Dayton's proposed $42 billion budget emphasizes state's youngest, but lawmakers may change mix

Gov. Mark Dayton released a $42 billion budget Tuesday that puts a heavy emphasis on education for the youngest Minnesota residents, leaving advocates for nursing homes, local governments and tax breaks to grab for a legislative lifeline in bids for state money.

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His two-year proposal is the opening move in a chess match over state spending that will play out for months among Dayton, a Republican-led House and a Democratic-controlled Senate. The debate revolves largely over a projected $1 billion surplus that gives lawmakers a chance to try new things, beef up existing programs, send money back to taxpayers or, most likely, some combination of the three.

Dayton wants much of the surplus devoted to subsidized preschool programs for 4-year-olds, free school breakfasts for an estimated 83,000 more children, reading readiness initiatives, increased per-pupil allowances and extra college aid grants. His voluntary pre-kindergarten plan would allow 31,000 kids to attend free, high-quality programs at a state cost of $109 million alone.

"So over half of this surplus goes into our future," Dayton said, "into the young people that will comprise the future of Minnesota."

To make room, Dayton set aside relatively few new dollars to boost reimbursements to nursing homes or aid to local governments — two areas that were big winners in the previous two-year state budget of $39.4 billion. And his centerpiece tax cut is a child-care credit that will go to 92,000 more families at a cost of $100 million.

Republicans signaled some common ground between Dayton's plan and their own goals but decried the overall increase in state spending he recommended. "This is an unsustainable level," said House Speaker Kurt Daudt, R-Crown.

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The GOP had been shut out of power the last two years and is now feeling a tug from its political base to cut business taxes while still investing in transportation and watching out for nursing homes, particularly in rural areas.

There is even some slight separation between Dayton and Democratic allies in the Senate, who want a bigger chunk of the surplus for tuition-free community college for recent high school graduates and a more-expansive early education initiative. Still, Senate Majority Leader Tom Bakk, DFL-Cook, praised the governor's proposals as ones that "reflect the values and priorities all Minnesotans share."

Dayton said he was open to the Senate tuition idea and putting extra nursing home money if a new economic forecast due in six weeks results in a bigger projected surplus. The governor will revise his budget after that forecast.

His spending proposal also contains $30 million to expand broadband Internet availability, puts $45 million from a proposed levy on railroads into local programs that could ease property taxes in those communities and allocates $11 million for the Senate to pay new rent in its lease-to-own office building under construction.

Advocates for programs that serve Minnesota's growing elderly population said they will keep pressing their case as Dayton's budget undergoes scrutiny by the Legislature. They are seeking a $200 million investment and changes to care rate structures and quality measurements.

"Any way you look at it there is going to be 60,000 new seniors every year for the next 15 years," said Gayle Kvenvold, president and chief executive of LeadingAge Minnesota. "We have a lot just to do to get ready."

Also left out of Dayton's plan for now was new money for the Minnesota State Colleges and Universities System. The governor said he wants MnSCU's administration, faculty and student groups to resolve a dispute first over Chancellor Steven Rosenstone's plan to revamp the 31-campus system to minimize duplication in offerings at its schools. The parties issued a joint statement assuring they take Dayton's concern "very seriously" and are working to resolve disagreement over the "Charting the Future" proposal.

House Minority Leader Paul Thissen, DFL-Minneapolis, has needled Republicans about devising an alternative approach, saying they'll have a tough time delivering a budget smaller than the current one based on proposals from GOP members already bubbling up.

"Republican members are tripping over themselves to spend and spend and spend money," Thissen said during a floor debate Monday. "The budget you're going to pass off this floor is going to be the biggest budget in state history."

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Associated Press writers Kyle Potter and Kia Farhang contributed to this report.