Minnesota tax collections are projected to be $1.3 billion more than what state leaders expected. That gives lawmakers a pot of money to work with this year, but much of it is considered to be a one-time windfall rather than an ongoing revenue boost.
Proposals on how to spend it include:
TAX CUTS
Republicans say the Legislature’s top priority should be giving some of that money back to Minnesotans. They’re recommending totally exempting Social Security from state taxes.
Doing so would cost about $450 million a year and Democrats say that’s too big of a permanent hole to blow in state tax collections. They also note 70 percent of Social Security income is already exempt from state taxes and removing the rest would benefit the wealthy who don’t rely on the payments to live.
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Absent an agreement on social security taxes, there’s likely to be debate on other provisions, but nothing as comprehensive as last year’s bill that brought Minnesota in line with 2017 federal changes.
EARLY LEARNING AND CHILDCARE
House Democrats say they will proposed using $500 million of the budget surplus to increase spending on early learning and childcare programs. They want to continue funding for public preschool programs and increase spending on scholarships families can use at private and public schools.
They also want to increase childcare grants to low-income families. They say doing so will help parents and providers who except state childcare vouchers.
Expanding state childcare funding is sure to face push back from Republicans. They’ve been highly critical of the program which as been characterized by state investigators as pervaded with fraud.
Republicans have pushed to address Minnesota’s growing childcare shortages in other ways, specifically with cutting red tape providers say keeps many out of the business. They’ve also been supportive of early learning scholarships for low-income families who could most benefit from early learning programs.
DEPARTMENT OF HUMAN SERVICES
There’s a bipartisan consensus that Minnesota needs to do more to combat fraud, abuse and rampant spending on state social programs. But there are big differences on how to best do so.
This year, expect a lot of debate over whether to break up the state Department of Human Services into smaller agencies that would be easier to oversee. Or if an outside audit of the roughly $ 7 billion in state money the agency receives would give state leaders a better idea of how to rein in the agency with more than 6,000 workers.
However state leaders decide to probe DHS’s future, it will likely be costly to dig into the inner workings of an agency that big.