, bridges, and railways are safe.