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Dayton wants to spend $1B state budget surplus on rural broadband, childcare tax cut

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A surplus of more than $1 billion in Minnesota's state budget over the next two years should be put towards improving rural broadband access and a childcare tax credit, Gov. Mark Dayton has said.

In another sign of Minnesota's improving economic health, The Office of Management and Budget announced Thursday morning it is forecasting a budget surplus of $1.037 billion in the next two-year budget cycle.

And speaking at a press conference Thursday, Gov. Dayton said he wants to see some of this surplus used to pay for a childcare tax credit, better broadband access for Greater Minnesota, and early childhood scholarships, according to WCCO.

Gov. Dayton said the state would be more prudent with the projected surplus, but added that he does not foresee any general tax increase as a result, unless it was used for transportation, according to FOX 9 reporter Timothy Blotz on Twitter..

The $1 billion surplus is for the upcoming budget cycle, which is the 2016-2017 fiscal year. Some of it stems from extra leftover money the state has for the 2014-2015 budget cycle, which officials attributed to higher than expected tax revenue, and lower than expected health care costs.

The $1 billion figure is actually slightly higher than the $900 million or so Gov. Mark Dayton had predicted.

Spending plans

Dayton will use the numbers to craft a budget plan, which lawmakers can then work from. An updated forecast in late February or early March from the state's budget office will give legislators a better sense of projections, allowing them to finalize spending plans.

As well as Gov. Dayton's plans for broadband, childcare and youth scholarships, Minnesota DFL officials told the press conference that some of the surplus will be eaten up by the change in Minnesota's tax code to align more closely with the federal tax code, Blotz reports.

In 2013, officials predicted a $1.08 billion surplus in December – then, when the update was released three months later, upped it to $1.2 billion.

Combined with the state's shrinking unemployment rate (which was at an eight-year low of 3.9 percent according to the most recent numbers), many consider Minnesota's economic climate among the best in the nation.

What does this mean for me?

The budget forecast gives lawmakers an idea of what they can (and can't) afford to do when they get back to the state Capitol in a couple months.

If they're facing a deficit, the legislators usually prioritize strategies to bring it down. (That usually means cutting spending, raising taxes or both.)

With a surplus – which they had last year, as well as this year – lawmakers have more flexibility.

In 2014, that forecast surplus was used to cut taxes, pay back the state's K-12 school fund for money the state borrowed while facing a deficit, and beef up the state's rainy day fun (with other, smaller projects also paid for).

Cautioning against more spending

Earlier this week, some lawmakers – expecting a surplus – said not to expect an increase in spending.

Senate Majority Leader Tom Bakk (DFL-Cook) told MPR News the inflating cost of current spending obligations means most of that extra dough will likely be used up.

Kurt Daudt (R-Crown), who will take over as the House Speaker in January after Republicans took over the chamber in the midterm elections, told MPR his party still plans to prioritize government spending as an issue.

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